CD/14/23 RECOMMENDATION NO. LCR20741
(CCC-132311-13)
INDUSTRIAL RELATIONS ACTS, 1946 TO 2012
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
PARTIES :
IRISH RAIL
– AND –
SIPTU, NBRU, TSSA, TEEU & UNITE
DIVISION :
Chairman Mr Duffy
Employer Member Ms Cryan
Worker Member Ms Tanham
SUBJECT:
Cost Containment Plan 2.
BACKGROUND:
This dispute arose from the unprecedented crisis in the Company’s finances. This dispute could not be resolved at local level and was the subject of a Conciliation Conference under the auspices of the Labour Relations Commission. As agreement was not reached, the dispute was referred to the Labour Court on the 31st March, 2014, in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 7th April, 2014.
UNIONS’ ARGUMENTS:
 The Company is seeking to reduce the Workers’ terms and conditions of employment in order to meet the shortfall in funding for public transport.
 The Company has not fully explored the possibility of making non-payroll savings.
 The Workers are committed to continuing their cooperation with negotiated change.
COMPANY’S ARGUMENTS:
 The Company has suffered a catastrophic drop in income since 2008.
 As pay and pension account for 60% of the Company’s costs these areas must account for a proportionate share of the cuts necessary to ensure the Company’s survival.
 The Company believes that its proposals are necessary and proportionate.
RECOMMENDATION :
Introduction
This dispute came before the Court against the background of a serious deterioration in the financial
and commercial circumstances of the Company. This deterioration arose from a combination of
reductions in exchequer funded Public Service Obligation payments and a decrease in passenger
numbers in the period from 2008 onwards. While the Company has achieved significant reductions in its
operating costs, its accumulated losses in the period between 2008 and 2013 amounted to some
€147.9 million.
According to the Company its pay and pensions bill accounts for some 60% of its overall cost base. It
believes that a proportionate reduction must now be achieved in payroll costs in order to ensure its
future viability.
Extensive negotiations have taken place between the parties through the Labour Relations Commission
on measures necessary to reduce the Company’s payroll and related costs. In the course of these
negotiations a set of proposals was formulated in June 2013 (described as the ‘Lansdowne House
Proposals). These proposals were rejected in a ballot. The parties resumed their negotiation and a
modified set of proposals were formulated dated 30th January 2014 and entitled: –
Amended Cost Reduction Proposals On Pay and Productivity Measures
Iarnród Éireann
&
NBRU, SIPTU, TSSA, UNITE, TEEU, Craft Group of Unions
This document will be referred to in this Recommendation as ‘the proposals of 30th January 2014’.
These proposals provided for a reduction in payroll costs of some €20m over a 36 month period. These
proposals were subsequently rejected by a majority of the Unions following a ballot of their members.
The Company contends that the proposals of 30th January 2014 represent the minimum level of
adjustment in its payroll costs necessary to achieve financial viability. The factual data relied upon by
the Company in advancing that argument is not seriously in dispute. Two independent reports
commissioned by the trade unions effectively confirmed the perilous state of the Company’s finances
and the necessity for the type of adjustments proposed.
Approach of the Court
The Court has consistently pointed out that it will only recommend retrenchment in established
conditions of employment where, on independently verified financial evidence, it is plainly and
unambiguously necessary to do so in order to protect employment. Having considered the extensive
and helpful submissions made by all parties, and having carefully considered the financial data made
available to it, the Court has reached the conclusion that the measures contained in the proposals of
30th January 2014 are unavoidable if the future of the Company and the employment that it maintains is
to be protected. The Court is, however, satisfied that further modifications can be made to those
proposals without undermining that objective.
The Court therefore recommends that the proposals of 30th January 2014 be accepted subject to the
following modifications: –
Duration of Foregoing of Gross Pay Arrangement
The Duration of the Foregoing of Gross Pay arrangements should apply for a total period of 28 months.
In that regard the Court recommends that the provision in the proposal of 30th January 2014 for an eight
month period during which 50% of the Foregoing of Gross Pay arrangement would apply should be
deleted.
Stabilisation
It is noted that the company’s proposals on Foregoing Gross Pay are intended to operate as a
temporary derogation from the terms of existing agreements. They are to apply for a defined period of
time (28 months) after the expiry of which the pre-existing rates should be automatically restored.
The unions are entitled to some assurance that what is now proposed constitutes the full extent of what
will be required in terms of payroll and related reductions during that period. Accordingly, the Court
recommends that for the period of 28 months during which the derogations apply the company should
be precluded from proposing or otherwise processing any claims for further reductions in pay or
conditions of employment.
Non-Payroll Savings
The Court notes that the cost savings in payroll which are to be achieved by the implementation of the
current proposals will not be sufficient to meet the Company’s financial objectives. It is envisaged that
further savings in non-pay items will be required although the details were not disclosed to the Court.
For their part, the Unions believe that there is considerable potential for additional non-payroll savings.
The Court recommends that the Cost Management Committee should identify target savings in nonpayroll
items necessary to implement the Company’s five year plan. The Cost Management Committee
should also engage in an intensive exercise directed at identifying further non-payroll savings in
addition to those targeted for the purpose of the five year plan. In so far as such additional savings are
identified and realised they should be used to offset the cost savings in payroll provided for in the
proposals of 30th January 2014 by shortening the durations during which the Foregoing Gross Pay
arrangements are intended to apply.
In that context an annual review of the non-payroll savings should be undertaken by the Cost Management Committee. This review should be in substitution for the review proposed at paragraph 2.1 of the proposals of 30th January 2014.
Voluntary Severance
The Court recommends that the 73 employees who have applied for voluntary severance prior to the deadline date of 31st October 2012 should receive the same enhanced exit terms as the 318 employees who have already left the employment. The further twelve employees referred to in the proposals dated 30th January 2014 should be afforded the same terms that applied prior to the Cost Containment Programme 1 (the 2009 Agreement).
Except in so far as they are expressly modified by or are inconsistent with this Recommendation all other provisions of the proposals of 30th January 2014 should be accepted and implemented.
Signed on behalf of the Labour Court
Kevin Duffy 11th April, 2014
JMcC CHAIRMAN
NOTE Enquiries concerning this Recommendation should be in writing and addressed to Jonathan McCabe, Court Secretary.