FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : REHAB GROUP (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Mr Duffy Employer Member: Ms Doyle Worker Member: Ms Ni Mhurchu |
1. Pay cuts.
BACKGROUND:
2. The Rehab Group is a not-for -profit organisation working for social and economic inclusion among people with disabilities and those who are marginalised. It employs approximately 2,225 staff and the claim covers 750 Union members. The organisation relies on funding from the State, mainly the HSE and some from FAS. The Union's claim concerns the decision by management to make wage cuts to all worker of between 5% and 15%. The Group's case is that the wage cuts were required by the various funders following the introduction by the Government of the Financial Emergency Measures in the Public Interest (FEMPI) in December, 2009. The Union sought the re-instatement of the pay cuts or a review of the situation by an independent assessor but the Group was not agreeable to either.
The dispute was referred to the Labour Relations Commission (LRC) and a conciliation conference took place. As the parties did not reach agreement, the dispute was referred to the Labour Court on the 12th May, 2010, in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 12th November, 2010.
UNION'S ARGUMENTS:
3. 1. The Group's decision to unilaterally impose a pay cut is not covered by the FEMPI. A reply from the Minister for Finance states:"Under Section 39 of the 2004 Act, the HSE provides a grant towards the overall costs of running certain organisation. Neither the pension levy nor the reduction in salary applies to such employees."
2. The Union made a number of suggestion regarding cost-saving measures apart from pay cuts but they were not considered by the group. The Union believes that an independent assessor should be appointed to review the Group's financial situation.
GROUP'S ARGUMENTS:
4. 1. The Group has clear links to Public Service rates of pay and pay movements. In the past the Union has used these links when it came to seeking pay increases and it cannot now ignore this fact when it comes to pay cuts.
2.The Group is fully dependent on funders and it was these funders who demanded the wage cuts in line with those in the Public Sector. The Union was made aware of the situation by letter.
RECOMMENDATION:
In previous cases the Court has recommended reductions in pay where:-
- (a) The workers concerned have an established pay relationship with corresponding grades in employments covered by the financial Emergency Measures in the Public Interest (No.2) Act 2009, and
(b) The financial circumstances of the employment are such that a reduction in payroll costs is essential.
Where organisations coming within these criteria propose to reduce pay the requirements of good industrial relations practice dictate that they should, in the first instance, seek to do so by agreement with recognised Trade Unions. Where agreement cannot be reached the established dispute resolution procedures should be fully utilised and exhausted. Regrettably that did not happen in this case.
While the exigencies of the situation that developed in the early part of 2010 required an expeditious response this did not justify the Organisation in disregarding its own disputes procedure and imposing the pay reductions before that procedure was fully utilised. In that regard it is a matter of record that both the LRC and this Court have always responded positively to requests for early interventions where the urgency of the situation so requires. Consequently, the manner in which this matter was handled by the Organisation cannot be condoned by the Court.
While there is no formal linkage between the pay of those associated with this claim and public sector organisations covered by the Act of 2009, there is an established de facto alignment with the public sector for the purpose of pay adjustment. However, the financial circumstances of the Organisation, and the necessity for pay reductions has not been independently verified. In that regard it is noted that the Union sought the cooperation of the Organisation in having an independent assessment of its financial circumstances undertaken. The Court can see no justification for the Organisation's refusal to allow such an examination to take place and no good reason for that refusal was offered in the course of the hearing.
The Court recommends that the Union should now nominate an appropriate person or professional firm to conduct an examination of the Organisation's financial position and the validity of the factors upon which it relies in requiring the pay reductions in issue. The Organisation should cooperate fully with that examination and provide such information as the examiners require, on a confidential basis if necessary.
When the report of the examiners becomes available it should be discussed between the parties and negotiations should take place with a view to reaching agreement on the issue now before the Court. If agreement is not reached the matter should be referred back to the Court. At that stage the appropriateness of pay reductions, if any, together with the effective date of any such reductions, will be addressed by the Court in light of the findings of the examination and all other relevant considerations.
Signed on behalf of the Labour Court
Kevin Duffy
23rd November,2010.______________________
CON.Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Ciaran O'Neill, Court Secretary.