Iarnród Éireann is to seek an urgent referral of cost reduction proposals to the Labour Court after employees belonging to the National Bus and Rail Union and SIPTU voted to reject the plan aimed at addressing the company's financial situation.

NBRU members voted by 82% to reject the proposals, while SIPTU members at the company rejected the proposals by a margin of 71%.

However, the clerical union, the Transport and Salaried Staff Association, has accepted the proposals.

The Department of Transport this afternoon ruled out any increase in Government subvention for Iarnród Éireann.

Industry sources said industrial action was unlikely in the short term.

The proposals negotiated at the Labour Relations Commission included pay cuts ranging from 1.7% to 6.1% which would have lasted up to three years commencing on 1 March.

However, for the final eight months, half of the pay cut would have been restored, with staff reverting to their original salaries after 36 months. 

The company would continue to pay increments and maintain the current contributions to the pension funds as it pursues savings of €8.5m in 2014, €6.5m in 2015, €5.8m in 2016, and €4.2m in 2017.

Iarnród Éireann has said that it is essential to make savings to ensure the future viability of the company, the long term sustainability of train services for passengers and jobs for employees.

The company has claimed that the delay in implementing cost savings was costing the company €100,000 a week.

Staff rejected a previous set of cost saving proposals last June.

However, in the document outlining the latest proposals, LRC Director of Conciliation Kevin Foley describes them as the best possible that can be secured by negotiation to deal with what he called "the unprecedented crisis".

Industrial sources forecast that the dispute will be referred to the Labour Court. 

In a joint statement this afternoon, Minister for Transport Leo Varadkar and Minister of State with  special responsibility for Public and Commuter Transport Alan Kelly said there had already been substantial fare increases and there was no scope for an increase in the Government subvention.

The statement added that payroll savings are therefore needed to protect existing service levels and jobs as part of the solutions to the financial challenges facing the company.

The ministers said management would now have to consider how best to proceed with implementing the necessary measures.

They described the ballot result as deeply disappointing and regrettable, but commended employees who had accepted the proposals.

They called on the unions to re-enter talks with Iarnród Éireann for the sake of the company, all its employees and the travelling public.