Labour Court Database __________________________________________________________________________________ File Number: CD87864 Case Number: LCR11655 Section / Act: S67 Parties: AER LINGUS - and - IRISH AVIATION EXECUTIVE STAFF ASSOCIATION |
Claim for increased basic pay/total remuneration for Superintendent grades A,B&C and analogous grades.
Recommendation:
7. In view of the extremely competitive environment in which the
airline operates, its urgent need to reduce costs and the
discussions which are taking place between the Company and the
various staff groupings aimed at securing savings, the Court does
not find it possible in present circumstances to recommend in
favour of the claim on the basis put forward by the Association.
Division: Mr Fitzgerald Mr Shiel Mr O'Murchu
Text of Document__________________________________________________________________
CD87864 RECOMMENDATION NO. LCR11655
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
SECTION 67
PARTIES: AER LINGUS
and
IRISH AVIATION EXECUTIVE STAFF ASSOCIATION
SUBJECT:
1. Claim for increased basic pay/total remuneration for
Superintendent grades A,B&C and analogous grades.
BACKGROUND:
2. There are seven levels of Management/middle Management below
that of Chief Executive. These are as follows:-
A. Assistant Chief Executive
B. General Manager
C. Departmental Manager
D. Controller
E. Superintendent A
F. Superintendent B
G. Superintendent C
The Association has in membership in excess of 80% of workers in
categories C to G inclusive (total number is approximately 420,
including analogous grades). The claim is on behalf of the formal
Superintendent and analogous grades (approximately 310 in total).
3. In late 1985, the membership directed the Association's
Executive to establish the relationship between its remuneration
and that of others in positions of a similar weight in the State,
semi-State and private sectors. The Executive subsequently
decided to assign this task to an external agency with expertise
in these matters and in December, 1986, Hay Management Consultants
were commissioned to carry out the exercise using their job
evaluation and benefit value comparison methods (full details of
methodology of the exercise plus copy of final report submitted to
the Court).
4. On the basis of the report's findings, the Association wrote
to the Personnel Manager on the 1st June, 1987, seeking a meeting
to discuss increases in basic salary, total cash, and total
remuneration. In his reply, dated the 4th June, the Personnel
Manager stated that there was no scope for negotiations and
rejected the claim. On the 29th July the Association referred the
matter to the conciliation service of the Labour Court. A
conciliation conference held on the 7th October, 1987 (earliest
suitable date) was adjourned to allow the Association make a
specific claim. On the 12th October the Association sought the
following minimum increases in its members' remuneration
(effective from the 1st August, 1986):-
Supt.A Supt. B Supt. C
Basic Pay - 23.18% 29.55% 28.17%
Total Remuneration - 20.76% 23.33% 16.26%
No progress was made at a re-convened conciliation conference on
the 6th November and the case was referred to the Labour Court for
investigation and recommendation. A Court hearing took place on
the 11th December, 1987.
ASSOCIATION'S ARGUMENTS:
5. 1. The findings of the Hay Management Consultants must in
the Association's view, convince the most neutral observer
that the level of remuneration of the middle management in Aer
Lingus is well below that which should be enjoyed in such a
Company. The Association would regard it as a dereliction of
its duty to its members if it did not seek to rectify a
situation which marks them as second-rate employees and the
Company as a second-rate employer.
2. The disparity shown between the various grades and their
comparator jobs would be greater still if the jobs selected
were at the middle or upper end of the jobs span in Aer
Lingus. However, by chance the majority of the jobs used in
the study fall into the lower end of the three Superintendent
grade spans.
3. The recent report of the Review Body On Higher
Remuneration in the Public Sector is of particular relevance
to the claim before the Court, if for no other reason than
that it provides independent substantiation of the findings of
the study carried out by the consultants into the remuneration
levels of the Superintendent grades.
4. While the Association has not maintained, nor is it
implying, any specified relativity between the claimants and
the Chief Executive or any other distinct category within Aer
Lingus, it is of the view that many of the conclusions arrived
at by the Review Group related to commercial State-sponsored
bodies and that these must also be applied in addressing the
issue here.
5. 5. The Review Body has carried out an exercise not very
dissimilar to that completed on behalf of the Association by
Hay Management consultants. It is noteworthy that the Review
Body also used Hay Management Consultants to carry out a job
evaluation exercise on some of the posts and that the results
were used in arriving at recommendations (4.5 of the Review
Body Report). On the matter of comparison the Review Body
Report stated "comparison between the Chief Executives of the
commercial State-sponsored bodies and the Chief Executives of
major private sector companies is convenient, appropriate and
relatively straightforward" (4.13 of the Report). This is no
less true for those in middle-management.
