Dispute resolution at ferry company curtails union influence

Irish Ferries has largely succeeded in limiting the trade union influence in its operations just nine months after the end of a major dispute that had a significant impact on the outcome of Ireland’s new national social partnership agreement, Towards 2016.

Staff outsourcing dispute

Only 12 trade union members remain at Irish Ferries out of about 550 directly employed unionised workers who worked at the company prior to last year’s decision to recruit foreign agency staff.

That outsourcing decision led to a widely publicised dispute in the company (IE0509202F). In late 2005, proposals drawn up by the Labour Relations Commission and the National Implementation Body resolved the dispute (IE0512203F), which had delayed talks on a new national agreement and threatened to end social partnership entirely (IE0602203F).

Present staffing situation

Irish Ferries succeeded in its plan to outsource crews on its Irish Sea vessels and to reflag its vessels in Cyprus. All vessels are now managed on a contract basis by Dobson Fleet Management, a shipping agency based in Cyprus, and new agency personnel are employed by Dobson.

This resulted in the replacement of nearly 500 existing permanent unionised staff with lower cost agency crews sourced by Dobson. The majority of those leaving were members of the Seamen’s Union of Ireland (SUI), who received attractive redundancy terms; in fact, all of the SUI members departed. Overall, Irish Ferries secured labour cost savings amounting to approximately €11.5 million per year.

Some 48 directly employed unionised staff, all members of the Services Industrial Professional and Technical Union (SIPTU), remained at the company in the immediate aftermath of the agreement that ended the dispute in late 2005. However, according to the weekly independent publication, Industrial Relations News (IRN), the number of unionised employees had fallen to just 12 staff by mid September 2006, a figure confirmed by the company.

Generous redundancy package

The majority of those unionised workers who have left Irish Ferries in the past nine months received a severance offer of four weeks’ pay for each year of service, plus two weeks’ statutory entitlement, and an additional two weeks for cooperating with the changeover to agency crewing – giving a potential total of eight weeks’ pay (per year of service), which compares favourably with the highest severance packages across the economy.

Under this package, the minimum payout was €2,000 for people with less than one year of service. One individual officer with over 30 years’ tenure received up to €300,000. The average was approximately €60,000.

IRN commented that, given the uncertainties facing the ferry sector, ‘the workers were likely to be aware that this “pot of gold” will probably not be available in a few years’ time, leading to the pragmatic decision that maybe it is best to leave sooner rather than later.’

Unique legal agreement

The unionised employees are covered by a legally binding contract – agreed this year (IE0604059I) – that is unique in an Irish industrial relations context. It has full legal effect, up to and including Ireland’s higher law courts. The legally binding agreement ties the parties to its terms for a three-year period, from 14 December 2005.

SIPTU had taken a number of cases under the legal agreement, which provides for binding arbitration, but the workers involved in these disputes have since left the company. The cases pertained to, for example, disputes over promotion and seniority; one case is still in procedure.

Assessing the outcome

In assessing the outcome of this controversial dispute almost a year after it commenced, it is essential to consider the result at company, national and international level.

The Irish Ferries management always stated that it wanted to decrease the trade union influence in the company. Apart from the 12 SIPTU members who remain, it is now a de-unionised company. So far, none of the agency crew have joined SIPTU or the SUI and, in any case, they are under the control of Dobson. Irish Ferries has also achieved significant labour cost savings.

Nevertheless, SIPTU can point to the fact that Irish minimum wage standards (€7.65 per hour, or €18,615 per annum) were applied to the predominantly Latvian contract personnel, which is twice the amount (€3.60 per hour) that the company initially planned to pay. Senior ratings and officer agency workers are on higher levels of pay, rising to a maximum of €65,000 for senior officers.

The company possibly decided to accept a minimum wage benchmark because it may have been unable to find a sufficient number of agency staff prepared to work for €3.60 per hour. In short, labour market factors may have played a part in the decision.

Significantly, at national level, the Irish Congress of Trade Unions (ICTU) secured agreement on new employment rights and compliance measures in the recently ratified national agreement, Towards 2016 (IE0606019I). Congress General Secretary, David Begg, asserted that the employment standards measures were better than anything achieved in Europe and challenged international trends.

Brian Sheehan, IRN Publishing