Labour Court Database __________________________________________________________________________________ File Number: CD87899 Case Number: LCR11653 Section / Act: S67 Parties: CHIVERS & SONS LIMITED - and - AMALGAMATED ENGINEERING UNION |
Dispute concerning parity of rates of pay between the Company and Cadbury (Ireland) Limited.
Recommendation:
8. The Court, having considered the submissions by the parties
and reviewed the correspondence on this issue, is satisfied that
the parity which applied between fitters employed by the Company
and fitters employed by Cadburys was conditional on common
agreements and on the economic and competitive position of the
Company.
In the changed circumstances which now prevail in the Company the
Court is of the view that the Company is justified in not applying
parity and accordingly does not recommend concession of the
Union's claim.
Division: Ms Owens Mr Heffernan Mr Walsh
Text of Document__________________________________________________________________
CD87899 RECOMMENDATION NO. LCR11653
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
SECTION 67
PARTIES: CHIVERS & SONS LIMITED
(REPRESENTED BY THE FEDERATED UNION OF EMPLOYERS)
AND
AMALGAMATED ENGINEERING UNION
SUBJECT:
1. Dispute concerning parity of rates of pay between the Company
and Cadbury (Ireland) Limited.
BACKGROUND:
2. Prior to May, 1986 the Company was a wholly owned subsidiary
of Cadbury (Ireland) which is a wholly owned subsidiary of the
Cadbury Schweppes Group. Since May, 1986 the Company is a wholly
owned subsidiary of the Premier Brands Limited.
3. In June, 1977 agreement was reached to bring the Company's
craftmens' rates into line with those in Cadburys. The parity
agreement continued up to the end of the 26th wage round at which
time the fitters' basic rate was #237.4 per 40 hour week in both
companies. However in 1985 the Company indicated that its
commitment to maintaining parity of basic rates with Cadburys was
subject to the operation of common agreements and to the economic
and competitive position of the Company's operation. The Union
could not recall contesting that position.
4. The 27th wage round settlement in the Company was for 2% for
6 months from 1st January, 1987 followed by a further 2% from 27th
July, 1987. The Cadbury's 27th wage round agreement was for 3.50%
increase on basic rate over 12 months, #72 VHI contribution, and
50p per increment increase on service pay. The dispute concerning
parity of rates with Cadburys was to be referred to a third party.
5. No local agreement was reached on the question of parity of
rates and on 6th October, 1987 the matter was referred to the
Conciliation service of the Labour Court. A conciliation
conference was held on 20th November, 1987 but no agreement was
reached. On 24th November, 1987 the case was referred to the
Court for investigation and recommendation. A Labour Court
hearing was held on 8th January, 1988, earlier dates were
unsuitable to one or other of the parties.
UNION'S ARGUMENTS:
6. 1. Following the management change of May, 1986 clear and
distinct commitments were given by the new management to
honour all existing agreements, conditions of employment,
service entitlements and pension rights. This must be
considered in the context of an agreement reached in a Labour
Court conciliation conference on the 24th June, 1977 which
gave effect to parity of pay rates between Cadbury Ireland and
the Company.
6. 2. By the agreement reached in June, 1977 parity was
introduced between the two companies and has continued to
exist for a period of 10 years. The commitment by the new
owners to honour all existing agreements must include the
parity agreement.
3. Even where parity does not exist the Court has accepted
the concept of fair comparison between companies.
4. One would have to search far and wide to find a comparison
such as this where the craftsmen are working on the same site
for the same rates of pay and conditions for like employers.
5. The agreement that the dispute concerning the existence or
otherwise of a parity agreement be referred to the Court was
on the basis that the Union's agreement to the 27th wage round
offer by the Company does not prejudice either party's case
while the matter is referred to the Court for interpretation
and resolution.
COMPANY'S ARGUMENTS:
7. 1. The agreement of June, 1977 came about because at that
time the Company's and Cadburys fitters frequently worked side
by side. The agreement reached in June, 1977 did not imply
parity of rates for ever.
2. It was constantly made clear to the Union that any
continued equalisation of pay rates between fitters in Chivers
and Cadbury depended totally on the viability of the business.
