Labour Court Database __________________________________________________________________________________ File Number: CD86918 Case Number: LCR11104 Section / Act: S67 Parties: WILSON & MCBRINN - and - ITGWU |
Claim that the introduction of a bonus scheme has increased production and reduced earnings.
Recommendation:
1987
Division: CHAIRMAN Mr Heffernan Mr Devine
Text of Document__________________________________________________________________
CD86918 THE LABOUR COURT LCR11104
CC86183 INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
RECOMMENDATION NO. LCR11104
Parties: WILSON & MCBRINN LIMITED
and
IRISH TRANSPORT AND GENERAL WORKERS' UNION
Subject:
1. Claim that the introduction of a bonus scheme has increased
production and reduced earnings.
Background:
2. The Company, which has been in operation since 1926, produces
clothing products. It currently employs 120 workers. The claim
concerns thirty workers employed by the Company as machinists.
3. In May 1985 the Company implemented a new bonus scheme. The
Union accepted that the scheme had to be reviewed but did not
accept the targets operated in the new scheme. The parties agreed
to operate the new bonus scheme for a sixteen week 'running-in'
period. This was on the understanding that a 'running-in'
allowance, which would reduce every four weeks, would be paid as
follows:-
Weeks 1-4 ...... 20% of basic pay
" 5-8 ...... 15% " " "
" 9-12 ...... 10% " " "
" 12-13 ...... 5% " " "
It was further agreed that a 'policy-allowance' would be paid with
effect from the end of the 'running-in' period. This would be
calculated as follows:-
Based on the Production Studies on each operator a
possible performance level was computed.
From this performance possible earnings were computed.
The difference between this possible earnings and the
previous Average earnings was then arrived at.
Where this difference was on the old Average this was
split in half and it was then to be paid to the
operator as a Policy allowance each week.
The Policy allowance will be paid to each person each week for the
remainder of their employment with the Company.
4. The workers considered that there was too big a loss of
earnings involved and that targets in the scheme were too high.
They claimed that there should be a reversion to the old bonus
scheme. This was not acceptable to the Company. The Union got
its Industrial Engineering Department to carry out a study of the
entire scheme and to issue a report with recommendations for
settlements. The report was issued on 27th September, 1985 and on
the basis of its recommendations the Union modified its claim as
follows:-
(a) Down-time to be paid at operative average earnings.
(b) That the 'policy allowance' should be index linked.
(c) That on top of the 'policy allowance', a phasing
allowance equivalent to half of projected loss be paid
to each respective operative and phased out over one
year.
The Company rejected this claim.
5. No agreement was reached at local level and on 24th January,
1986 the matter was referred to the conciliation service of the
Labour Court. A conciliation conference was held on 15th April,
1986. However, no agreement was reached and the conference was
adjourned with the parties holding position as follows:-
(i) The parties agreed to review on an individual basis the
"policy payments" being paid - without prejudice on the
company's part.
(ii) The company did not agree to increase the downtime
rates as requested by the union.
(iii) The company did agree to study further any problems on
the "line" with a view to removing any problems that
are causing blockages and thereby increasing production
and possible incentive earnings.
(iv) A review of the system to be carried out after two
months.
(v) Following the above, the claim to be discussed further
with a possibility of its being settled with a once off
payment.
Although further negotiations took place at local level no
agreement was reached. On 6th November, 1986 the case was
referred to the Court for investigation and recommendation. A
Labour Court hearing was held on 25th February, 1987 in Drogheda.
Union's arguments:
6. (i) The Union accepts that there was a need to change the
incentive bonus scheme. However the standards under
the new scheme are tougher than under the old scheme.
This has resulted in substantial losses for a large
number of the workers. In September, 1985 losses
ranged from #20 to #40 per week. It should be noted
that a 'running-in' allowance was being paid at that
time.
(ii) The losses involved are still ongoing. There appears
to be a lose of interest by the workers in the scheme
due to the reduced reward from it.
(iii) The basis of a settlement of this dispute can be found
in the report issued by the Union's Industrial
Engineering Department Implementation of the
recommendations therein should be seriously considered.
Company's arguments:
7. (a) The Company installed the new bonus scheme based on new
'time standards'. This was an attempt to preserve the
viability of the Company and to safeguard long term job
security. A generous policy payment allowance has also
been introduced.
(b) The Company cannot make any further concessions if it
is to maintain its competitiveness in an increasingly
difficult trading environment. The Company has been
reasonable in its approach to this matter.
(c) Between 1979 and 1985 wage rates in Ireland increased
at a faster rate than in the United Kingdom. Over that
period wage rates in the Clothing Industry in Ireland
were increased on a percentage basis by double the
percentage increase of the comparable rates in the U.K.
(d) The Company calculates the workers' wages in accordance
with the Tailoring Industry Employment Regulation
Order. It could be argued that the workers should come
under the rates for the Shirtmaking Employment
Regulation Order which are some 10% lower than what is
currently being paid. The minimum wage rates in the
Clothing Industry are 34% higher in Ireland than in the
U.K.
RECOMMENDATION:
7. The Court recommends that average earnings be paid for machine
breakdowns lasting more than one hour where alternative bonus
working is not provided.
The Court recommends that the policy allowance be linked to pay
subject to a maximum of 5% increase in any year commencing in
1987.
The Court does not recommend the payment of the 'phasing
allowance' as suggested by the Union's Industrial Engineering
Officer.
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Signed on behalf of the Labour Court
John M. Horgan
---------------------
3rd April, 1987
T O'M./U.S. Chairman