OPEC121

FULL RECOMMENDATION

ECR/12/1

OPINIONNO.OPEC121

INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 7(1)(A), PROTECTION OF EMPLOYMENT (EXCEPTIONAL COLLECTIVE REDUNDANCIES AND RELATED MATTERS) ACT, 2007

PARTIES :

PEPSICO IRELAND FOOD AND BEVERAGE LIMITED
(REPRESENTED BY MATHESON ORMSBY PRENTICE)

- AND -

GROUP OF WORKERS
(REPRESENTED BY OLIVER SHANLEY & CO. SOLICITORS)

DIVISION :

Chairman: Mr Duffy
Employer Member: Ms Cryan
Worker Member: Ms Tanham

SUBJECT:
1. Exceptional Collective Redundancies.

BACKGROUND:

2. Request from Minister for opinion of the Labour Court as to whether collective redundancies proposed by employer are exceptional collective redundancies for the purpose of the Protection of Employment (Exceptional Collective Redundancies and Related Matters) Act 2007.

Mr Richard Bruton, T.D.
Minister for Jobs, Enterprise and Innovation,
Department of Jobs, Enterprise and Innovation,
Kildare Street,
Dublin 2.6

Re: Protection of Employment (Exceptional Collective Redundancies and Related Matters) Act 2007 - Section 8(1)

PepsiCo Ireland Food and Beverages Limited and Nine Named Employees

Dear Minister,

I refer to your letter to me of 10^thMay 2012, which was received by the Court on 14^thMay 2012, by which you sought the opinion of the Court on whether the proposal by PepsiCo Ireland Food and Beverages Limited for collective redundancies are exceptional collective redundancies for the purpose of the Protection of Employment (Exceptional Collective Redundancies and Related Matters) Act 2007.

Pursuant to your request, and in accordance with section 8(1) of the Act, the Court held hearings into the matter on 25^thMay 2012 and 28^thMay 2012.

I now attach Court’s opinion in the matter.

It is noted that in accordance with section 8(1)(b)(i) of the Act the Court is required to issue its opinion to you as Minister and that it is a matter for you to notify affected parties of the giving of the opinion and its content.

Accordingly the Court is not conveying its opinion to the parties.

OPINION:

1.Background

1.1. By letter dated 10^thMay 2012, which was received by the Court on 14^thMay 2012, the Minister for Jobs, Enterprise and Innovation requested the Labour Court to issue an opinion on whether collective redundancies proposed by PepsiCo Ireland Food and Beverages Limited (hereinafter referred to as “the employer”) constitute exceptional collective redundancies within the meaning of section 4 of the Protection of Employment (Exceptional Collective Redundancies and Related Matters) Act 2007 (hereinafter the Act) and section 7(2A) of the Redundancy Payments Act 1967, as amended.

12. The Court held hearings pursuant to the Minister’s request on Friday 25^thMay 2012 and on Monday 28^thMay 20121.3 The employer was represented by Mr Tom Mallon B.L., instructed by Matheson Ormsby Prentice, Solicitors. The employees were represented by Mr Ois�n Quinn S.C, with Mr Roderick Maguire B.L, instructed by Oliver Shanley & Co, Solicitors.

2. Preliminary Objection to the Court’s Jurisdiction

2.1 At the commencement of the hearings Counsel for the employer raised an objection to the jurisdiction of Court to investigate the dispute for the purpose of providing the Minister with an Opinion under the Act. The basis of Counsel’s objection was that the terms“establishment”in

s. 6(2) of the Protection of Employment Act 1977, as amended, should be construed as referring to a location or business unit to which the affected employees were assigned. In advancing that submission Counsel relied upon a decision of the Court of Justice of the European Union (formally the ECJ) in Case C-449/93,Rockfon A/S Specialarbejderforbundet i Denmark[1995] ECR 1-04291. It was submitted that, on the interpretation of the Act of 1977 contended for, the employees to whom the within reference relates are employed in different establishments and that the redundancies are not collective redundancies within the statutory meaning.

