Labour Court Database __________________________________________________________________________________ File Number: CD88455 Case Number: LCR11935 Section / Act: S67 Parties: IRISH RAIL - and - CIE SHOPWORKERS' TRADE UNION GROUP |
Inclusion of some job losses in the calculation of productivity payments to engineering operatives.
Recommendation:
8. The Court was greatly assisted in its deliberations by the
detailed presentations made by both parties to this dispute, which
has its origins in productivity agreements made in the last
decade. All the parties are aware of the substantial changes in
the economic situation in the country which have taken place over
that period, the impact those changes have had on the structure of
the Company itself, and of the view which is now taken of the
influence which productivity agreements can be allowed to have on
wage rates.
In Recommendation No. 11845 the Labour Court dealt with two
aspects of a proposed productivity agreement. The matter now
before the Court is the outstanding item which remains to be
resolved.
The Court accepts that the period for the determination of the
savings in manning levels should be December, 1983 to December,
1987, and notes that while there are some differences between the
parties on the actual number of jobs to be considered, the dispute
revolves primarily around the contention of the Company that in
its present viability situation savings made must be allocated
towards sustaining that viability, and cannot be viewed in the
same way as if they were an actual contribution to profits.
The Court is satisfied:-
1. That the present claim should be regarded as the culmination
of an issue which has its origins in an earlier Productivity
Agreement covering engineering operatives which was followed
by a proposal for further productivity in 1984.
2. That the basis for evaluation of the savings made submitted by
the Union is reasonable.
3. That the difference between the Company and the Union
evaluation of those savings is not, in the context of the
overall claim, significant.
4. That the circumstances of the claim are quite unique to the
group in the claim and can have no bearing on groups outside
it.
The Court recommends:
A. That on acceptance and full implementation of the productivity
elements, the Company agree to the additional £2.80 claimed by
the Union in addition to the £7.19 already agreed (rounded up
to £10 p.w.)
B. That this increase should be applied to the basic rate.
Division: Ms Owens Mr McHenry Mr Walsh
Text of Document__________________________________________________________________
CD88455 RECOMMENDATION NO. LCR11935
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
SECTION 67
PARTIES: IRISH RAIL
and
CIE SHOPWORKERS' TRADE UNION GROUP
SUBJECT:
1. Inclusion of some job losses in the calculation of
productivity payments to engineering operatives.
BACKGROUND:
2. The dispute concerns approximately 650 engineering operatives
employed in the Company's workshops, stations and depots
throughout the country. The history of the situation dates back
to the 1970s when the Group sought restoration of relativity with
engineering craftworkers in CIE. Labour Court Recommendation No.
6465 (June 1981) stated as follows:
"The Court considers that there is merit in the Group's
claim for a fixed relationship between these workers and
engineering craftsmen with whom they work so closely in
CIE. The Court, therefore, recommends that the parties
agree that on the expiry of the 1980 National Agreement on
Pay Policy the percentage relationship between the
claimants and the engineering craftsmen be maintained
except where a general company or national agreement or
productivity agreement on behalf of any group disturbs this
relationship".
In 1979, the Rail Operative Trade Union Group concluded a
comprehensive productivity deal with CIE which resulted in
increases for all rail operative grades (details supplied to the
Court). In 1981, the engineering craftworkers concluded a
productivity agreement with CIE. The division of cost savings was
on a 70/30 basis in favour of the craftworkers. Discussions
commenced between CIE and the Shopworkers' Group on a productivity
agreement for engineering operatives and, following lengthy
negotiations, proposals were formulated for a new agreement. The
Labour Court, in Recommendation No. 8644 of the 27th January,
1984, recommended that the division of savings in this proposed
agreement should be on a similar basis as agreed with the
craftworkers.
Arising from the productivity proposals and on the basis of the
70/30 division of savings, CIE, on the 16th May, 1984, made an
offer to the Shopworkers' Group of an increase in basic pay of
£9.08 per week for adult engineering operatives and £4.26 for
juniors. This, however, was not accepted or implemented as it was
not acceptable to engineering operatives in Dublin City (Bus)
Services.
3. As a result of the restructuring of CIE in February, 1987,
three new companies were set up, Irish Bus, Irish Rail and Dublin
Bus. In January, 1988, the Shopworkers' Group sought discussions
with Irish Rail on the matter of a productivity deal involving
engineering operatives in Irish Rail. The matter was referred to
the conciliation service of the Labour Court on 16th March, 1988.
Industrial action took place at Inchicore on 21st March and a
conciliation conference was held on 23rd March, 1988. Normal
working was resumed. Further discussions subsequently took place
between the parties and a Union working party visited various
workshops throughout the country to evaluate productivity in man
hours. Arising from this process, agreement was not reached on
three items:
a) Division of savings.
b) Retrospection.
c) Inclusion of some job losses in the calculation of
productivity payment.
Following a conciliation conference on 11th April it was agreed
that items (a) and (b) would be referred to the Labour Court for
investigation and that the Company would agree to examine item
(c). The Court issued Recommendation No. 11845 on 11th May, 1988
which stated:
"The Court, having considered the submission from both parties
and noting the terms of Labour Court Recommendation No. 8644
and the sanction of the Minister to productivity proposals in
1984, recommends as follows:-
(1) DIVISION OF SAVINGS:
In respect of savings arising from productivity agreed
and implemented up to date of recommendation a division
of 70/30 in favour of the employees
and
In respect of savings arising from productivity agreed
and implemented as and from the date of recommendation a
division of 50/50.
