The Labour Court has ruled that Irish Ferries should honour a contract agreed last year with Siptu and the Seamen's Union of Ireland.
Under the terms of the agreement the company was to maintain normal staffing on its Irish sea routes until 2007.
The company wants to make over 500 seafarers redundant with a view to outsourcing the jobs at cheaper rates to agency workers, mainly from eastern Europe.
Siptu members had threatened to strike last month over the company's plan to outsource the jobs.
The agency workers hired to replace the seafarers would be paid €3.60 an hour, less than half the Irish minimum wage.
In a statement this evening, Irish Ferries said the cost-cutting plan was put together in the face of unprecedented adverse trading conditions.
The company warned it was impossible to see how management could accept any course other than the proposed cost reductions.
It claimed there were two separate Labour Court recommendations to accommodate the two unions but both were unacceptable given that 90% of staff have applied for the severance package.
"Against the deteriorating environment in which the company is now operating, conditions that make Irish Ferries a special case, it is regrettable that the recommendations did not take these matters into account or provide any guidelines helpful to the company in respect thereof," the company said.
"Mindful of the fiduciary responsibilities binding upon them, it now falls back on the management of the company to consider what their future course of action should be."
But SIPTU's Local Authority Branch Organiser, Paul Smyth, said he was pleased with the recommendation, particularly as it said that Irish Ferries should "continue to honour their 2004 Agreement and that the parties resume negotiations on such modifications in its terms as are necessary in order to address the changes in circumstances which have occurred since its conclusion."
"SIPTU has always indicated its willingness to explore ways of dealing with changed circumstances and has at all times complied with reasonable requests from management to review terms and conditions of employment," he added.
"On this occasion — despite the fact that we are less than half way through a three year agreement — we showed our willingness to co-operate with the most recent cost cutting exercise proposed by Irish Ferries by agreeing to the appointment of independent consultants to examine their proposals.
"We remain convinced that the only sure way of addressing management's concerns is through a negotiated settlement. "It is now our intention to ballot our members on this Recommendation as soon as practicable," he concluded.
