FULL RECOMMENDATION
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : AVARA SHANNON PHARMACEUTICAL SERVICES LTD (REPRESENTED BY IBEC) - AND - SIPTU DIVISION : Chairman: Mr Haugh Employer Member: Mr Murphy Worker Member: Ms Treacy |
1. Redundancy terms.
BACKGROUND:
2. The case before the Court concerns a dispute between the Employer and the Union on behalf of its members in relation to redundancy terms. The Union is seeking an assurance from the Employer that it will honour the redundancy terms previously agreed in Labour Court Recommendation No. 19496 should the Company face closure. The Employer rejects the Union's claim, arguing that it is not in a position to fund any ex-gratia redundancy terms due to its current financial position. The 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 the 17th April, 2019, in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 22nd May, 2019. The following is the Recommendation of the Court:
RECOMMENDATION:
Avara Shannon Pharmaceutical Services Limited (‘the Company’) is a subsidiary company within the Avara Group, the holding company of which is Avara Pharma Services Limited, a company registered in the United Kingdom. The Company employs 115 direct employs and some 12 contractors. SIPTU represents approximately 38% of the Company’s workforce.
The Company was acquired by the Avara Group in May 2016 from UCB Manufacturing Limited subject to a Share Purchase Agreement whereby the vendor agreed to make ongoing financial contributions to the Company up until 2018 as the business was loss-making for some time prior to the sale. The Company has not succeeded in acquiring any additional business nor in reversing its loss-making status since 2016. Significant efforts have been made to acquire a purchaser for the Company’s business and/or assets and premises since early 2019. It appears most likely that those efforts will not result in a successful sale as of the date of hearing of this matter before the Court (22 May 2019) and there is a high probability that the Company will be forced to apply to the High Court to seek the appointment of a liquidator.
The Union on behalf of its Members have unsuccessfully sought assurances from the Company that it will abide by a Recommendation of the Court in relation to ex-gratia severance terms (LCR19496) in the context of a compulsory redundancy programme undertaken by the Company’s predecessor – UCB Schwarz Pharma – in 2009. On that occasion, the Court recommended redundancy terms of 6.5 weeks’ pay per year of service plus statutory, capped at 2.5 years’ pay. The Company submits that the cost of applying the terms recommended in LCR19496 would be in the order of €15.35 million, a cost which it simply cannot meet having regard to its current financial position.
Recommendation
The Court accepts that the Workers concerned have a legitimate expectation of receiving an ex gratia severance payment in addition to their statutory redundancy entitlements in the event that no purchaser is found for the Company’s business/premises in the near future. That expectation is grounded in the Court’s 2009 Recommendation, LCR19496. The Court, however, is also cognisant of the Company’s current financial difficulties and poor trading outlook.
The Court, therefore, recommends that the Parties re-engage locally – and with the assistance of the Workplace Relations Commission, if necessary – to agree revised ex-gratia severance terms. The Court has been advised that in the event the Company ceases operations, extensive decommissioning works will need to be undertaken. The Court recommends that the Parties’ discussions should also make provision for the retention of as many Workers as practicable for the duration of any such decommissioning works and for the Workers’ ongoing co-operation with those works.
The Court so recommends.
Signed on behalf of the Labour Court
Alan Haugh
27th May 2019______________________
SCDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Sharon Cahill, Court Secretary.