FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 20(1), INDUSTRIAL RELATIONS ACT, 1969 PARTIES : LAKE COMMUNICATIONS LTD (REPRESENTED BY ARTHUR COX SOLICITORS) - AND - A GROUP OF WORKERS (REPRESENTED BY HR IRELAND LTD) DIVISION : Chairman: Mr Duffy Employer Member: Ms Doyle Worker Member: Mr Nash |
1. Capping severance pay
BACKGROUND:
2. The issue before the Court concerns the imposition of a cap on redundancy payments by the Company. The Company announced that there would be redundancies necessary at the end of 2010. The severance terms were to be 3.5 weeks pay per year of service plus statutory entitlements and to be capped at one year's salary. The Workers concerned made a number of representations to Management regarding the cap being unfavourable to longer serving Workers. It is the Workers case that the imposition of the cap is indirect discrimination of longer serving workers. The Company's position is that while it acknowledges that the redundancies of long standing employees is particularly difficult, in all circumstances the cap on redundancies was fair and reasonable.
On the 27th January, 2011 theWorkersreferred the issue to the Labour Court, in accordance with Section 20(1) of the Industrial Relations Act, 1969. A Labour Court hearing took place on the 19th May, 2011.
The Workers agreed to be bound by the recommendation of the Court.
WORKERS ARGUMENTS:
3. 1 If the cap is imposed the value of the severance for long service workers is being cumulatively penalised by virtue of their service. The imposition of a cap is very rare in the Irish market and where there is one it is normally twice what the Company is imposing.
2 This is the first time any cap has been placed on redundancy payments by the Company. The Workers contend that this is because of the long service of the Workers concerned in this case.
3 This group of Workers has made a major contribution to the development of the Company's latest product, they have accepted pay freezes and a pay reduction. They have also seen their pension entitlements change. These factors represent a serious erosion of pay and conditions for these employees and are further compounded by the capping of the severance pay.
COMPANY'S ARGUMENTS:
4. 1 The imposition of the cap is not discriminatory. The Company is only required by law to pay statutory redundancy. The Company determined that it would pay a discretionary ex-gratia sum of 3.5 weeks pay per year of service with the statutory and ex-gratia payment capped at one year's pay.
2 The cap was fair and reasonable in light of the Company's financial position and the country's financial circumstances.
3 The Company made a number of workers redundant in 2002 and 2009. A cap of one year's pay applied in these instances also.
RECOMMENDATION:
Having regard to all the circumstances of this case the Court recommends that the cap be increased to the equivalent of 104 weeks pay.
Signed on behalf of the Labour Court
Kevin Duffy
10th June, 2011______________________
DNChairman
NOTE
Enquiries concerning this Recommendation should be addressed to David P Noonan, Court Secretary.