LCR23007

PARTIES:

DIVISION:

SUBJECT:

Pay Claim

BACKGROUND:

This matter comes before the Court following an intervention made under Section 26(5) of the Industrial Relations Act, 1990.  A Labour Court hearing took place on 3 July 2024.

RECOMMENDATION:

This matter comes before the Court following an intervention made under Section 26(5) of the Industrial Relations Act, 1990. That provision of the statute states as follows:

“(5) Where the Court, following consultation with the Commission, is of the opinion, in relation to a trade dispute which but for this subsection it would be precluded by virtue of subsection (1) from investigating, that there are exceptional circumstances which warrant it so doing, it may investigate the dispute.”

In this case the Court, in concluding that exceptional circumstances exist which warrant the Court investigating this trade dispute, took account of the following factual circumstances in being:

• The parties’ own dispute resolution mechanism of many decades – the Pilot Pay Tribunal – issued a decision in 2023 to resolve this trade dispute which was rejected by Forsa Trade Union / IALPA.
• Independent mediation between the parties failed to achieve a resolution of the matter.
• Conciliation at the Workplace Relations Commission was not successful in facilitating the parties to find agreement on the matters in dispute.
• An interim Recommendation was made by this Court in May 2024 which did not attempt to definitively resolve the dispute; but rather recommended an interim resolution which would facilitate a final resolution being achieved through further engagement and a further referral to the Court, if necessary, no later than end of August 2024. That recommendation was rejected by the trade union as a means of advancing the dispute towards resolution in an orderly fashion.
• Industrial action commenced in the airline in June 2024 which has resulted in serious impact upon the travelling public, the airline and the working lives of the pilots.
• The Court met the parties on 25th June 2024 and 1st July 2024 in the course of the conduct by the Court of assessments of the situation with a view, on each occasion, to establishing whether the Court could assist the parties in finding a resolution to their trade dispute. The Court understood from its engagements with the parties on both of these occasions that the potential exists for a very grave and unfavourable outcome to this trade dispute should resolution not be found in the short term. Similarly, the Court came to understand that, notwithstanding their extensive engagements directly and with the assistance of a series of expert bodies, no discernible narrowing of the gap between the parties’ respective positions on key matters, or indeed their disputation on matters of fact, had emerged.
  
  
  

Observation

The parties have engaged in collective bargaining for very many decades and such engagement has been the basis for pay determination and pay growth across that period. In fact, the first Labour Court Recommendation addressing the issue of pay between the parties issued in December 1948.

Against that background it is concerning that engagements before the Court in the context of this trade dispute laid significant emphasis on the differences between the parties and less emphasis on the identification of positions which had the potential to be acceptable to both sides.

It is the view of the Court that, given their extensive history of bargaining and engagement with each other, neither party to the hearing of the Court could have believed that the submission they made to the Court had the potential to be acceptable to the other side if it was to be repeated as the terms of this Recommendation. The Court therefore believes that both parties must have concluded that any recommendation put forward by the Court would require compromise on the part of both sides in order to be acceptable to both as a basis to resolve this trade dispute.

This recommendation represents the opinion of the Court, based on the merits of the trade dispute, as to how it should be resolved.

Underlying facts relevant to the trade dispute.

1. No submission has been made that pay determination / pay growth for pilots, or indeed the company generally, over the years has been linked to or determined by the prevailing rate of inflation in the economy. It would appear to be accepted that wage growth for pilots, exclusive of wage growth arising from the application of incremental pay scales to the pay of individual pilots, has regularly exceeded the rate of inflation in the economy. It is to be assumed that pay, exclusive of pay growth arising from the application of increments, regularly lagged inflation over the decades also.

2. The trade dispute before the Court is a claim for the application of basic pay increases with effect from 1st November 2022 with the agreement ending in December 2025.

According to the Central Bank, inflation over the period of the proposed agreement is of the order of

2023 –                               5.2% - (Central Bank Q 1 bulletin 2024)

2024 (projected) –          1.7% - (Central Bank Q 2 bulletin 2024)

2025 (projected) –          2% (Central Bank Q 2 bulletin 2024)

Data from the Central Bank is to the effect that inflation in 2021 was 2.4% (Central Bank Q1 bulletin 2022) and in 2022 amounted to 8.2% - (Central Bank Q1 bulletin 2023)

3. Relevant collective agreements are in place as follows:

• ‘The 2019 Crewing agreement’* addressing annual leave / rostering issues. That agreement provided for a ‘debt’ to be paid by pilots following implementation.

