FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : BORD GÁIS EIREANN - AND - BORD GÁIS GROUP OF UNIONS DIVISION : Chairman: Mr Duffy Employer Member: Mr Doherty Worker Member: Mr Nash |
1. Payment of Transition Agreement of T 2016
BACKGROUND:
2. Bord Gáis is a leading energy provider, serving nearly 630,000 gas users and is diversifying into the electricity market where it currently has 150,000 domestic electricity customers. It also operates a transmission pipeline and a gas supply/distribution business in Northern Ireland. The issue before the Court concerns a dispute between the Company and the group of Unions representing up to approximately 850 Workers regarding the payment of two increases due under 'Towards 2016', the ten year framework social partnership Agreement 2006-2015 and the related Review and Transitional Agreement 2008 - 2009.
The dispute could not be resolved at local level and was the subject of a Conciliation Conference under the auspices of the Labour Relations Commission. As agreement was not reached, the dispute was referred to the Labour Court on the 22nd June, 2009 in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 12th August, 2009.
UNIONS' ARGUMENTS:
3. 1. Bord Gáis is a highly profitable commercial semi-state Company with a pre-tax profit of €158 million for 2008, largely generated by the contribution of its dedicated staff.
2. Other Employers who do not enjoy similar profit margins or the financial stability of Bord Gáis have honoured the terms of this Agreement and have implemented the pay increases due to their workforce.
3. Bord Gáiscannot simply refuse to honour its commitments and obligations under the Review and Transitional Agreement.
COMPANY'S ARGUMENTS:
4. 1. The economy has experienced an unprecedented period of contraction since the finalisation of the Transitional Agreement in September 2008.
2. Bord Gáis board have concluded in early 2009 that the immediate payment of the 6% pay increase would be imprudent on the grounds that it would impact on the funding of the defined benefit pension scheme, currently in deficit, impair the Company's ability to fund for capital projects in the future and send a wrong message to its large customer base.
3. Bord Gáis have put an alternative proposal to the group of Unions whereby the Company would provide a significant additional pension contribution on top of the €7.5 million already agreed with the Trustees in return for a two year pay pause being agreed by the workforce.
RECOMMENDATION:
The dispute before the Court relates to the Trade Union Group’s claim for payment of increases in pay provided for by the National Partnership Agreement Towards 2016 (Review and Transitional Agreement 2008-2009).
In this case the Union Group contends that they are entitled to the benefits of the Agreement unless the employer makes and sustains a plea of inability to pay. The employer is not pleading inability to pay. Rather it contends that it would be imprudent to pay the increases in the current circumstances of the economy. The Employer further contends that its pension scheme is in need of a significant cash injection. It proposed that there should be a 24 month pay freeze in return for a significant investment by the Company in the pension scheme.
The Court is aware that the continued application of that Agreement is a matter of controversy between the Social Partners. It would be inappropriate for the Court to enter that controversy or to express any view on how it should be resolved. The Court is also aware of a divergence of approach to the application of the Agreement by employers in the private sector. The employer in this case is a commercial state company and as such is properly classified as part of the private sector for the purposes of the Agreement.
It would appear to the Court that in the private sector employers, workers and their trade unions have adopted positions in relation to the Agreement which are based on the economic and commercial circumstances of the particular employment concerned. Frequently a central consideration is the capacity of the enterprise to pay the increases provided for without impairing its competitiveness and the employment which it supports.
In this case the Company is highly profitable and there can be no question of complete inability to pay. Rather, as the Court understands it, the Company’s position is that the money which would otherwise be used to fund the pay increases claimed should instead be used to reduce the deficit in the pension scheme.
In all the circumstances, and having regard to position adopted in some similar employments, the Court recommends that the first phase of the Agreement should be paid from the due date. There should then be further discussions between the parties in relation to the second phase. Subject to anything that might be agreed at national level in relation to the future application of the Agreement these discussions should examine further the desirability of investing an amount equal to the cost of the second phase in the Company’s pension scheme.
For the avoidance of doubt the Court wishes to make it clear that this recommendation is made having regard to the particular facts of this case. It is not intended, nor should it be understood, as indicating any generally applicable policy or position on the part of the Court on the appropriate application of the Agreement in current circumstances.
Signed on behalf of the Labour Court
Kevin Duffy
26th October, 2009______________________
JFChairman
NOTE
Enquiries concerning this Recommendation should be addressed to John Foley, Court Secretary.