6. The Review Body states in 1.3 that "despite benefiting
from the standard increases under the various pay rounds since
the last review, those covered by our terms of reference have
lost out considerably during this time". The Association
claims that those in middle management have lost out to at
least the same, and more likely greater, extent than the Chief
Executive of the Company, as they did not benefit from a
review similar to that accorded to higher posts in the public
sector in 1979.
7. The Association has looked at the effect of applying the
Review Body's recommendations to the Chief Executive's
remuneration to quantify the percentage increase in his salary
vis-a-vis that of middle management since 1979. It was
assumed that the 1979 remuneration level for the Chief
Executive was the maximum recommended of #22,000 and that in
1987 he would be adjusted to the maximum level (before bonus)
of #57,200. Following the application of the Review Body
recommendation and dependent on the level of bonus, the
remuneration for the Chief Executive will have risen by
between 21.5% and 65.5% more than the percentage increase for
middle management. This demonstrates that the study which was
carried out by the Review Body and that commissioned by the
Association have proven to be complementary in these findings.
8. It was a matter of standard practice for many years in
Aer Lingus for staff groupings to draw external comparisons
with the State/semi-State and private sectors. It was
considered appropriate that Aer Lingus employees should be
remunerated at levels appropriate to the top companies in the
country and in this instance the oil companies and finance
houses were amongst others regularly used as comparators.
COMPANY'S ARGUMENTS:
6. 1. For historical reasons (due to the fact that the bulk of
the Superintendent grades are located in the administration,
commercial and finance areas) the claimants' salaries have
been determined by movements in the clerical supervisory
grades. On the occasion over the years where pay
differentials were the subject of review, the clerical grade
movements were largely the basis for comparison. No analogue
or relativity agreement (formal or informal) has ever existed
between the salary rates for the Superintendent grades and
comparable grades in other organisations. Neither have
private sector rates ever featured in Company negotiations.
2. The information contained in the Hay Management
Consultants Report is based on nine private sector
organisations and four State/semi-State organisations. There
was no prior consultation with the airline on the exercise.
However, had it been invited it is unlikely that the Company
would have supported this approach or agreed to a joint study
in view of it being weighed so heavily in favour of the
private sector. Furthermore, no Company permission was given
for the release of job descriptions to the consultants.
3. Now that agreement has been reached between the social
partners on the pay element of the Programme for National
Recovery, the Company has no scope for special pay increases
of the nature or the order sought by the Association.
4. The airline has commenced a major cost reduction
programme (TRIM '87) in order to substantially improve the
cost base of its air transportation costs and to help fund its
progressive fleet replacement plan. This has involved
system-wide reductions in staff numbers, overheads and other
costs designed to cut expenses by #25m. This programme will
continue until all targets have been achieved. The Company,
therefore, has no scope to fund special pay claims except
perhaps through immediate staff reductions in the group
concerned.
5. The Court will be aware of the serious situation facing
air transportation not alone in the current low fare and
competitive situation but also because of the changes being
introduced in January, 1988, by the EEC. These changes, while
presenting new opportunities to the airline, will nevertheless
create additional competition on many of its existing routes
including its prime routes out of Heathrow. The Company will
be exposed to competition on a scale not seen before. For
example, there are a number of independent U.K. carriers
expert in cornering niches in the type of market currently
controlled by the Company. Generally these carriers'
marketing strategy rely totally on price-cutting. At home
base, the Company's Irish low cost competitors continually
seek expansion at the airline's expense and this will
intensify.
6. In response to this serious competitive challenge by low
cost operators on air fares, charter rates and ground handling
contracts, the Company has held lengthy discussions with the
unions representing clerical entrant grades and operative
grades. Agreement has been reached on a detailed package
covering basic pay structures, shift and public holiday costs
with the clerical grades which will provide substantial
savings relative to both seasonal and future employment costs
generally. The new salary structure which has been agreed
will apply to all existing employees who will transfer at
present pay rates to the new structure. Discussions are at an
advanced stage with the operative grades on a package designed
to achieve the same objectives which will enable the Company
to meet head-on all competitive challenges especially in the
ground handling areas.
7. It seems incongruous that at a time of these major
developments, brought about by the requirement to compete with
low fare operators, the Association should be seeking
substantial pay rises with consequent major cost increases.
RECOMMENDATION:
7. In view of the extremely competitive environment in which the
airline operates, its urgent need to reduce costs and the
discussions which are taking place between the Company and the
various staff groupings aimed at securing savings, the Court does
not find it possible in present circumstances to recommend in
favour of the claim on the basis put forward by the Association.
~
Signed on behalf of the Labour Court
Nicholas Fitzgerald
--------------------
22nd January, 1988 Deputy Chairman
D.H./U.S.