Irish Ferries dispute finally resolved after bitter stand-off

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A deeply entrenched dispute between management and trade unions at Irish Ferries was finally resolved in December 2005 after the state dispute-resolution institutions formulated a settlement acceptable to both sides, following intensive talks. The conflict had threatened to derail the national social partnership process and it has highlighted a number of important issues for the future of industrial relations in Ireland.

A bitter industrial dispute at Irish Ferries (IE0509202F) was ignited after management unilaterally issued proposals to replace 543 directly employed seafarers with predominantly eastern European agency crew, and to reflag its vessels to Cyprus in the process. This culminated in a stand-off, starting on 27 November 2005, whereby, provoked by management actions in bringing agency crews aboard Irish Ferries vessels backed by a security presence, local representatives and members from Ireland's largest union, the Services Industrial Professional and Technical Union (SIPTU), responded by mobilising and applying industrial pressure. The result was that Irish Ferries ships were laid up in Welsh and Irish ports for close on three weeks.

In addition, a national day of protest over the broader issue of job displacement was held on 9 December 2005, and attracted a substantial turn-out from the ranks of the union movement and the general public. Estimates of the turn-out range from 40,000 to over 100,000. Commentators argued that, to a large degree, this show of strength was a message from the unions that they are still a force in the private sector - where union density now hovers around the 20% mark (IE0510201F)

However, the deadlock between the parties was eventually broken, following intensive talks at Ireland’s primary dispute-resolution institution, the Labour Relations Commission. The proposals for resolving the Irish Ferries dispute were painstakingly drafted by the Commission, following the prior intervention of the National Implementation Body (a high-level industrial relations 'trouble-shooting' body set up under national social partnership arrangements - IE0103233N), which established the broad parameters of the final settlement. The final settlement has been reported by the specialist publication Industrial Relations News.

Something for everyone

There is something for all parties - employer, unions, government and, indeed, the dispute-resolution institutions themselves - in the proposals drawn up by the LRC, following the prior intervention of the NIB, which set the parameters for the settlement. Negotiating teams on the employer and union side have recommended the proposals for acceptance. Balloting of workers was due to be concluded by the end of December 2005. Ships have resumed sailing as normal and, as part of the return to work formula, the parties agree that all personnel, on return to work, will be treated as if the dispute had 'never happened'. However, this may be easier said than done, given the low level of trust between the protagonists.

Employer 'wins' outsourcing

On the employer side, Irish Ferries has obtained the green light to proceed with its plan to outsource crews on its Irish Sea vessels and reflag its vessels to Cyprus. In future, all vessels will be managed on a contract basis by Dobson Fleet Management, a shipping agency based in Cyprus. All new personnel will be employees of Dobson.

However, the LRC proposal suggests that this development will occur on the basis that Irish Ferries agrees to facilitate a meeting/introduction between SIPTU and the Seamen’s Union of Ireland (SUI) (the other union representing members in Irish Ferries) and Dobson. Further, it would be expected that Irish Ferries make it clear to Dobson that it is open (in contractual) terms to the conclusion of agreements between Dobson and SIPTU/SUI. However, it is a matter for the unions to establish details of any agreement with Dobson.

Under the proposals, the company will secure cost savings amounting to approximately EUR 11.5 million, which although lower than the EUR 15 million demanded by management under its initial plan, are substantial.

Lower wage costs

The wage costings for new agency seafarers are significantly lower than those applying to existing seafarers. To take one example, the existing rate for a bosun is about EUR 42,000 per year, but a new bosun will earn EUR 24,349. In comparison, the rate for a bosun at Irish Ferries’ main competitor, Stena Lines, will be EUR 41,057 with effect from November 2005. Further, new entrants on the lowest ratings grades working on Irish Ferries vessels will be paid the Irish national minimum wage of EUR 7.65 per hour, based on a 10-hour day, 2,433.3 hours worked per year, and a lower 'ratio' of 1.5, giving an annual salary of EUR 18,615. New entrants will work two months on and one month off.

