FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : CALOR GAS (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - UNITE MANDATE DIVISION : Chairman: Ms Jenkinson Employer Member: Mr Murphy Worker Member: Mr Shanahan |
1. Buy-out of allowance
BACKGROUND:
2. The Company is seeking to buy out a "storage & entertainment allowance" from 13 workers. The Company offered twice the annual loss in compensation. The allowance has been in existence since the 1980s and is paid to employees employed pre-2005. It was originally paid to cover (1) temporary storage of equipment in the homes of sales staff and (2) minor subsistence expense incurred whilst dealing with clients. The Company's reasons are due to the original reasons for the allowance gaving gone and economic downturn. The Unions are opposed to the proposal.
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 9th November, 2010, in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 1st February, 2011.
UNIONS' ARGUMENTS:
3. 1. The workers affected are key people in the Company and have been co-operative with change in the Company over the years.
2. Members are still working from their homes i.e. they use their own personal space for storage facilities.
3. The Company is profitable and the cost of the allowance is insignificant. The workers concerned see it as part of their normal income.
COMPANY'S ARGUMENTS:
4. 1. The Company has experienced a major decline in business in recent years (details supplied to the Court). In view of this it has no choice but to take measures to reduce its cost base.
2. The original reason for the allowance - storage of equipment in the workers' homes and entertainment - have long since passed and the Company has not been involved in appliances for many years with entertainment now otherwise dealt with.
3. Since 2005 new recruits do not enjoy the allowance and do not enjoy the same basic salary and pension entitlements as their longer-established colleagues.
RECOMMENDATION:
The claim before the Court concerns the Company’s proposal to buy out a “Storage and Entertainment Allowance” paid to thirteen sales staff. The Company submitted to the Court that the allowance no longer has application and it is necessary to abolish it as a cost saving measure. It proposed to pay twice the annual loss of the allowance.
The Unions stated that the allowance formed part of a contractual composite agreement reached between the parties in 2005 which agreed to “red-circle” the allowance to the individually-named sales staff at the time. The Unions stated that the “red-circling” agreement was in exchange for a new consolidated pay structure which included revised pay scales for new entrants of 25% below established rates thereby creating significant and ongoing cost savings for the Company.
The agreement provided protection to the incumbents that the existing pay and conditions of employment would remain the same as long as market and economic conditions made it reasonable to do so.
Having considered the oral and written submissions of both parties, the Court is of the view that the integrity of the 2005 agreement should be preserved, however, in recognition of the changing nature of the requirements for payment of the allowance, the Court recommends that half of the allowance should be retained by the Claimants and half of the allowance should be bought out at the rate of compensation offered by the Company, i.e. twice the annual loss of that half of the allowance.
The Court so recommends.
Signed on behalf of the Labour Court
Caroline Jenkinson
11th March, 2011______________________
CONDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Ciaran O'Neill, Court Secretary.