2.2 Counsel further submitted that since only three proposed dismissals are now in issue that number could not constitute a collective redundancy for the purpose of s. 6 of the Act of 1977.

2.3. Counsel for the employees did not accept the points contended for on behalf of the employer and made extensive legal submissions to the contrary.2.4 The Court considered that this issue would only fall for consideration if it formed the opinion that the dismissals in issue otherwise constitute exceptional collective redundancies within the meaning of the Act. Accordingly it reserved its decision on that question and proceeded to consider the substance of the dispute.

3. The Dispute

3.1 The referral received by the Court relates to the proposed dismissal by reason of redundancy of nine employees of the employer. At the commencement of the hearings the Court was informed that agreement had been reached in respect to five of the proposed redundancies and only three of the dismissals are now in contention. The dismissals now in issue are those of a Financial Analyst and of two National Accounts Managers. The three employees in question are employed at the employer’s Drogheda base.

3.2 The employer proposes to create a number of new positions at its base located in Sandyford Co. Dublin. These positions, in so far as is relevant to the Court’s investigation, are described as, a Commercial Analyst, a Management Accountant, and two Accounts Executive posts.3.3 Under the employer’s pay determination system remuneration is determined by reference to pay levels within which there are a range of salary levels. The existing Finance Analyst post is currently placed at level 7 in this structure and the two National Accounts Manager posts in issue are at level 8 and level 7 respectively.It is proposed that the new Commercial Analyst post is to be placed at level 8, the proposed Management Accountant post is to be placed at level 5 and the Account Executive posts are also to be placed at level 5/6.

4. Position of the Parties

4.2 The Finance Analyst contends that the functions attaching to the new post of Management Accountant are essentially the same as those that he currently performs. The two employees currently employed as National Account Managers contend that the functions that they now perform are essentially the same as those to be undertaken by the holders of new Accounts Executive posts.

4.3 The employer contends that post of Management Accountant will involve substantially different functions to those of the current Finance Analyst post. It contends that the functions attaching to the latter post will be undertaken, in part, by the higher graded role of Commercial Analyst while other functions will be reassigned elsewhere with its organisational structure. It accepts that some of the functions of the existing post will be undertaken by the Management Accountant but that overall the posts are not comparable.

In relation to the National Accounts Manager posts, the employer told the Court that it is proposed to create four Accounts Executive positions which will perform some but not all of the functions currently performed by the two posts to be made redundant.

4.4 The parties made extensive and helpful written submissions on the issues arising in the case. At the request of the Court the parties also prepared detailed job descriptions for the existing posts and the posts to be created. Evidence was given by the affected employees on the functions attaching to their existing posts and on what they regard as the similarities with the proposed new posts. Evidence was given on behalf of the employer on the content of the proposed new posts and on what they regard as the material difference in those roles relative to the existing posts in issue.

5. The Approach of the Court

5.1 The first question which the Court had to consider is whether the employees whose dismissal is in dispute are to be replaced by others who are to perform essentially the same functions as the dismissed employees within the meaning of Section 7(2A) of the Redundancy Payments Act 1967, as amended by the Act of 2007. If the Court answers that question in the affirmative it must proceed to consider if the new posts are to be filled by persons on materially inferior terms conditions of employment to those of the dismissed employees.

5.2 The Act provides no guidance as to the circumstances in which functions are to be regarded as‘essentially’the same. Assistance on what the statute was intended to address can be obtained from its Long Title. This indicates that the Act is intended to give effect to the ten-year framework social partnership agreement 2006-2015 known as “Towards 2016”. It is a matter of record that the social partnership agreement referred to sought to discourage abuse of the Redundancy Payments Acts by employers who engaged in retrenchment of established terms and conditions of employment by making employees redundant solely or mainly for the purposeofreplacing them with other workers on inferior conditions of employment.