In keeping with the Company argument that there was no
unconditional commitment to the maintenance of both sets of
employees on the same rates was a May, 1984 agreement between
the Union and the Company. This agreement provided for a
different basis of retrospective payment to the Company's
fitters than that paid to Cadbury fitters in respect of a
guaranteed payment into the bonus scheme. The Union accepted
at that time a plea of financial difficulty by the Company and
agreed to differing arrangements than had applied in Cadbury.
3. A further example of the Company's attitude to
equalisation of pay is indicated from the following letter
written to the AEU on the 2nd July, 1985:
" The Company is committed to maintaining Chivers craftsmen
and Cadbury craftsmen on the same basic rates of pay.
Obviously this commitment is subject to Chivers craftsmen and
Cadbury craftsmen operating on common agreements and to the
economic and competitive position of the Chivers operation."
The Company attitude as outlined in this letter was accepted
by the Union.
7. 4. In February, 1986 the Company indicated to the Union that
the new owners would continue to honour all existing
employment contracts and other negotiated agreements and that
pay increases under the 26th wage round which had already been
negotiated would be implemented. The letter goes on to
indicate that on the expiration of the 26th wage round
bargaining under the 27th wage round would take place directly
between the Company, management and union representatives.
The contents of this letter were never disputed by the Union
indicating acceptance that the Company was now a separate
legal and financial entity to Cadbury Ireland PLC.
5. The Company cannot commit itself to parity of wages with
Cadbury Ireland PLC because of the different market and
economic factors affecting both companies. Its future
development would be severely undermined if its labour costs
were tied to those in a separate company over which it had no
control.
6. The fact that equalisation of pay rates existed for
fitters in both the Company and Cadburys since 1978 is due
entirely to the willingness of Cadbury to subsidise the
Company's operation. In three years since 1978, the Company
made losses whereas Cadbury Ireland PLC has been a consistent
profit maker. Since 1977 the best level of profit ever
achieved by the Company was 2.2% of sales while Cadbury
returned profit levels in the region of 4-5% on sales
approximately six times greater than Chivers. Thus the degree
of subsidisation was crucial to affording similar increases in
both companies. As a result of the acquisition by Premier
Brands Limited employees in the Company can no longer expect
wage increases which are subsidised by Cadbury Ireland PLC.
7. During the course of the 27th wage round negotiations the
Union recognised and accepted that the Company could not
commit itself to parity of wage rates or other conditions of
employment for the future with Cadbury Ireland PLC. The
Company pointed out that if such occurred it would undermine
the ability of the Company and its craftsmen employees to
negotiate meaningfully and within the context of the financial
and economic circumstances in which the Company operated. The
understanding of that meeting was confirmed to the Union in a
letter dated 29th July, 1987.
8. Premier Brands Limited employ in total almost 5,000
people, all of whom are ex-employees of Cadbury Schweppes.
The question of future parity with Cadbury Schweppes has not
been an issue anywhere within the UK and has not been an issue
with 96% of the staff employed in the Company.
9. The Company is now a fully separate legal and financial
unit to Cadbury Ireland PLC. This separation is also
underlined by the fact that the Company has appointed its own
separate professional advisors has introduced its own
separately funded Pension Scheme, has introduced a Share
Option Scheme which has been taken up by all but two of its
employees and since May, 1986 has directly conducted all its
own employee and Union negotiations.
7. 10. Any buy-out payments made would have to extend to all
other workers in the Company to maintain existing
differentials.
11. The Company's policy is to pay wages and provide
conditions of employment which are among the best in the Irish
Food Industry. Current basic wage rates for employee members
of the Union are #246.99 per week and are recognised to be
among the top rates paid in the country. This policy is, and
must continue to be, based on the economic environment in
which the Company operates and not on the financial
circumstances of Cadbury Ireland PLC.
12. Due to the nature of its market the Company must have the
ability to determine its own costs in order to protect its
market and the employment of its staff.
RECOMMENDATION:
8. The Court, having considered the submissions by the parties
and reviewed the correspondence on this issue, is satisfied that
the parity which applied between fitters employed by the Company
and fitters employed by Cadburys was conditional on common
agreements and on the economic and competitive position of the
Company.
In the changed circumstances which now prevail in the Company the
Court is of the view that the Company is justified in not applying
parity and accordingly does not recommend concession of the
Union's claim.
~
Signed on behalf of the Labour Court.
Evelyn Owens
___20th___January,___1988. ___________________
T. O'M. / M. F. Deputy Chairman