The Labour Court has dismissed attempts by workers at Ballygowan to stop the company contracting out its core product on the grounds that such an arrangement "could prove disastrous to all concerned".

In August last year, because of higher-than-expected demand, the company, based at Newcastlewest, Co Limerick, proposed to contract out some of its sparkling water production to a local company, a plan that was rejected by SIPTU. The union argued that workers were concerned that flavoured water production had been subcontracted for the previous two years, despite an undertaking from management that it would only be contracted out for a limited period - and this had affected its members' earnings.

The company's position, however, was that stocks were at a critical level at the time and that the company/union agreement provided for sub-contracting as necessary.

The dispute was referred to the Labour Court, where the union rejected the management case that the need to subcontract was created by an emergency situation as a result of a rapid rise in sales. SIPTU conceded that it had previously agreed that management had the right to subcontract work when necessary, but said there was a "clear understanding by the company that the contracting out of water [the core product] would not be an issue".

The company responded that the existing agreement provided for subcontracting "as necessary". Stock levels were at a critical stage and the need to protect the Ballygowan brand had been "explained and was fully understood" by employees. In July 1999, prior to the subcontracting of flavoured water production, the company concluded a 3 per cent increase under Clause 3 of PESP. "As a goodwill gesture, payment was backdated to September 1st, 1998," the company stated. It also agreed to pay a further 1 per cent from tomorrow, March 1st 2000.

The court deputy chairman, Ms Caroline Jenkinson, expressed concern at the unofficial nature of the action, which she said could have damaged the business and jeopardised the company's future development. The circumstances of the case appeared to be "a prime example of a situation which necessitated the need for subcontracting on a temporary basis so as to avoid the loss of customers".

The court took into account "the distrust which has arisen in the past as a result of contracting out" when it was believed by the workforce that this was to be a temporary measure. None the less, it took the view that refusal to allow contracting out in similar circumstances in the future could prove disastrous to all concerned.