In addition, pay and conditions on the Irish Ferries’ French routes vessel, MV Normandy - where crewing has already been outsourced - are to be dealt with via binding arbitration by the LRC on agreed terms of reference. Significantly, a previous Labour Court recommendation relating to the Normandy is to be disposed of.

Importantly, the company has also secured a three-year industrial peace (no-strike) clause, with any issues of dispute going to binding arbitration.

Union 'wins'

For their part, the unions - SIPTU was the main union in the negotiations - secured, above all, a negotiated settlement, which was sacrosanct from their point of view. Irish minimum wage standards (EUR 7.65 per hour and EUR 18,615 per annum) will be applied to new, predominantly Latvian, contract personnel, which is twice the amount (EUR 3.60 per hour) that the company was initially seeking. It has been speculated that part of the reason why the company came round to accepting a minimum wage benchmark may be because it simply could not find a sufficient number of Latvians prepared to work for EUR 3.60. In relation to this, Jazeps Spridzans, the director of the Latvian seafarers’ register, recently suggested that the Riga-based agency charged with recruiting staff would find it impossible to find crew in any of the Baltic states prepared to work at a rate of EUR 3.60. However, an Irish Ferries spokesperson has disputed this.

The minimum wage figure of EUR 18,615 per annum may seem low when compared with the current Irish average industrial wage of EUR 30,000, but it is certainly much higher than the Latvian minimum wage of EUR 0.71 per hour and EUR 120 per month (2004 rate) (TN0507101S). The average industrial wage in Latvia is EUR 3,900 per year. So, seen through the eyes of non-Irish workers from some of the poorest EU states, it is difficult to refute the fact that the Irish minimum wage will put them some way above national average earnings when they return home on leave. They will also receive round-trip transportation expenses when they go on leave.

Another successful outcome from a union perspective is that the pay and conditions of existing seafarers who choose to remain with the company will be 'red-circled'. In view of this, the company has agreed that the pay and conditions of the staff (a maximum of 48) who decide to remain will be protected (for instance, existing bosuns will remain on EUR 42,000 per year). Individuals who remain will have the option of agreeing on an individual basis to a reduction in 'ratio' with the company offering a sum equivalent to three years of the value of the compensation. Significantly, all remaining staff will continue to be represented by SIPTU/SUI.

Turning to redundancy terms, those employees who decide to leave will receive managements’ 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 'top-end' severance packages. Under this package, the minimum pay-out will be EUR 2,000 for workers with less than one year’s service, and it is understood that one individual officer with over 30 years’ service could receive up to EUR 300,000. The average will be roughly EUR 60,000.

Legal agreement

It is significant that the above terms and conditions will be 'ring-fenced' by a legally binding agreement - enshrined in express contract under Irish law - to enable enforcement of the terms and conditions of employment in respect of current staff who remain and those yet to be employed. This legal agreement will provide for a mechanism for dispute resolution on a binding arbitration basis. It is understood that, as of December 2005, the parties are in the process of drawing up a legal framework for the agreement.

Union recognition

Uncertainty surrounds the future of union recognition at Irish Ferries/Dobson. Following the completion of reflagging and the recruitment of 543 non-unionised eastern European agency crew in place of directly employed unionised workers, SIPTU will be left with a relatively small rump of unionised officer and ratings members at Irish Ferries/Dobson, while this may be 'the beginning of the end' for the much smaller SUI, given that it will have few members left. In short, from being a highly unionised company, Irish Ferries could become more or less de-unionised, which is why SIPTU has been insistent that new entrants should have the choice to join a union. However, new employees would have been entitled to join a union of their choice anyway, and the key question will be whether trade union recognition for new entrants can be secured under Irish law.

Wider picture

Turning to the wider national picture, Ireland’s main employers' body, the Irish Business and Employers Confederation (IBEC), was centrally involved in devising a solution to the dispute, and will be relieved that social partnership is now back on track, with IBEC valuing, in particular, the economic stability and certainty provided by partnership. The employers' organisation was in a tricky position, in terms of having to represent Irish Ferries (an IBEC member) at the same time as upholding the institutions and processes of social partnership.

