Labour Court Database __________________________________________________________________________________ File Number: CD8778 Case Number: LCR11203 Section / Act: S67 Parties: ALFA CAVAN LTD. - and - ITGWU |
Claim on behalf of approximately 90 general workers for a 26th wage round increase and the introduction of a pension scheme.
Recommendation:
7. The Court recommends that the Company's final offer on the
26th round be increased to 4% for 15 months. The Court further
recommends that a 40/80ths contributory pension scheme with full
back service be introduced. The level of contribution from
employees should not exceed 5%. The question of a permanent
health insurance plan should be treated as a separate matter. The
Company's proposal on flexible breaks should be accepted.
Division: CHAIRMAN Mr Heffernan Mr Devine
Text of Document__________________________________________________________________
CD8778 THE LABOUR COURT LCR11203
CC861996 INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
RECOMMENDATION NO. LCR11203
Parties: ALFA CAVAN LIMITED
(Represented by the Federated Union of Employers)
and
IRISH TRANSPORT AND GENERAL WORKERS' UNION
Subject:
1. Claim on behalf of approximately 90 general workers for a 26th
wage round increase and the introduction of a pension scheme.
Background:
2. The issue of the pension scheme, which was discussed during
the 26th wage round negotiations, was first raised during the 25th
wage round negotiations. It was investigated by the Labour Court
which recommended, as follows:-
"The Court notes the Company's undertaking to introduce a
pension scheme with effect from 1st January 1987 and
recommends that talks on the details of the scheme,
especially as it applies to those due to retire in the
immediate future, should begin as soon as possible."
(Labour Court Recommendation No. 10601 refers).
When the parties started negotiations on the 26th wage round the
Company proposed introducing a money purchase pension scheme.
This was rejected by the Union. Local negotiations took place but
no agreement was reached.
3. On 2nd December, 1986 the questions of a 26th wage round
increase and the introduction of a pension scheme were referred to
the conciliation service of the Labour Court. A conciliation
conference was held on 22nd January, 1987, which was the earliest
date suitable to all parties. At conciliation the Union
quantified its claim as:-
- 5% for 12 months
- 40/60th contributory pension scheme with full back
service
- doubling of service pay
- permanent health insurance scheme (the Union was
prepared to defer this for one year if company gave
commitment to introduce a scheme) company to bear
full cost
- flexible and staggered breaks,not to be
consolidated
The Company rejected the claim and made a final offer as follows:-
- 3% for 15 months, no further costs
- 40/80th contributory pension scheme with full back
service
- flexible and staggered breaks with strict adherence
to ten and twenty minutes. Initial six months
trial period, if abused two breaks to be
consolidated.
- level of contributions from employees to be agreed.
The Union rejected the offer.
4. On 3rd February, 1987 the case was referred to the Court for
investigation and recommendation. A Labour Court hearing was held
on 25th February, 1987 in Carrickmacross.
Union's arguments:
5. (i) The workers' rate of pay is reasonable but it is not as
generous as the Company contends. The workers must
have a high daily productivity rate of 75 B.S.I. but
there is no production bonus. In addition the work
demands a variety of skills and involves heavy physical
work.
(ii) The Company's offer over 15 months is less than half
the average settlement for the wage round i.e. 6.2%
over 12 months. It appears the Company is offsetting
the full cost of the pension scheme against the wage
increase.
(iii) It would be possible, if the Company's offer were
accepted, that the wage increase could be totally
offset by the pension contribution.
(iv) The Company's last minute timing in making its offer
did not help the situation. In addition the workers
should have been given an explanation of why the offer
was so low.
(v) The factory is working at full rate on three shifts
with considerable overtime worked each week. The
workers have not seen the Company's accounts and can
only assume that because the factory is busy it is
profitable. Therefore, they are entitled to expect a
proper increase in pay.
(vi) The standard of 40/60th contributory pension scheme is
well established. In addition most schemes provide the
following benefits as part of the pension scheme;
Mortality benefit at twice annual salary;
pension payable for a minimum of 5 years after
retirement. Income Continuance (Disability Benefit)
to apply after 26 weeks illness.
Widows pension at 50%.