*The trade Union contends that the 2019 Crewing Agreement does not exist as a collective agreement, and the Airline submits that it does exist as a collective agreement, and that, as a result of that agreement, new summer leave and related arrangements were implemented via the recruitment of additional pilots at very significant cost.

• The 2020 ‘Framework Agreement’ addressing, inter alia, much of the same rostering / annual leave issues as the ‘Crewing Agreement’. That agreement also addressed pay arrangements throughout the covid period when work levels for pilots fell as low as 5% while pay was maintained at 50%,
• The 2021 Covid Recovery agreement which dealt with pilot pay scales.

A feature of some of these collective agreements is that the implementation of the agreement would, by agreement, generate a ‘debt’ payable by the pilot group to the airline. That ‘debt’ is said by the airline, and not hugely disputed as regards quantum by the pilot group, to amount to €17m arising from implementation of rostering / leave and related elements of the Crewing / Framework agreements for example.

That level of ‘debt’ presumably amounts to a rough average of €20,000 to €25,000 per pilot. No element of that agreed ‘debt’ has, apparently, been discharged to date albeit the cost of implementation of the agreement has been incurred by the employer.

A similar structure of accrued ‘debt’ on the part of pilots arose from the elements of the Framework Agreement dealing with pay through the COVID period when work levels fell below 50%. That ‘debt’ ultimately created a liability on the part of pilots in the amount of €34m which presumably amounted to a rough average of approximately €42,500 per pilot. That liability was removed on foot of the conclusion of the Covid Recovery Agreement which introduced new scales in 2022 for narrow body and wide body aircraft. The parties now dispute whether the 2022 agreement was temporary in nature, and in any event the trade union seek its termination now with a reversion to the pre-existing 2019 scales.

4. The airline incurred losses of €901m in the years 2020 to 2021 inclusive. Profits for 2023 amounted to €225m for the year 2023 which was an increase of €168m on the year 2022.

5. The trade union made a claim for a once off payment equivalent to 5% of pay for the year 2022. That claim was dealt with by the Pilot Pay Tribunal in a decision which awarded a once off net payment of €1,700 to each pilot, which mirrored in quantum a once off net payment made to all workers in the airline in 2022. That decision of the tribunal was accepted by the trade union.

Matters put before that Court by the trade union as claims

• Pay
• Structural change
• Framework Agreement (2020) costs and practices*
• Resolution of overnight allowance dispute.

*The parties dispute the basis for implementation of new rostering and Summer leave arrangements in place since conclusion of what is referred to as the Crewing Agreement. The trade union contends that the 2019 Crewing Agreement does not exist as a collective agreement and that the relevant agreement is the ‘Framework Agreement,’ while the employer submits that the Crewing Agreement exists as a collective agreement and resulted in the recruitment of additional pilots, new Summer Leave and related arrangements and significant cost.

Discussion

Having regard to the extraordinary level of engagement between the parties over an extended period and their engagement of various processes and expert bodies in their attempts to find agreement, the Court does not consider that any value can be derived from a recitation of the detailed written and oral submissions made by the parties to Court in advance of and at its hearing. It is clear that all parties, and presumably the membership of the trade union and the wider decision-making stakeholders on the management side, are deeply familiar with these positions.

The Court, following its own extensive engagement with the parties made across its various engagements, concludes that the parties are best served by the straightforward articulation of the Court’s opinion by way of Recommendation, based on the merits of the trade dispute, as to how it should be resolved.

