Labour Court Database __________________________________________________________________________________ File Number: CD87270 Case Number: LCR11327 Section / Act: S20(1) Parties: TARA MINES LTD - and - ITGWU;AUEW(TASS) |
Claim on behalf of approximately 140 workers for payment of merit increments.
Recommendation:
7. The Court having considered carefully the submissions of the
parties and noting that no other group is being asked to accept
such a position, recommends that the proposal to cease paying
increments to those members of the Unions who have traditionally
been in receipt of such payments should be removed from the cost
reduction plan and that increments due from the beginning of this
year, which relate to the performance of these employees in the
previous year, be paid now.
Division: CHAIRMAN Mr McHenry Mr O'Murchu
Text of Document__________________________________________________________________
CD87270 THE LABOUR COURT LCR11327
Section 20(1) INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
RECOMMENDATION NO. LCR11327
Parties: TARA MINES LIMITED
(Represented by the Federated Union of Employers)
and
AMALGAMATED UNION OF ENGINEERING WORKERS-
TECHNICAL ADMINISTRATIVE AND SUPERVISORY SECTION,
IRISH TRANSPORT AND GENERAL WORKERS' UNION
Subject:
1. Claim on behalf of approximately 140 workers for payment of
merit increments.
Background:
2. On 8th January, 1987 a notice was issued by the Company to all
employees containing a review of the Company's operations, future
prospects and proposals for a cost reduction plan and changes in
work practices (details supplied to the Court). Discussions on
the proposals took place at local level in January, 1987. On 22nd
January, 1987 the Company issued a notice to all employees which
contained detailed proposals on the cost reduction plan and
changes in work practices (details supplied to the Court) outlined
in the previous notice. The proposals related to:-
1. Pay - a fourteen months pay freeze to 31st December,
1987, including basic wages, bonus schemes,
differentials and merit increments.
2. Plant Bonus
3. Bonus payments to miners.
4. Work practices
5. Redundancy.
3. The Company clarified the proposals in relation to merit
increments as meaning that all further increments would be
withheld. The Unions informed the Company that they were prepared
to discuss all details of the plan with the exception of:-
1. Merit increments - as loss of these was equivalent to a
reduction in wages and therefore should not form any
part of the overall cost reduction plan.
2. Augmentation of the bonus scheme (this was later
removed by the Union as an issue as other discussions
on the bonus scheme were taking place).
4. The Union requested the Company to withdraw the merit
increments from the cost reduction plan. However, the Company was
not agreeable to this. On 27th February, 1987 the matter was
referred to the conciliation service of the Labour Court. On 2nd
March, 1987 the Company were invited to attend a conciliation
conference. However, the Company declined this invitation as it
considered the issue to be part of the package of proposals put
forward by the Company to provide for no increase in labour costs
up to 31st December, 1987 and as such should not be dealt with or
discussed individually but as part of the total package. On 31st
March, 1987 the Unions referred the matter to the Labour Court for
investigation and recommendation under Section 20(1) of the
Industrial Relations Act, 1969 and agreed to be bound by the
recommendation of the Court. The Court investigated the dispute
on 15th July, 1987. A letter recommendation issued to both
parties on 16th July, 1987.
Unions' arguments:
5. (i) The structure of the incremental scales means that
workers start on a low point and after many years of
service reach the maximum of the scale. The bottom
point of the scale is to cater for workers of 16 or 17
years of age. Compensation after a number of years
justifies the low entry point but if increments are
withheld it could result in workers retiring at 60
years of age on the 17 year old rate. The withholding
of increments would also amount to a change in the
conditions of employment and breach of a wage
agreement.
(ii) Incremental scales are part of the basic wage structure
of the workers. Withholding of increments would be
equivalent to a reduction in wages. As only seventy to
eighty workers are paid increments, non-payment of
increments would mean these workers would be expected
to take a reduction in wages, while the rest of the
workforce would not.
(iii) In the type of plan put forward by the Company it is
unreasonable that an established practice which relates
to a small proportion of the workforce should be
included. There should be no changes in the
incremental system whatever the outcome of the proposed
cost reduction plan.
Company's arguments:
6. (a) When the Company began operations in 1973 a very
substantial amount of money was borrowed, 20% of which
is still owing ten years later. The Company's auditors
have prepared a report which consists of an analysis
of; 1986 financial results; 1987 financial projections;
and an analysis of employee costs (details supplied to
the Court). The Company incurred mining operating
losses during 1986 and during the first half of 1987.
Based on current costs and with no increases in labour
costs and with a reduction in the workforce (as
outlined in the Plan) together with projected metal
prices and planned production levels the Company is
expected to incur a mining operating loss during 1987
(details supplied to the Court).
(b) The Company is in a poor financial condition due to
high operating costs and cannot consider any cost
increases. The Tara Plan was prepared in order to
achieve a significant reduction in operating costs per
tonne. This would be achieved by: purchasing new
equipment; reducing prices paid and usage of parts and
supplies; increased labour productivity; and a pay
freeze and changes to current bonus schemes.
(c) In the circumstances, the Company must continue with
all efforts to reduce costs and improve production.
Further improvements are needed in 1987 and 1988 to
enable the Company to operate during periods of low
metal prices. The Company has spent a substantial
amount of capital expenditure in order to modernise the
plant and equipment. Such changes and others which are
necessary in order for the Company to be viable must be
accompanied by a greater degree of co-operation by the
workers in the re-organisation of work at the mine.
Pay and bonus rates will have to be established at
economic levels and improved work practices introduced.
The changes proposed by the Company should result in
the necessary performance levels to restore the
economic viability of the mine.
(d) The Company has commissioned a number of surveys on
labour costs (details supplied to the Court). These
show that: the workers have received a substantial
increase in total earnings during the last six years;
pay and conditions of employment are very favourable
compared to other Irish companies; the Company has
conceded larger pay increases than other companies
particularly during the 23rd, 24th and 25th pay rounds,
resulting in high labour costs to the Company; compared
to an international cross section of other underground
lead/zinc mines the Company will have higher operating
costs during 1987 and the cost to the Company of each
employee is almost the highest in the worlds mining
industry. These reports also show that the Company's
labour costs have become uncompetitive and will have to
be reduced if the Company is to be able to operate in
the future.
(e) Many meetings have taken place with the Unions to
review and agree on the proposals. The Company made it
clear at all times that the proposals in the plan had
to be implemented as a package if it was to be
successful in making the Company viable. The Company
has also continuously emphasised that success is
dependent on a reduction in both labour and non-labour
costs and an increase in production to 2.6m tonnes per
annum. In line with this the Company has stated that
no labour cost increases of any kind could be accepted
in respect of the 26th Round. However, during the
course of discussions on the plan all the Unions
involved have submitted claims in respect of the 26th
Round (details supplied to the Court). The auditors in
their July, 1987 report to the Company prepared an
estimated cost of conceding these claims (details
supplied to the Court). This cost would be substantial
and just taking a 10% pay increase for all workers
employed at the end of 1987 would amount to
approximately $2.8 m (approx. #1.9m).
RECOMMENDATION:
7. The Court having considered carefully the submissions of the
parties and noting that no other group is being asked to accept
such a position, recommends that the proposal to cease paying
increments to those members of the Unions who have traditionally
been in receipt of such payments should be removed from the cost
reduction plan and that increments due from the beginning of this
year, which relate to the performance of these employees in the
previous year, be paid now.
~
Signed on behalf of the Labour Court
John M Horgan
13th August, 1987 -------------
U.M./U.S. Chairman