In terms of the wider trade union movement, commentators argue that there is a certain irony arising from the dispute, in the sense that, in some ways, the managing director of Irish Ferries has almost done the unions a favour by bringing the issue of job displacement to the forefront of discourse and, indeed, providing the unions with a point to rally around. After 18 years at the 'top table' of social partnership with the government and employers, the union leadership had arguably become cautious about deploying the industrial muscle of the movement on the streets.

As it turned out, the combination of localised action by the SIPTU marine branch, resulting in the immobilisation of Irish Ferries vessels for close on three weeks, and the show of strength at the national day of protest on 9 December, allowed the unions to send a signal to other employers that they are still a force to be reckoned with in the private sector. Observers argue that, in reality, from their perspective, the unions had little choice but to draw a 'line in the sand' on this dispute, and the local action by the marine branch helped to create the space for a negotiated settlement. Moreover, the very fact that they have displayed their industrial power in such a traditional manner may have strengthened the unions’ hand in the social partnership process.

The government will be relieved that a settlement has been reached, with the route towards a seventh successive social partnership deal suddenly looking clearer (IE0507202F). The odds are now in favour of a new national pact being concluded in 2006. The government was coming under mounting political flak, apparently powerless to do anything about the issues at the core of the dispute. Critics suggest that there are contradictions in government labour market policy, and it remains to be seen whether it will now change course in this regard.

Turning to the dispute-resolution agencies, it can be argued that the various experts at resolving serious industrial relations conflict have again proven their mettle, the result being that the credibility of the institutions has been preserved, albeit at a cost - in the sense that Irish Ferries became the latest employer to reject a Labour Court recommendation.

Commentary

There can be little doubt that the Irish Ferries conflict took on a significance that went way beyond the localised industrial relations issues at stake - to the extent, it seemed, that almost everyone had a view on it. The dispute has proven to be the most difficult test facing Ireland’s social partnership model since its inception in 1987. Indeed, it seriously challenged the order of the present industrial relations system. Not for the first time, the state dispute-resolution institutions - the LRC, Labour Court and NIB - dealt with the fall-out from a seemingly intractable dispute, and crafted an industrial relations accommodation by building a bridge between the entrenched positions of employers and unions. The pressure on all participants has been all the more intense with the future of social partnership at stake (IE0511201N) and concerns mounting that the dispute could hit the economy hard if it escalated.

Despite the evident relief of all the parties in the aftermath of the dispute, in the cold light of day, after the dust has settled, it would be wrong to conclude that the settlement brokered by the dispute-resolution bodies will fix the industrial relations issues that have been triggered by this one dispute - in relation to both Irish Ferries specifically and the wider Irish labour market. The 'genie is now out of the bottle', and the industrial relations terrain is clearly shifting in a new direction under the pressure of EU enlargement and the competitive forces unleashed by globalisation.

The Irish Ferries dispute has lifted the lid on a number of issues. First, it has starkly illustrated the importance of constructing good workplace industrial relations models based on joint problem-solving, communication, and employee consultation. The unfolding conflict showed how bad things can get when a spiral of industrial relations distrust and adversarialism takes root unchecked. There are lessons for both management and unions in this regard.

Second, in highlighting the industrial relations implications of outsourcing and job displacement in the face of competitive pressures, the dispute has presented something of a litmus test for the future direction of social partnership, in terms of finding an accommodation between the interests of economic competitiveness and employment protection.

Third, the conflict has illustrated the difficulties and tensions facing the government and the social partners arising from labour immigration. Since EU enlargement in May 2004, upwards of 110,000 employees from the new EU Member States have come to Ireland - about 6% of the labour market. Together with Britain and Sweden, Ireland was one of only three countries in so-called old Europe that have fully opened their borders to workers from so-called new Europe. The merging of 70 million people from poorer central and eastern European economies into richer western European economies was bound to create reverberations - not least in highlighting the gulf in earnings and working conditions. The real test will be when the Irish economy hits a downturn, and unemployment starts to rise.

These employment relations issues will play a significant part in reshaping the Irish industrial relations landscape into the future. (Tony Dobbins, Industrial Relations News)

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