ADJ-00020200

Complainant

Respondent

Anonymised Parties

A Welder

A Refrigeration Company

Representatives

Unite the Union

Ibec

Act

Dispute Reference No.

Date of Receipt

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

CA-00026612-001

27/02/2019

The Worker was employed by the Employer as a Welder from 1977 until his retirement in February, 2019. The Employer is a manufacturer of refrigeration systems. In recent years the Employer has introduced robotic automation to the assembly lines as well as the Welding Department. The implementation of new technology is initiated through the Manufacturing Engineering function. When a project for the implementation of new technology is approved and timelines are finalised, the company communicates the proposed changes to the employees in the impacted department. 

When there is a proposed headcount reduction in an area, the company initiates the Downsizing Protocol to deal with the options available to the displaced employees. The Downsizing Protocol is an in-house agreement which has been in place for many years and is utilized when the company either outsources work on a permanent basis or implements new technology which results in the permanent headcount reduction in the impacted area.

When it is confirmed that there will be a headcount reduction, the company offers voluntary severance, to all employees in the impacted area and applications are sought in respect of those that may wish to avail of voluntary severance. If there are a number of applicants, voluntary severance will be offered to the most senior applicant in the department (department seniority, rather than company seniority). However, if there are no applicants for voluntary severance, the last person into the department will be displaced and such an employee will have an opportunity to take up a Production Operator role where there is a vacancy on the assembly line.

In Autumn 2017, the Employer informed the union that it was installing new robotic technology in the Welding Department and in accordance with the Downsizing Protocol, discussions commenced between management and the union.

The Worker contends that the Employer has reneged on what had been agreed in relation to downsizing in the Welding Department and claims that if the process had been completed, he would have been entitled to a redundancy severance package.

The Employer disputes the claim and contends that downsizing did not occur as a result of the implementation of the new robotic technology in the Welding Department and that a requirement for a reduction in headcount did not materialize. The Employer further contends that there was no compulsion on it to have to offer a voluntary redundancy severance to the Worker or any other employee within the Welding Department when the company did not achieve any headcount reduction.

The arguments made in the Worker’s submission in relation to this dispute can be summarised as follows:

·         The Downsizing Protocol was activated by the Employer in July, 2011 following the introduction of new technology in the Welding Department and as a result two severance packages were subsequently issued to workers in 2012.

·         In Autumn 2017, the Employer informed the Union that it was installing new robotic technology in the Welding Department. As per the Downsizing Protocol, discussions commenced between management and the Union. The Employer indicated that the new technology would be introduced in quarter one of 2018 and that one person “may be displaced”. Meetings between management, workers and the union commenced on 16 November, 2017 in relation to the downsizing. During these discussions there was disagreement between the Employer and the Union in relation to number of workers within the Welding Department. The Employer indicated that there were 11 workers in this department, whereas the union contended that there was 12.

·         On 23 November, 2017, the Employer informed the Union Convenor that the activation of the Downsizing Protocol “will result in a reduction of one headcount” in the Welding Department. Subsequent to the installation of the new technology the production rate on one of the production lines operated by the company increased from 80 to 105 units per day, resulting in the need for the Welding Department to increase its output accordingly.

·         On 20 February, 2018, the Employer informed the Union Convenor that the downsizing “needed to be put on hold” due to the increase in the production load and indicated that it would be May or June, 2018 before it could be looked at again. At a regular union/management meeting on 22 February, 2018, the company confirmed that the downsizing in the Welding Department was on hold due to the increase in the production load from 80 to 105. The Union argued that it should not be affected by load, as this had never been the case in the past. In a letter dated 4 October, 2018, the Employer advised that there is “no evidence of downsizing”.

·         By February, 2019, the Worker and another employee within the Welding Department had retired, thereby reducing the number of workers in the department from 12 to 10. Recently a further person was transferred from the department, bringing the current number to 9.

·         It is common case between the union and employer that the reduction in permanent headcount in a given department arising from the introduction of new technology gives rise to the implementation of the downsizing protocol. However, due to the need to increase production output arising from increased sales from the targeted 80 units per day from the department to 105 units per day, the employer argued that the downsizing protocol should be suspended.

·         It is the Union’s clear contention that the change in permanent staff arising from the introduction of technology should have resulted in the conclusion of the Downsizing Protocol. It is submitted that had the Downsizing Protocol been completed in November, 2017, it would have been established that there was a need to reduce the department numbers to 10, rather than the 11 argued for by the employer at the time.

·         It is further submitted that extra work flowing from increases in load should have been addressed by increasing temporary staff, as was done in other departments at the time. It is important to note that there are very clear agreements between union/management about the use of temporary staff and when they become permanent staff.

·         The Union is adamant that there was and is ample evidence of a downsizing, with headcount reducing from 9 to 12 since the introduction of new technology in the Welding Department. The union believes that the employer has reneged on what had been agreed in relation to downsizing in the Welding Department and that it used the increase in production to effectively hide the need for a downsizing.

The Worker was one of the two most senior employees in the Welding Department when the downsizing protocol was activated, and if the process had of continued, as contended by the union, he would have been eligible for a severance package. The Worker is seeking a recommendation that he should be entitled to a severance redundancy package.

