LCR20036

SUBJECT:
1. Loss of earnings


BACKGROUND:

2. This case concerns a claim by two workers for loss of earnings following the outsourcing of the Oil Installation function and the subsequent reorganisation of the stores areas within the Company. Managment's position is that the two workers were redeployed within the organisation in positions that for one worker attracted a higher basic rate of pay. The other was guaranteed four hours' overtime each week. Management consider that these redeployments helped mitgate some of the losses incurred. In addition, management contends that due to financial constraints agreed reductions in loss of earnings compensation had been notified to the Union and implemented by the Company.

The Union is seeking that similar compensation be applied in this case as previously applied following the outsourcing of the Network Catering and Freight Services. The Union contends that there are agreed formulae in place concerning loss of earnings compensation and that the two workers in this case are entitled to be compensated in line with the agreed formulae and not be subject to the reduced compensation which was implemented after their positions in the organisation had changed.

On the 6th December 2010, the workers referred the issue to the Labour Court in accordance with Section 20(1) of the Industrial Relations Act, 1969 and agreed to be bound by the Court's Recommendation. A Labour Court hearing took place on 3rd March, 2011.

UNION'S ARGUMENTS:

3 1 The two workers incurred significant losses as a result of their redeployment within the organisation. The losses incurred and the changes required of the two workers go beyond normal ongoing change and the higher ceiling of compensation should apply to the workers.

2 The Company has previously applied higher levels of compensation where outsourcing occurred. In this case, the Oil Installation function was outsourced which would qualify the two workers for compensation in the same terms as previously applied.


COMPANY'S ARGUMENTS:

4 1 Due to financial restrictions within the Company, the loss of earnings compensation ceiling was reduced to €10,000. As the workers' losses were incurred after the new compensation rate was introduced, it is the new rate that should be applied in each case.

2 Concession of this claim woud have wider implications throughout the organisation and would lead to repercussive claims which, in the current circumstances, would be unsustainable.


RECOMMENDATION:

The Court has carefully considered the submissions of both parties in this case.

The Court has two issues to decide:
1. What is the relevant date for the purpose of determining the compensation framework that applies to the two workers involved in this case?
2. Should the changes involved in these case be properly classified as, a) normal ongoing change, or b) major change that would attract the compensation levels set out in the New Deal arrangements?

1. Relevant date

Both parties agreed that the relevant changes in this case occurred on 24th April, 2009. The decision to reduce the maximum compensation payable for loss of earnings was confirmed by the Company by letter of 30th July, 2009, effective as of 1st October, 2009. In light of this the Court is satisfied that the compensation framework that existed on the date the changes took place is the relevant one for the purposes of determining the compensation for the two individuals involved. Decisions communicated afterwards in July and effective in October cannot be retrospectively applied to agreements concluded before those dates. Accordingly, the ceilings of €14,000 and €30,000, respectively, should apply.

2. Major or Normal Ongoig Change.

The documentation underpinning the terms of the agreement in this case is silent on this point. Neither party clarified to the other which category the change being effected fell into. The Court would normally expect the Company effecting such a change to set out the terms on offer in quite specific detail. Equally, the Union should, before the agreement was perfected, have clarified to the Company its contention that it was dealing with an item of major change that attracted the higher compensation ceiling. This did not happen in this case.

The Court takes the view that neither party should be entitled to accrue to itself the entire benefit of the others shortcomings in this matter.

Accordingly, the Court recommends that, in the particular circumstances of this exceptional case, and, without precedent for the future, the compensation ceiling should be set at €20,000 in respect of each individual.

The Court so recommends.



Signed on behalf of the Labour Court



Brendan Hayes
31st March 2011______________________
AHDeputy Chairman



NOTE

Enquiries concerning this Recommendation should be addressed to Andrew Heavey, Court Secretary.