Labour Court Database __________________________________________________________________________________ File Number: CD87435 Case Number: LCR11330 Section / Act: S67 Parties: STANDARD LIFE ASSURANCE CO. - and - ASTMS |
Dispute concerning proposed changes by the Company to the method of remuneration for sales consultants.
Recommendation:
5. The Court recommends that the Company's proposals be accepted
and come into operation at the end of the current financial year
i.e. 15th November, 1987 instead of the proposed date of 15th
July, 1987.
Division: Ms Owens Mr Shiel Mr O'Murchu
Text of Document__________________________________________________________________
CD87435 THE LABOUR COURT LCR11330
CC87417 INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
RECOMMENDATION NO. LCR11330
PARTIES: STANDARD LIFE ASSURANCE COMPANY
(REPRESENTED BY THE FEDERATED UNION OF EMPLOYERS)
AND
ASSOCIATION OF SCIENTIFIC, TECHNICAL AND MANAGERIAL STAFFS
SUBJECT:
1. Dispute concerning proposed changes by the Company to the
method of remuneration for sales consultants.
BACKGROUND:
2. The Company has, as well as its head office in Dublin, branch
offices around the country. Business is sold through independent
insurance agents. The Company employs 24 sales consultants who
are based in various offices around the country. These
consultants are remunerated by way of basic salary and conditions
of employment plus commission on sales achieved by the agents
allocated to them. In December, 1986 the Company presented an
overall package of remuneration to the Union which would increase
the basic salaries and reduce the commission (details supplied to
the Court). The introduction of the new system would take effect
from 15th July, 1987 and operate until 15th November, 1988. The
package would lead to a reduction in the overall earnings of some
of the workers. In the case of the workers whose earnings would
be reduced, the Company proposed to pay a lump sum based on the
differences of earnings under the new and old systems on a two
phased basis. This package was rejected by the Union. The matter
was referred to the conciliation service of the Labour Court on
11th March, 1987. Conciliation conferences were held on 8th and
25th May, 1987. As no agreement was reached the Company requested
that the issue be referred to the Labour Court for investigation
and recommendation. The Union agreed to the referral and a Court
hearing was held on 9th July, 1987 a date suitable to both
parties.
Company's arguments:
3. (a) Because of changes in marketing and new products
introduced by the Company the earnings achieved by
sales consultants has increased dramatically beyond the
expectations of both the Company and the sales
consultants. The level of remuneration is at an
unacceptably high level at present and the Company
requires to reduce this level of remuneration to ensure
that sales costs do not inhibit the Company's primary
duty as a mutual organisation to provide the highest
possible returns of its policy holders.
(b) The Company requires to reduce consultants earnings and
restructure the earnings package to bring their level
of remuneration more into line but still highly
competitive with competing companies (details supplied
to the Court).
(c) The Company is also attempting to correct a serious
anomalous position regarding the comparison of sales
consultants earnings with those of other employees
including senior management.
(d) The Company is endeavouring to provide a more
satisfactory and realistic cost base for the Company in
relation to its cost of sales and to direct the sales
of particular products and business.
Union's arguments:
4. (i) In previous years the procedure for agreeing the
consultants remuneration package has been agreed at
local level. The system in the past has worked out
well for all parties concerned except that one of the
main gripes of the consultants is the fact that the
package has not been agreed until well into the
financial year. The consultants have always striven
for stability in relation to their contracts and were
prepared and even conceded a reduction in their level
of earnings over the past four or five years. What
the Company now proposes is a complete change of
structure from that which exists at present and will
drastically reduce the earnings of those concerned.
(ii) While the Union concedes that the level of earnings
have been high for the consultants over the last
number of years, this was due to the sale of two
products and changes in marketing conditions. These
high level of earnings have not been maintained and
will in fact be reduced in the coming years (details
supplied to the Court).
(iii) The Union cannot accept a situation where either head
office feel that earnings are too large or someone
does not understand the package that it could in fact
be changed every year. It is grossly unfair that the
remuneration basis is not known until so late in any
financial year. This is an intolerable situation
which does not lend itself to incentives. Being in a
selling situation it should be known from day one of
a financial year what earnings are likely to be for
the production of "x" amount of business. The
Company are quick enough to set targets from the very
beginning of the financial year.
(iv) It is obvious that the Company find it embarrassing
in view of the fact that consultants have earned more
than management. However, in bad years this
situation can be reversed. There are sales and area
managers whose contracts have also not been agreed.
The Union have reason to believe that whatever saving
can be made on consultants commissions will in fact
be passed onto this category of management.
(v) The changes proposed by Head Office are so drastic
insofar as they propose that commissions can be
reduced from a potential 7% to 4% on annual premium
business and from a potential 5% to 2% on single
premium business with a new formula for basic salary,
it was the Union's conclusion that they were not
legally entitled to change the consultants contract
without consent. It has been the case in previous
years that we have been able to sit down and work out
an agreement. The same procedures have been followed
this year and we have been unable to make any
agreement whereas we have had no problem in the past.
In view of the letter issued to recently appointed
consultants setting out the contract, it is a matter
of legal record that the Company cannot change the
contract without the consent of all those involved.
RECOMMENDATION:
5. The Court recommends that the Company's proposals be accepted
and come into operation at the end of the current financial year
i.e. 15th November, 1987 instead of the proposed date of 15th
July, 1987.
~
Signed on behalf of the Labour Court.
Evelyn Owens
___________________
29th July, 1987.
M. D. / M. F. Deputy Chairman.