FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 20(1), INDUSTRIAL RELATIONS ACT, 1969 PARTIES : CONDRON CONCRETE LIMITED - AND - 58 NAMED EMPLOYEES (REPRESENTED BY LMCS MANAGEMENT CONSULTANTS) DIVISION : Chairman: Mr Hayes Employer Member: Mr Doherty Worker Member: Mr Nash |
1. Introduction of a 10% pay cut and imposed redundancy programme based on statutory entitlements for 58 named employees.
BACKGROUND:
2. Condron Concrete Limited is a privately owned and family run business operating as a concrete pipe and concrete roof tile manufacturing company since 1969.
Similar to other companies in the construction sector the Company has suffered dramatic reductions in turnover and business activity. Since 2007 the Company turnover and employee numbers have decreased at a very rapid rate in line with the construction industry.
The matter before the Court today relates to the proposals of the Company to implement a 10% reduction in basic pay effective 1st March 2010 and to implement a forced redundancy programme in such a manner as to entwine it with the reductions in basic pay.
The Company wrote to all Employees in January 2010 informing them that an arbitrary deduction in basic hourly rates of pay would be applied to the pay rates of all employees effective from 1st March 2010.
The Employees sought an opportunity for consultation with the Company and wished to engage with their Employer in a consultative process aimed at ensuring arrangements which met the needs of both parties relative to the future of the business.
The Company did not engage in any form of consultation other than to insist on imposing the terms of its original letter to all Employees.
The Employees then sought the external professional assistance in the form of LCMS Management Consultants.
The issue could not be resolved at local level. LCMS Management Consultants, on behalf of the Employees, referred the matter to the Labour Court on the 7th April 2010, in accordance with Section 20(1) of the Industrial Relations Act, 1969 and all Employees agreed to be bound by the Court's recommendation. A Labour Court hearing took place on the 30th June, 2010.
WORKER'S ARGUMENTS:
3. 1. The Employer has neither sought nor obtained agreement to vary the rates of basic pay and therefore the Employees contend that the rates implemented by the Company on 1st March 2010 are illegal and should be reversed.
2. The Employees argued and the Company acknowledged that at the end of 2008 the Company's financial reserves amounted to approximately seventy-one million euro (€71,000,000) as per published accounts. The same accounts showed that the shareholders of the Company reduced these reserves by fivty-five million euro (€55,000,000) at the end of 2008 converting this sum of money to their own benefit.
3. The Employees in the recent past have been agreeable to significant reductions in earnings including cessation of bonus and overtime payments which have inflicted severe hardship on them, most of whom have experienced up to 25% reduction in gross earnings as a consequence.
4. The Employees contend that the method of selecting employees for redundancy adopted by the Company is not in accordance with any of the Redundancy Payments Acts from 1967 to date.
COMPANY'S ARGUMENTS:
4. 1. The Company is projecting a reduction in turnover for 2010 and a further substantial reduction in turnover for the year ending 30th April 2011 and a further substantial trading loss. This loss arises after implementation of the 10% pay reductions and taking into account the ongoing Company redundancy programme.
2. If the Company is to successfully compete for contracts to survive the recession and maintain the existing jobs it must reduce wage costs which account for more than 30% of overall costs.
3. The Company maintains that it has held meetings to inform Employees of the deteriorating financial position of the Company and of its intention to introduce a 10% pay reduction and redundancy programme in an effort to reduce the Company losses. No alternative cost saving proposals were put forward by the Employee representatives.
RECOMMENDATION:
The Court has considered the submissions of both parties. The Court notes that the reduction in pay introduced by the Company on 1st March 2010 was done without the agreement of the Workers affected. The Court recommends that this decision be reversed and the pay levels of the Workers be restored to their previous level with full retrospection.
The Court notes that a number of Workers have been made redundant over the past 18 months on statutory terms. In all the circumstances of this case the Court recommends that those Workers who have been made redundant since 1st January 2009 be paid an enhanced payment of 4 weeks pay per year of service inclusive of statutory redundancy entitlements paid to date.
The Court so recommends.
Signed on behalf of the Labour Court
Brendan Hayes
10th July, 2010______________________
MG.Deputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Madelon Geoghegan, Court Secretary.