5.3 Consequently, in approaching the questions posed by the statute the Court believes that it must have regard to the nature of the jobs being made redundant in the context of the enterprise as a whole and to the object or purpose which the proposed redundancies are intended to achieve. It should then consider if the putative replacement jobs perform the same general function within the enterprise and those being displaced and if any differences identified are of significance having regard to the functions served by the jobs as a whole.

5.4 In ascertaining the material facts upon which to formulate its opinion the Court adopted an investigative or inquisitorial mode of procedure rather than an adversarial process appropriate in proceedingsinter partes.

6. Context in which the Redundancies Arise

6.1 The Court is satisfied that these redundancies arise in the context of the closure of the employers Drogheda office and the relocation of a number of positions previously located there to its premises in Sandyford Co Dublin. Concurrent with this transfer the employer proposes to restructure its finance and sales functions. The net question that arises is whether the restructuring proposed will genuinely result in new employees performing materially differently functions to those being made redundant. On that question the Court has reached the following conclusions in respect to the three positions remaining in issue: -

7. Finance Analyst

7.1. Having carefully considered all of the material made available together with the evidence adduced at the hearing the Court has come to the conclusion that the Finance Analyst role is effectively being suppressed and replaced with two new positions; that of Commercial Analyst and Management Accountant. While the functions of the proposed Commercial Analyst will be primarily strategic in nature it will take on a number of the functions currently performed by the Finance Analyst. The Commercial Analyst will be at a higher pay level to that of the Finance Analyst. The Management Accountant will act in a support role to that of the Commercial Analyst while performing many, but not all of the day-to-day functions currently performed by the Finance Analyst. The current holder of the Finance Analyst post contends that this latter post will involve essentially the same functions as his current role.

7.2. In the Court’s opinion the proposed role of the Management Accountant is materially different to the role currently performed by the Finance Analyst both in terms of the job content and in terms of its place within the overall organisational structure of the employer. Accordingly the Court cannot hold that the new position will perform essentially the same functions as the post being made redundant.

8. National Account Managers x 2

8.1 The two National Account Managers currently have responsibility for the management of a number of customer accounts. In effect these positions are to be split and the effect of the employer’s proposal is to appoint four Accounts Executives to take over the main work undertaken by the current holders of the displaced roles. Consequently this proposal, if implemented, will result in a net increase in jobs within the enterprise with resulting additional costs to the employer. The new appointees will service fewer customers and will be responsible for smaller sales budgets that the existing post holders.

8.2 The day-to-day responsibilities of those occupying the new positions will be similar to those of the occupying the existing positions although, in the medium term, they will have less responsibility overall. Some of the strategic functions traditionally performed by the National Account Managers were transferred, during 2011, to a new post of Channel Business Manager. This was relied upon by the employer in advancing the argument that a major component of the existing jobs will not exist within the new structure. However, the Court considers that it should look at the duties attaching to the jobs currently rather than at their historic content. As this strategic element of the job has already been transferred the Court does not consider it to be a material consideration in considering if the functions of the new posts will be essentially the same as those being displaced.

8.3 Likewise, while the scope of the new positions may expand over time (and it is undoubtedly the intention of the employer that they should) the Court must have regard to the reality of the position at the time the redundancies are to take effect. Having regard to the diminution in the number of customers and the sales budget for which the new appointees will be responsible, and the fact that the existing posts are effectively being split, the Court does not believe that they will perform the same function within the enterprise as the existing National Account Manager roles. In that regard the Court is satisfied that there will be material differences in the functions performed by those appointed to the new roles relative to the functions performed by those in the existing posts.

Conclusion

For the reasons set out above it is the opinion of the Court that the redundancies giving rise to this referral are not exceptional collective redundancies within the meaning of Section 4 of the Act. In these circumstances it is unnecessary to address the legal issues raised in relation to the Court’s jurisdiction in this matter.

Signed on behalf of the Labour Court

Kevin Duffy
29th May, 2012______________________
JFChairman

NOTE

Enquiries concerning this Opinion should be addressed to John Foley, Court Secretary.