The arguments made in the Employer’s submission in relation to this dispute can be summarised as follows:

·         In November, 2017, the Employer commenced discussions with employees and the Union to advise them of plans to implement new technology in the Welding Department. The consultation process began, and the Employer advised the Union that one headcount would be reduced as a result of the implementation of the new technology. It was stated that one headcount less would be required in the Welding Department when the company achieved 80 units on day shift on the main robot. It is important to note that the rates achieved in Welding on day shifts ranged between 54 and 74 units. The additional units required to make up 80 units were produced by another operator who was added to the evening shift.

·         It is not unusual for the company to run a second shift to meet customer demand. The company commenced a second shift in February, 2018 to build an additional 25 trailer units (80 units on day shift plus 25 units on evening shift). The second shift continued until mid-March with line rates dropping on a number of occasions on the trailer line.

·         It became apparent as the company worked through the consultation process that the implementation of the new technology would not result in a headcount reduction. Four employees were required to produce 80 units on day shift prior to the implementation of the new technology. When the new technology was implemented in January, 2018, four employees were still required to reach an output of 80 units on day shift. Therefore, the company has not reduced headcount and no downsizing has occurred. When the Worker retired in January, 2019 the line rate was still at 80 units on days.

·         While it is accepted that initially the project justification stated that a reduction of headcount was likely, this has never materialised. It was clearly specified from the outset at the consultation meetings that 80 units per day must be reached before the department could downsize. When the company were on a line rate of 80 units per day, a second person was required to work the second shift to achieve the target of 80 per day. The company never proceeded to the point in the protocol where the company wrote to each employee in the department to advise them that voluntary severance was available.

·         If the Worker was successful in his claim the cost of a voluntary severance package for him would be close to €96,000. In addition, it must be considered that at the time the Worker referred this dispute to the WRC for adjudication he had already retired on a defined benefit company pension.

The Employer does not believe that it is reasonable to offer voluntary redundancy to the department when the company did not achieve any headcount reduction.

This dispute was referred to the Workplace Relations Commission under Section 13 of the Industrial Relations Act, 1969 and, in essence, concerns a claim by the Worker that he should be entitled to a redundancy severance package from the Employer.

I have carefully considered the extensive written and oral submissions made by the parties in relation to this dispute.

It was common case between the parties that there is an agreement in place between the company/union in relation to the procedure to be followed in circumstances where there is a proposed headcount reduction within one of its departments arising from the implementation of new technology. This in-house agreement is called “the Downsizing Protocol” and it involves an established process of consultation between management/union prior to the finalisation of any reductions in headcount.

It was also common case that the Employer confirmed its proposal in November, 2017 to implement new technology in the Welding Department and that the Downsizing Protocol was subsequently activated as a result of this proposal.

The Worker contends that the Employer reneged on its initial position that there would be a requirement for a downsizing in the headcount within the Welding Department. The Worker contends that the Employer subsequently suspended the downsizing process without justification prior to its conclusion and that it used the increase in output during 2018 to effectively hide the need for downsizing. The Worker further contends that he was one of the two most senior employees in the Welding Department, and therefore, would have been eligible for a redundancy severance package had the downsizing process been concluded.

The Employer contends that it became apparent during the consultation process that the company would not achieve a headcount reduction as a result of the implementation of the new technology in the Welding Department. The Employer contends that four employees were required within the department to produce a load of 80 units prior to the implementation of the new technology and that four employees were still required to achieve the same output after it was implemented. The Employer contends that downsizing did not occur as a result of the introduction of the new technology and as a result there was no requirement to reduce the headcount within the department.

It is clear that there was an expectation at the outset of the consultation process following the activation of the Downsizing Protocol in November, 2017 that there would be a headcount reduction of one in the Welding Department. I note that the Employer subsequently suspended the process prior to its conclusion on the basis that the implementation of the new technology in the department would not result in a headcount reduction, and therefore, it contends that downsizing did not occur.

The Worker contends that the Downsizing Protocol does not allow for a suspension of the process once it has been activated and claims that in this instance it should have resulted in an appropriate redundancy severance payment being offered to him on the basis of his seniority within the department.  

I have examined the Downsizing Protocol document and I note that it is silent on the issue regarding the permissibility or otherwise of suspension once the process has been activated. Notwithstanding the foregoing, I take the view that it would be a wholly unreasonable proposition for the Employer to have to offer a voluntary redundancy severance package to a Worker in circumstances where there was no reduction in headcount and a genuine redundancy situation did not exist. It is clear from the manner in which the Downsizing Protocol is operated that any reduction in headcount within a department, which could potentially result in a voluntary redundancy, is contingent on the necessary efficiencies in output being achieved as a result of the implementation of the new technology.

Having carefully considered the submissions of both parties, I accept the Employer’s position that a downsizing did not occur at the material time in question as a result of the implementation of new technology in the Welding Department. In the circumstances, I am satisfied that there was no requirement for a reduction in the headcount at the material time and that a genuine redundancy situation did not exist. Accordingly, I cannot recommend concession of the Worker’s claim that he was entitled to a redundancy severance package from the Employer prior to his retirement.

I do not recommend concession of the Worker’s claim that he was entitled to a redundancy severance package from the Employer prior to his retirement.

Industrial Relations Act 1969 – Section 13(9) – Trade Dispute – Redundancy Severance Package - Retirement