FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : BORD NA MONA - AND - GROUP OF UNIONS DIVISION : Chairman: Ms Jenkinson Employer Member: Mr Doherty Worker Member: Mr O'Neill |
1. Compensation for Loss of Earnings
BACKGROUND:
2. Bord na Mona (the Company) has been supplying peat for energy fuel to the ESB at Shannonbridge Power Station since the early 1960s. Shannonbridge was replaced by the new West Offaly Power Station (the Station) in late 2004. In July, 2004, the Company entered into an Agreement with the ESB for the supply of a "contracted amount" of 1,245,000 tonnes of peat per annum. The Unions' claim is on behalf of approximately 320 workers and is for a loss of earnings which arose as a result of the closure of the Station for extended periods in 2006/2007. The Power Station was forced to close for the periods in question because of outages caused by corrosion in critical parts of the Station's infrastructure. As a result of the ESB cutting back on the amount of peat it took from the Company the result was a loss of overtime and bonuses for the workers concerned. The Unions quantified the losses at €1.75 million for the various group of workers involved.
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 12th January, 2009, in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 1st October, 2009, in Mullingar.
UNION'S ARGUMENTS:
3. 1. In 2005/2006 the workers were promised by senior Company management that future earnings would surpass those of 2005/2006 as a result of supplying peat to the new Station. As result of the outages this did not happen.
2. The outages were beyond the control of the workers. The average basic wage is quite low and the workers relied to a large extent on bonus/overtime payments. The Company has been compensated for its losses by the ESB by way of an advance payment of €4 million. The Company is still profitable and should compensate the workers
COMPANY'S ARGUMENTS:
4. 1. The events which rendered the Company unable to purchase the contracted amount was beyond its control. The loss of sales revenue in 2006 was approximately €15,000,000. The €4 million advance by the ESB was for the peat that will be supplied in the future contract years and will have to be paid back by December, 2009. There are no provisions in the Agreement for compensation for loss of earnings.
2. Despite the loss of earnings for the Company the employees were retained in employment and maintained a minimum of basic earnings and more in some cases. Earning levels have significantly increased since 2006.
RECOMMENDATION:
The matter before the Court concerns a claim by the Group of Unions for compensation for loss of earnings which occurred as a result of reduced production arising from the ESB West Offaly Power Plant being out of commission for long periods, as follows: –
- 28th March 2006 – 3rd June 2006
18th August 2006 - 5th November 2006,
4th March 2007 - 7th March 2007
2nd June 2007 - 5th October 2007
The Unions stated that this resulted in loss of bonus earnings and regular/rostered overtime earnings and quantified the loss at €1.75 million. They indicated that these outages were unscheduled and, therefore, unexpected unlike the customary planned or scheduled outages which occur from time to time and, accordingly, sought compensation for the losses incurred.
An agreement in 2004 between Bord Na M�na and ESB for the supply of peat to the West Offaly plant contracted the former to supply 1,245,000 tonnes of peat per annum for a period of fifteen years. Due to unforeseen technical problems the plant was out of commission for the period resulting in loss of sales to the value of €15million in 2006 and €8million in 2007.
Bord Na M�na sought to mitigate its losses and came to an agreement whereby ESB agreed to make an advance payment of €4.3 million to assist in the payment of wages to the workers concerned. This advance must be repaid by the end of 2009.
In response to the Unions’ claim management submitted that there was no provision in the 2004 Agreement for compensation for consequential losses, only for maintaining cash-flow if and when the “minimum annual peat quantity” was not achieved. It stated that the total amount of tonnage has had to be adjusted downwards with a consequential loss of over 800,000 tonnes, with further losses to come which will not be recovered in the contract period. Therefore, it rejected the claim stating that in a year where there were substantial revenue losses to the company, employees were retained in employment and were maintained on minimum basic earnings and more in some cases. Management held the view that the outages must be considered as“force majeure”occurrences. Furthermore, it stated that earning levels have significantly increased since 2006.
Having investigated the Unions’ claim the Court notes the agreement entered into by the parties on 15th May, 2008, under the auspices of the Labour Relations Commission whereby, it was agreed as follows:
- “Bord na M�na is in discussions with the ESB on means of resolving the deficit in sales that has arisen as a result of the Station outages (2006/2007). In the event of a successful outcome to these discussions Bord na M�na commits to resume discussions with the Group of Unions on possible means of addressing its claim. Bord na M�na will keep the Secretary of the Group and the Commission appraised of progress”.
The Court is satisfied that this agreement created a certain expectation that its claim would be addressed in some manner and for that reason the Court recommends that a total sum of €100,000 should be paid by the Company in full and final settlement of the claim. The Court recommends that this sum should be divided on a pro rata basis between those claimants whose earnings between 2005 and 2006 demonstrate an established loss.
The Court so recommends.
Signed on behalf of the Labour Court
Caroline Jenkinson
12th October, 2009______________________
CONDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Ciaran O'Neill, Court Secretary.