One of Dublin's largest pub groups, Capital Bars plc, cannot pay some of its staff the terms of Sustaining Progress because the chain is suffering from "significant financial and competitive pressures", according to a Labour Court finding, writes Emmet Oliver

The company, which owns two hotels and nine high-profile bars, has refused to pay Sustaining Progress increases to 15 staff employed in bar, kitchen and cleaning work for the company.

The company has been in dispute with Mandate, the union representing the workers, since last summer.

The Labour Court, after reviewing documentation from Mandate and the company, this week upheld Capital's claim that it could not pay the workers in the current climate. It took into account a report into the issue by an independent assessor.

Its judgment reads: "The court is satisfied that the company is experiencing financial and competitive pressures and is therefore, satisfied that the employer has demonstrated that it cannot pay the terms of phase one, two or three of Sustaining Progress.

In arguments presented to the court, the company claimed that pub sales had dropped by 14 per cent in Dublin and Capital Bars had been hit severely by this.

It listed a series of factors that had damaged the licensed trade in recent times, including the growth in the off-trade, the smoking ban and a general increase in overheads.

The company owns several large pubs, including Cafe en Seine, the George and Zanzibar. It recently sought permission for a change of use of the former Planet Hollywood premises. No member of the company would comment yesterday on the issues raised by the Labour Court finding.

Under the terms of Sustaining Progress, companies are allowed plead inability to pay it they can prove that paying increases would "lead to a serious loss of competitiveness and employment".

The onus is on the employer to substantiate its claim.

In its accounts for the year ended September 30th 2003, Capital Bars said it was suffering from declining turnover and a major squeeze on profitability.

It reported a pretax loss of €3.4 million in this period, down from a pretax loss of €72,000 in the year before.

The company claimed the city centre had become "anti-shopper/visitor", with limited public transport, a widespread clamping policy and the closure of Dart at weekends.

One of the largest companies to plead inability to pay in recent times was An Post.

It claimed it was facing serious losses and in order to implement a rescue plan it needed to put a freeze on all pay increases.