(vii) The Company has resisted introducing a pension scheme
for eleven years. The only reason for this is that the
Company does not consider the pension scheme an
important priority and are unwilling to purchase the
required benefits. An employer of the calibre of the
Company should not have to be forced to provide proper
benefits for its workers. It should accept
responsibility for its workers when they are at their
most vulnerable.
(viii)The pension scheme claimed by the Union would provide a
reasonable income at retirement age, but the Company's
proposal would mean a substantially reduced income
after retirement.
(ix) The Union has recommended that workers over 55 years of
age should accept an Endonment Benefit instead of
pension to help reduce costs. The lump sum provided
then would have to be equal to twice salary for 11
years service.
(x) Most good Pension Schemes provide for ill health under
one of two headings:-
(a) Early Retirement at any age, with consent of
employer, and pension calculated on full
actual and potential service to retirement
date.
(b) Income Continuance payment @ 75% salary, until
return to work, retirement date or death.
One of these provisions should be included in the
Company's scheme.
(xi) The Company's suggestion that the workers should
provide for ill health cover by taking out their own
life assurance is unacceptable.
Company's arguments:
6. (a) The Company has made a trading surplus marginally above
breakeven on a turnover of #5.3 million in the fifteen
months up to 31st December, 1986. This is an
insufficient return and will have to be improved if
serious consequences are to be avoided. The Company
exports all its product with 50% being sent to both the
U.S. and to Europe. At present the Company is losing
on its U.S. business and will either have to withdraw
from that market or invest substantially over the next
three years to improve its present operation. The
Company is discussing the matter with the I.D.A. at
present. However, to commit the investment necessary
there must be confidence in the Company's ability to be
viable and profitable. Presently this does not exist.
(b) No price increase will be possible on the Company's
U.S. sales during 1987 and the maximum possible
increase on the European sales will be 3% over the
second half of 1987. This represents a total possible
price increase on the Company's products of 0.75%
during 1987.
(c) The Company's labour costs are currently 31.5% of total
sales. This is out of line with competitors whose
labour costs range from 16% to 26%.
(d) The Company must have efficiency levels equal to or
better than its competitors if it is to survive.
Labour efficiency alone must increase by a minimum of
21% if it is to survive.
(e) The Company's hourly rate of #4.22 is one of the
highest rates in the region and possibly the highest in
the industry. The Union's claim on wages is
unreasonable in view of the Company's difficulties, its
labour costs and the low inflation rate. Having regard
to the additional cost of the pension proposal the
Company's offer is reasonable.
(f) The introduction of the pension scheme is a substantial
additional labour cost on the Company. In an effort to
secure agreement the Company replaced its original
proposal for a money purchase scheme with a 40/80th
scheme. However the Union has remained totally
inflexible. The situation is further complicated by
the Union's claim for the introduction of a permanent
health insurance scheme as part of the pension scheme
issue. This is a separate and independent matter. The
claim is totally inappropriate and unsustainable and as
the union has consistently been advised under no
circumstances is the company willing to consider same.
(g) A pension scheme is not common in all companies and in
companies which do have one many different types of
schemes are in use. The Company proposed a 40/80th
scheme to meet the Union's aspiration for back service.
This could not be afforded at a higher level of
benefit. Some recently negotiated schemes do not make
any provision for back service.
(h) The Company proposes to have direct negotiations with
three workers who will be excluded from the scheme
because of their ages. The Company's offer of
ex-gratia payments to these workers was rejected by the
Union.
(i) The Company's scheme for service pay is more beneficial
in a number of areas than schemes that apply generally.
This is true of the level of service pay that applies
and the fact that it commences after three years
instead of five. Service pay also increases every year
instead of at five yearly intervals.
(j) The Company agreed to a six month trial regarding
strict breaks on the basis of a Union committment for
adherence to strict and 20 minute breaks. If lost time
continued the breaks would be consolidated. This
position is reasonable.
RECOMMENDATION:
7. The Court recommends that the Company's final offer on the
26th round be increased to 4% for 15 months. The Court further
recommends that a 40/80ths contributory pension scheme with full
back service be introduced. The level of contribution from
employees should not exceed 5%. The question of a permanent
health insurance plan should be treated as a separate matter. The
Company's proposal on flexible breaks should be accepted.
~
Signed on behalf of the Labour Court
John M. Horgan
________________________
Chairman.
22nd May, 1987.
T.O'M./U.S.