FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : C.L.G. DEVELOPMENTS LIMITED (REPRESENTED BY ESA CONSULTANTS) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Ms Jenkinson Employer Member: Ms Doyle Worker Member: Mr Nash |
1. Redundancy
BACKGROUND:
2. The Company employs approximately 150-200 people in the construction and civil engineering works for utility companies, including Bord Gais Eireann (BGE) and the ESB. It employs a mixture of direct workforce and sub-contractors. The Union represents 130 workers.
Over the last 12 months the Company has suffered a downturn in business in line with the Construction Industry. In November, 2008, the Company informed the Union of the need for 54 redundancies and its proposal to pay only statutory redundancy. The case was referred to the Labour Court and LCR19414 issued in December, 2008. In it the Court recommended a voluntary redundancy package as follows;
Employees with less that one year's service - €1,000
Employees with less than two years' service - €2,000
Employees with more than two years' service should be paid 2.5 weeks' pay per year of service plus statutory redundancy payments.
Since January, 2009, the Company has made a number of workers redundant or put them on short-time working and it is now seeking a further 18 redundancies who will only receive statutory redundancy. The Union is seeking an enhanced redundancy package and it has a problem in that all the redundancies are to come from the direct workforce.
The dispute was referred to the Labour Relations Commission and a conciliation conference took place. As the parties did not reach agreement the dispute was referred to the Labour Court on the 21st April, 2009, in accordance with Section 26(1) of the Industrial Relations Act, 1990. a Labour Court hearing took place on the 15th May, 2009.
UNION'S ARGUMENTS:
3. 1. The Company did not comply fully with the terms of LCR19414. In February, 2009, it made seven employees from the direct workforce redundant instead of reducing the number of sub-contractors as LCR19414 recommended.
2. The Company is continuing to place direct workers on temporary lay-off and replace them with sub-contractors. If there is a genuine need for lay-offs it should be done through consultation with the Union.
COMPANY'S ARGUMENTS:
4. 1. The Company has carried out an analysis of the productivity and cost of carrying out renewals using sub-contractors and direct employees and it has been clearly shown that here is a cost difference of 23% in favour of the sub-contractors (details supplied to the Court). The Unions expressed no objection to the engagement of sub-contractors to carry out renewal works in 2006 and 2007.
2. The Company has no choice but press ahead with whatever changes are required to ensure its continued survival, including the need for 18 further redundancies. It cannot afford to pay any enhancement on the statutory rates.
RECOMMENDATION:
The matter before the Court concerns the Company’s proposal to make 18 workers redundant. The dispute with the Union arose when the Company proposed to select the workers from its direct workforce as distinct from its sub-contractors, implement the redundancies on a compulsory basis and pay statutory redundancy payment with no enhanced ex-gratia payments. The Union contended that this proposal is contrary to the terms of Labour Court Recommendation No. 19414 which recommended voluntary redundancies with enhanced payments; selection from volunteers - in the absence of sufficient numbers, then selection from the sub-contractors.
The Company outlined to the Court details of the deteriorating circumstances it is constantly facing and the vulnerability of retaining contracts.
In December 2008, the Labour Court recommended
“…. the Court notes the limited amount of work available at present and recognises the urgency of having these matters addressed immediately and accordingly makes the following recommendation:
-The Company should offer a voluntary redundancy severance package to those employees currently under notice which they in turn must opt for by the deadline date of 13th December 2008, on the following terms:-
-employees with less than 1 year’s service €1000
-employees with less than 2 years’ service €2000
-employees with more than 2 years’ service should be paid 2 ½ weeks’ pay per year of service plus statutory redundancy payments-In the event of insufficient volunteers being forthcoming by the 13th December 2008 deadline, the Court recommends that the parties should enter into immediate negotiations to achieve the required efficiency/ productivity levels (i.e. an improvement of 40%), by no later than 9th January 2009. Following such agreement and in the event that there is still a need for a reduction in the number of employees, then the Court recommends that the Company should reduce their contract personnel by a commensurate number.”
Having carefully considered the position of both parties, the Court notes the severe financial conditions facing the Company at this point and the urgent need to make cost savings to ensure its continued survival. Furthermore, the Court notes that the recommended productivity improvements have not been achieved. The Court also notes that the level of work available to the Company has deteriorated, and the renewals contract work will cease from September 2009 at which stage there will no longer be a requirement for subcontractors.
However, in the meantime, the Company is anxious to retain subcontractors in preference to direct workers due to the higher levels of productivity achieved by the former. It is in these circumstances that the Court reaffirms Recommendation No. 19414 as outlined above and recommends that its provisions should continue to apply, taking account of the amended numbers and dates. The Court also recommends that every effort should be made by both parties not just to agree on the necessary productivity improvements required but to put in place the necessary conditions to achieve them. Furthermore, the Court recommends that both sides should work together to actively set about reducing costs, through efficiencies and overall reductions in labour costs.
The Court so recommends.
Signed on behalf of the Labour Court
Caroline Jenkinson
26th May, 2009______________________
CONDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Ciaran O'Neill, Court Secretary.