FULL RECOMMENDATION
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : TEVA PHARMACEUTICALS IRELAND (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Mr Geraghty Employer Member: Ms Connolly Worker Member: Mr McCarthy |
1. Long standing Company/Union Site Collective Agreement
BACKGROUND:
2. This dispute could not be resolved at local level and was the subject of a conciliation conference under the auspices of the Workplace Relations Commission. As agreement was not reached, the dispute was referred to the Labour Court on 31 July 2018 in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on 30 January 2019.
The parties negotiated an annual employee incentive scheme in 2005, which followed an earlier scheme agreed in 1996. At the end of 2017, the Company announced that, due to severe global circumstances affecting the Company, they were unable to pay what might have been due under the agreed scheme for the second half of 2017. While the parties had entered discussions on a possible new scheme for 2018, the Union continued to express the view that the Company had breached an agreement unilaterally and this was holding up the conclusion of any possible new agreement. The matter was referred by the Union to the WRC but no progress had been made in resolving this matter and the Union had sought to have the matter heard by the Court.
UNION’S ARGUMENTS:
1.The Company broke an agreement by declaring unilaterally that it would not honour its terms. The agreement itself required the parties to give 3 months’ notice of any decision to review or terminate and this was not done.
2. The plant showed a profit of $255m in 2017 and is the shining light of the Company plants.
3. The per person monetary value of the payments withheld were in the region of €1800 gross. This had been earned by the workers concerned, in accordance with the agreed metrics, which were specific to the Waterford plant.
4. The Company’s decision had caused hurt and anger in a workplace that had traditionally enjoyed good, positive workplace relations based on a model of partnership that had contributed to the success of the plant. The Company’s decision was unfinished business that was preventing a conclusion to talks on a new scheme for 2018.
5. This was a case of ‘Won’t pay’ rather than ‘can’t pay’.
EMPLOYER'S ARGUMENTS:
1.The Company denies that it broke the collective agreement. The original 1996 agreement, on which the later agreement was built, references specifically the issue of Group performance and the 2005 agreement provides in an appendix for the right of the Company to review or remove the payments if they undermine ‘the orderly management of the business’
2. Despite local success, in 2017 the Company’s debt reached $36.9 billion and by year end was still $32.5 bn with the latest reported level of $27.6bn. The stock price had fallen from over $70 in 2015 to $10.85 by end 2017 and it has been erratic since then. The Company world-wide suffered an operating loss in 2017 of $17.5bn.
3. The Company faced considerable pressures from generics price pressures and the effect of branded products being genericised. The Company’s key branded product, Copaxone, which generated 30% of the Company’s profit in 2016 faced competition now and revenues were down 10%.
4. While it was not disputed that Waterford was one of the most successful sites, the key branded product of the site, ProAir, is also under threat and a new competitor product had entered the market. This will result in huge reduction of margin and sales of ProAir are down
5. As part of a recovery plan that included divestments and suspension of dividend payments, the global management had decided that no bonuses should be paid for 2017. In the case of the workers concerned they had, in fact, received their first 6 months’ payment already and the Company had continued to show faith in the plant, to the extent of resisting political pressure to close it and move its operations to Jerusalem. The workers concerned continued to enjoy favourable terms.
RECOMMENDATION:
The Court heard extensive and forceful argument from the Employer regarding the global circumstances of the Company that had led to the decision at issue and these arguments have to be weighed carefully by the Court.
On the other hand, the issue was referred to the Court under the Industrial Relations Act, under which Act the role of the Court is to assist the parties in the resolution of a dispute. With few, and rare, exceptions the Court holds to the view that collective agreements entered into freely by the parties should be up-held.
In this case the Court was asked to contextualise the Company’s decision in the global circumstances of the Company and, in so doing, it was argued that the decision was justified. In weighing this argument, the Court had to have regard also to the fact that the Union was claiming that an agreement had been breached unilaterally. The Court was mindful also of the point, emphasised by both parties, that the relations in the plant had been, heretofore, very positive, were underpinned by a spirit of partnership, which contributed hugely to the success of the plant, and that this situation had been sundered by the Company’s decision. Indeed, the damage to the relationship is impacting on the ability of the parties to conclude agreement on a scheme for 2018.
In all the circumstances the Court is satisfied that there is an agreement in place and that its terms were breached by the Company’s actions and that this dispute is best resolved by the Company making any payments due in respect of 2017, in accordance with the terms of the 2005 agreement.
The Court believes that this will assist the parties’ relationship in the future, something which is of value to both parties and which can continue to assist in the on-going success of the plant.
The Court so recommends.
Signed on behalf of the Labour Court
Tom Geraghty
6 February 2019______________________
MNDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Michael Neville, Court Secretary.