In making this Recommendation, the Court concludes the following as regards underpinning factual matters which are disputed by the parties:

• Pay was addressed for 2022 against the unprecedented background of financial loss and operational decline suffered during the Covid period by payment to pilots of the sum of €1,700 on foot of a decision of the pilot pay tribunal which was accepted by both parties. The claim before the Court can therefore only concern the period from January 2023 onwards.
• No alignment with inflation as a means of determining pay growth has been shown or contended to have been agreed between the parties or applied at any time preceding the within trade dispute or the making of the claim of the trade union.
• Inflation from 1st January 2023 to end 2025 (projected) is calculated by the Central Bank as amounting to 8.9% approximately. Current Central Bank projections expect inflation in the region of 1.4% to 2.0% in 2026 in Ireland [Central Bank first & second Quarterly Bulletin 2024:1, 2024:2].
• A significant debt is owing by the pilots to the airline arising from the cost borne by the airline in implementing elements of the rostering, annual leave and related arrangements arising from the ‘Crewing Agreement’ or elements of the ‘Framework Agreement’. Another element of significant ‘debt’ owing by pilots to the airline was, according to the airline, eliminated by agreement and absorbed by the airline when the parties agreed to the introduction of the 2022 pay scales.
  
  

Recommendation

Against this background, and noting that the trade union has ruled out engagement on any significant element of productivity or flexibility as a means to advance the stated priority of pay growth, the following is the Recommendation of the Court

1. Pay

That pay should be adjusted as follows over the lifetime of a pay agreement to commence on 1st January 2023 and conclude on 31st December 2026

2% with effect from 1st January 2023,

1.75% with effect from 1st July 2023

2% with effect from 1st October 2023

3.5% with effect from 1st January 2024

1.5% with effect from 1st October 2024

3% with effect from 1st January 2025.

3% with effect from 1st January 2026

1% with effect from 1st July 2026

Total percentage pay increase in the period – 17.75%

2. Structural change

That the agreed 2022 pay scales be terminated on date of acceptance of this Recommendation and that Pilots should revert to a single scale from that date. That scale will be broken down as between Captains and First Officers, as per the pre-2022 scale, with a narrow body cap applicable at point 20 of that scale. The restoration allowance and the agreed 10% reduction to scale to cease to apply from that date also.

The elimination of elements of the acknowledged ‘debt’ owed by pilots and its absorption by the airline (which was agreed to by the airline as part of the Covid Recovery Agreement that introduced the 2022 scales), should stand, notwithstanding the termination of the 2022 scales.

3. New rostering and Summer Leave and related arrangements resulting from 2019 ‘Crewing Agreement’ or the ‘Framework Agreement’

The Court notes that the parties cannot agree on (a) whether the Crewing Agreement exists as a collective agreement at all, and (b) cannot agree the basis for advancing repayment by pilots of the acknowledged ‘debt’ accruing to pilots arising from the implementation of a range of arrangements provided for in the Crewing agreement (some at least of which are also referred to in the Framework Agreement). The Court also notes that (a) the employer is agreeable to the total elimination of all arrangements which comprise the elements of the agreements which deal with rostering / annual leave etc. and which give rise to the accrued ‘debt’ owed by pilots, and (b) the trade union is agreeable to the elimination of some but not all elements of the same agreements dealing with annual leave / rostering and which give rise to the ‘debt’ owed by pilots. The Court also notes that the implementation of the arrangements for leave etc deriving from these agreements is in place for 2024.

Against that background, the Court recommends that the contested elements of these agreements, including the entire ‘Crewing Agreement’, and all elements of either agreement associated with rostering / Summer leave etc giving rise to ‘debt’ currently owed by pilots, be regarded as unsustainable and inoperable and that these elements should now be regarded as terminated by agreement at the end of 2024. The accrued ‘debt’ owed by pilots to date should also be regarded as eliminated and the debt absorbed by the airline.

In the event that either party should propose to enter an agreement in the future addressing these same matters, any such claim should be pursued as a fresh claim through normal procedures as necessary.

4. Overnight allowance

The overnight allowance to be increased by 10% with effect from date of acceptance of this Recommendation and a further 5% with effect from 1st October 2025. Normal revenue rules will apply to any resulting amount of allowance which exceeds allowable taxation limits.

The Court so recommends.

	Signed on behalf of the Labour Court
	Kevin Foley
CC	______________________
8th July 2024	Chairman

NOTE

Enquiries concerning this Recommendation should be addressed to Ceola Cronin, Court Secretary.