Labour Court Database __________________________________________________________________________________ File Number: CD87772 Case Number: LCR11560 Section / Act: S67 Parties: DJS MEATS - and - ITGWU |
Dispute concerning the calculation of "make-up" pay during lay-off.
Recommendation:
5. In the circumstances of this case the Court recommends
concession of the Union's claim.
Division: Ms Owens Mr Heffernan Mr Walsh
Text of Document__________________________________________________________________
CD87772 RECOMMENDATION NO. LCR11560
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
SECTION 67
PARTIES: D.J.S. MEATS LIMITED
(REPRESENTED BY THE FEDERATED UNION OF EMPLOYERS)
AND
IRISH TRANSPORT AND GENERAL WORKERS' UNION
SUBJECT:
1. Dispute concerning the calculation of "make-up" pay during
lay-off.
BACKGROUND:
2. 1. In the mid 1970s, the Company entered into a comprehensive
agreement with the Union governing terms and conditions of
employment. Clause 5 of the Company/Union agreement states:
" In the event of a falling of trade, the Company guarantees a
full working week to those with one year's continuous
permanent employment together with the agreed guaranteed bonus
rates"
Because of the nature of the meat business there has frequently
been short-time working, usually in the form of a 3 day week.
Until recently, the Company operated this arrangement by assessing
a person's nett take home pay for a normal five day week and paid
the difference between this and the appropriate social welfare
payments. With the introduction of social welfare equality
legislation, the Company assumes that a married man gets the
spouse and childrens allowances that he got before the change in
the law and calculates the difference accordingly. The Union has
objected to this on the grounds that it is a breach of the
agreement and that the Company is paying the workers on the basis
of assuming that they are in receipt of a "married mans allowance"
regardless of the fact that this is not what is received. The
Company rejected the Union's position.
2. 2. Agreement could not be reached on the matter at local
level. The Company objected to the referral of the matter to a
Rights Commissioner. On 6th August, 1987, the matter was referred
to the conciliation service of the Labour Court. A conciliation
conference took place on 27th August, 1987. No agreement was
reached, and on 12th October, 1987, the matter was referred to the
Labour Court for investigation and recommendation. A Court
hearing took place in Dublin on 6th November, 1987.
UNION'S ARGUMENTS:
3. 1. The Company says it is entitled to pay people on the basis
of assuming they receive a 'married man's allowance'
regardless of the fact that this is not what is received.
This is totally contrary to the agreement which is clear and
specific. The Company's new interpretation is totally
contrary to previous practice and is just a cost saving ploy.
2. Each year when the rates of social welfare increased the
Company was happy to take such increases into account because
they lessened the amount needed for 'make-up'. The Company
must treat decreases equally.
3. Some years ago a similar situation occurred whereby social
welfare payments to members were reduced by amendment of
entitlement by the government (this was the rule ending
pay-related benefit to those on systematic short time). The
Company recognised its obligations to pay more 'make-up' then.
When the Union successfully appealed to the Department of
Social Welfare and had the pay related benefit restored, the
Company's 'make-up' was correspondingly reduced.
4. The Company is also inconsistent in that when calculating
the target figure they operate on the basis of actual nett
pay. If an employee pays a higher amount of tax because a
spouse is working the Company has a lower target figure to
achieve. Needless to say the Company has not continued in
this case to calculate as if the spouse were not employed.
5. The Company says that they do not intend to pay 'make-up'
where there are two incomes in a house. But if there are two
incomes the employees concerned have entered commitments based
on this e.g. higher mortgages.
6. The Company is discriminating (probably illegally) against
married men. This happens where the Company assumes an
additional payment (i.e. dependent spouse allowance) is being
received by each married man though in fact no such payment is
received whereas no such assumption is made for an employee
who is not married and who could have a partner who is also
earning. This leads to a lesser 'make-up' pay for a married
man whose wife is working than for an unmarried man whose
partner is also working. 'Make-up' is remuneration. A
Company is not entitled to apply such inequality of
remuneration to employees.
3. 7. The Company is attempting to introduce a whole new
dimension to 'make-up' pay. This was meant to be a guarantee
of a full weeks work per employee. If the full week's work
could not be given then the Company guaranteed to ensure that
each employee would receive a total package of payments equal
to the minimum the individual would have earned in five days.
If this can be reduced because a workers spouse is working (or
is on social welfare in her own right) then logically it could
be further reduced to take account of children in the family
who were earning, or indeed any further source of income the
family might have.
8. The target figure used by the Company is only the net
minimum that would be earned from 5 days work. As such the
bonus is calculated at #12 for a G.O., #15 for a trimmer, and
#18 for a boner. The actual bonus over 5 days work for those
categories would be #50, #80 and #190 respectively.
9. In response to certain points raised by the Company, the
Union wishes to put the following on record.
The Company has always taken the benefit of any changes in the
social welfare system when they were to its advantage.
'Make-up' pay is very common in the meat industry. The same
concept of 'make-up' is very widespread in sick-pay schemes.
The Union are not serving a new claim on the Company, they are
merely asking that an existing agreement be honoured.
The Company claim that had the legislation been different they
would not have entered the agreement. For its part, the Union
can state that had the Company tried to change the method of
payment, it would not have agreed to working less than the
five days guaranteed.
The Union believes that the agreement is clear and
unambiguous. It asks the Court to rule that the formula for
calculating 'make-up' based on what is actually received be
continued, and reject the Company's attempt to base it on a
figure which they feel should be there but is not.
COMPANY'S ARGUMENTS:
4. 1. The Company/Union agreement makes no provision for
lay-off. However during the early 1980s by local arrangement
the practice of "making-up" wages during periods of lay-off
was entered into. The Company do not view this as a
guaranteed/permanent practice. The continuance of this
practice is governed by the cost of maintaining it and the
relative financial position of the Company. The Company
presently is in a very difficult trading situation and will
lose money during 1987. Should it become necessary to
discontinue the practice the Company will enter into prior
consultations with the Union.
4. 2. Notwithstanding its difficulties with the above the
Company have continued to "make-up" pay during lay-off in the
same manner since the practice was established in the early
80s.
(a) An employee's basic weekly wages and bonus nett of tax
and PRSI is calculated.
(b) The employee's nett pay during short-time/lay-off and
social welfare receipts in respect of the employee and his
family is calculated.
(c) During the period of lay-off the Company make up the
difference between (a) and (b) above where applicable.
3. The Union are claiming that following the extension of
equal social welfare benefits to wives, where an employee's
wife is in receipt of benefit this benefit should not be
included in calculating the "make-up" pay for the employee
while on short time. The claim is completely unsustainable
and unrealistic and if conceded would completely undermine the
continuance of the practice. The practice was established to
minimise hardship during periods of lay-off where possible.
To entertain the Union's claim could result in a situation
where employees would be actually better off financially while
on lay-off at the cost of the Company. It could also result
in situations of unequal "income" for employees on lay-off in
the same family circumstances.
4. The Union are seeking to take advantage of the extension
of equal social welfare benefits in an unreasonable way which
would cause the make up practice to operate in a manner that
is inequitable and was never intended or envisaged.
RECOMMENDATION:
5. In the circumstances of this case the Court recommends
concession of the Union's claim.
~
Signed on behalf of the Labour Court.
Evelyn Owens
__3rd___December,__1987. ___________________
P. F. / M. F. Deputy Chairman