Complainant

Respondent

Anonymised Parties

Production Supervisor

Manufacturing company

Act

Complaint/Dispute Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under section 13 of the Industrial Relations Act, 1969

CA-00012680-001

20/07/2017

The Complainant was a production supervisor with the Respondent. He commenced work on the 1st of August 2008. He was made compulsory redundant on the 11th of August 2017.

He was part of a group of six employees whose positions were terminated by reason of redundancy. This was a compulsory redundancy for the Complainant.

The complaint is in relation to the severance terms and conditions.

The Complainant was offered an ex gratia package of four week’s pay per year’s service plus statutory redundancy and other smaller allowances. There was no cap on the ex-gratia element.

The Complainant’s case is that there is a precedent within the Respondent’s workplace which was negotiated with his union to grant six weeks pay per year of service plus statutory redundancy.   His claim was that two of his colleagues had been in receipt of this package some ten months earlier.   Earlier redundancy packages in 2009 and 2010 were also on the terms of six week’s ex-gratia plus statutory redundancy.

The Complainant’s argument was that the Respondent was a very viable international trading company and was not experiencing financial difficulty. The Complainant has received his statutory redundancy but had not received any further payment as he wasn’t prepared to accept the package on offer to him.

The Respondent’s case was that the ex-gratia payment was discretionary. The four-week’s pay included basic salary, average overtime, shift rate and the value of health insurance.

Following negotiations on the redundancy package agreement was made to offer various additional elements as requested by the affected employees. A training allowance was agreed and the health insurance paid by the Respondent for the Complainant and his family was to be continued up to the 31st of January 2018. Retention of a company phone was also agreed. An additional notice period amounted to €4,816 was agreed and also a gift of the product manufactured by the Respondent.

The package on offer was accepted by the other five employees affected by the redundancy.

The Respondent set out to differentiate between the earlier redundancies where an ex-gratia payment of six weeks pay per year of service plus statutory was awarded to employees. It provided a table differentiating between the 2006 redundancy and the 2017 redundancies based on an average basis. The average cost of each redundancy in 2006 was just under €18,000.00. The average cost of each redundancy in 2017 was over €100,000.00.

The Respondent explained that it was under pressure to reduce costs and had introduced a salary freeze for some staff and other cost measures. It explained that there was a substantial fall in Revenues and profits since 2006 to date.  

The Respondent explained how it wanted to ensure viability of the plant and to manage costs into the future. With that aim, it decided that a six weeks’ ex-gratia payment could not be awarded and was not sustainable. It considered introducing a cap on redundancy payments however that would disproportionally impact on employees with longer service.

It decided to offer an ex-gratia payment of four weeks and increase other benefits such as a training allowance, health insurance, additional gift, extension of notice period. These add on benefits equated to an additional seven weeks pay. When collated, the discretionary redundancy package amounted to €75,841.00. When the statutory redundancy was added and notice, the total redundancy package came to €94,170.00. This was significantly higher than the average redundancy costs of employees who previously received an ex-gratia payment of six weeks and did not receive the additional benefits being offered to the Complainant.

The Respondent was not in a position to fund the redundancy locally and this was being financed by its parent company.

Overall, its position was that the ex-gratia offer to the Complainant was fair and equitable and it was accepted by the others who were made redundant at the same time.

I have given careful consideration to the comprehensive and measured submissions of both sides in this dispute.

In reaching my decision I have taken into account the financial position that the company finds itself in and the decision process engaged to balance the best interests of the business, those employed and at the same time being fair to the employees being made redundant also.

It was agreed between the parties that there was an agreement in the past setting out the terms of an enhanced redundancy package.   Unfortunately, neither side was in a position to produce a copy of this agreement.

I have noted that there was no cap on the current ex-gratia payment and this has influenced my decision. I have reviewed the summary of the average redundancy packages paid under the historic rounds of redundancy.

I note the Complainant’s representative’s reservations in respect of the complaint and I have reached my decision based on the facts presented to me and in particular the differentiation between weekly paid staff and monthly paid staff. The complainant being in the latter category. My decision should not have any bearing on the weekly paid staff.

I have taken into account also that the Complainant received a further and enhanced package above the four weeks’ pay per year of service which equates to €10,183.00.

In view of the above, I recommend that the proposal from the Respondent is a fair balance between the parties considering the circumstances they find themselves in.

The terms of the earlier agreement were not committed to writing or if they were, the document is no longer available. Without a document to examine, I can only work on the basis of the submissions made to me both in writing and orally.

In any event, no agreement is immutable. Circumstances change. While it would have been best industrial relations practice for agreement to be reached on the proposed terms of the redundancy package, this was not to be in this case as regards the complainant. I note that his colleagues did accept the package on offer to them.

I accept that the parties have engaged extensively with a view to reaching an agreement and considering same and what I have set out above, I have reached a recommendation.

I recommend that the Complainant accept the severance terms on offer from the Respondent.

Enhanced redundancy package