(2) With regard to the claim for retrospection the Court
recommends payment of £100 to each of the operatives
directly concerned in the claim."
4. The current dispute relates to item (c), the inclusion of some
job losses in the calculation of productivity payment. The Group
contends that 25 job losses should be credited to the workers (see
Group's arguments below) and on this basis is claiming a £10
productivity increase on basic pay, rather than the £7.19
increase as now proposed by the Company.
5. This dispute led to a ballot emerging in favour of strike
action to commence on 1st July, 1988. The matter was the subject
of a Labour Court conciliation conference held on 20th June, 1988,
at which no agreement was reached. The dispute was then referred
to a full hearing of the Labour Court and industrial action was
deferred for one week pending the outcome of the Labour Court
investigation. The Court hearing took place on 28th June, 1988.
GROUP'S ARGUMENTS:
6. 1. The approach by the Company in not crediting these job
losses in the calculation of productivity is unreasonable and
out of line with its approach in other productivity deals.
Previous productivity deals involving engineering operatives,
engineering craftsmen, clerical and executive grades, building
operatives and craftsmen, rail operatives and road freight
operatives have all taken account of staff reductions in
determining amounts paid. A clause in the existing agreement
with clerical and executive grades states "saving in respect
of suppression of posts will be based on direct costs, i.e.
salary plus addition to cover on costs, etc". The Unions
supplied details to the Court of the various productivity
agreements over the years.
2. The Unions are seeking the application of productivity
increases onto the basic rate of pay, and not application of
such increases in the form of an allowance which would not
rank for pension or plus payments.
3. The Group are satisfied that job losses as a result of
closures, reductions in workload or budget cuts should not be
included when calculating savings for the purpose of
productivity payments. Taking the period December 1983 to
December 1987, which is agreed to be the relevant one, there
were a total of 230 job losses. The Group contends that, of
these, 180 should not be included when calculating
productivity. This figure consists of 103 arising from the
closure of Broadstone, 55 for man hours already included in
the productivity package and 22 for decline in workload. This
leaves a balance of 50 jobs lost and this figure should be
included in calculating productivity payments.
On the basis of Labour Court Recommendation No. 11845 the
Group states that the 50 job losses should be credited 50/50
between the Company and the operatives giving a figure of 25
job losses to be credited to the workers. This is calculated
to yield a figure of £2.80 each to the workers in addition to
the £7.19 already agreed. (This is on the basis of each job
loss credited yielding an increase of 11p on the basic rate).
The Group is therefore seeking an increase of £10 per week
(approximately £7.19 + £2.80) on foot of productivity.
4. The Company at one time offered an increase of £9.08 which
would have been acceptable to the workers in Irish Rail.
However, the offer was not acceptable to workers in Dublin
City Services and, because of the structure of CIE at that
time, the offer was not implemented.
5. The working party which visited various locations
throughout the country reached agreement with local management
on the evaluation of productivity items. These values
exceeded those finally included in the deal by the Company and
thus false expectations were raised amongst the workforce.
6. The Group does not accept that concession of this claim
would have any repercussive effects since the workers
concerned are generally perceived to be "behind" others.
COMPANY'S ARGUMENTS:
7. 1. The Company must obtain the approval of the Department of
Tourism and Transport before an offer can be made on foot of
any claim whether productivity or other. The Company has not
been able to reach final conclusion with the Group on
proposals to be put to the Department in the present case.
The Company's evaluation of the productivity elements which
have emerged from the discussions is that they would yield an
increase of £7.19 per week for adult engineering operatives if
implemented in full. There is not, however, agreement on full
implementation.
2. The Company considers that there are no valid grounds for
industrial action in the current circumstances. The Company's
present financial situation and the intense competition in the
transport field mean that any interruption of services would
call into question the survival of the Company as it exists
and therefore the maintenance of jobs.
3. In recent years there has been a general Government policy
movement away from productivity deals. The situation in 1988
is very different from that which obtained in 1984 when
Ministerial approval was originally given in respect of a
package covering all engineering operatives in CIE. Where a
Company is in a viability situation, as this Company is, all
reductions in expenditure should go to ensuring the survival
of the company and the maintenance of the highest practical
level of employment. The Company has been instructed by the
Government to reduce expenditure from 1984 up to and including
1989 by 3.7% per year. The Government is very concerned at
the existing level of deficit on the railway which in 1987 was
£96.2m. It is vital to Irish Rail to reduce expenditure and
as a consequence since its establishment in February, 1987 the
Company has progressively reduced staff numbers covering all
grades and this has been achieved through natural wastage and
voluntary severance. Because this reduction in numbers stems
from a viability situation, the resultant savings are not
being credited to productivity in the case of the grades
concerned. The Company has indicated to the Trade Unions that
it would wish to meet the first phase pay increase under the
Programme for National Recovery which would cost an additional
£3.3m in a full year. The Government has stipulated that this
money must be found without recourse to additional borrowing
or increases in fares or charges. This underlines the need to
maximise savings and to secure increased revenue. While the
Company is pursuing a vigorous sales policy, the position in
the market place is extremely difficult because of the
recession and intense competition from private operators; the
situation on the freight side is particularly critical.
4. The Company's records show a reduction of 179 engineering
operatives over the period in question while the Group
contends that the figure is 230. The precise details for each
location were supplied to the Court. In arriving at the
figure of a reduction of 230 employees, the Group have
excluded 29 engineering operatives at present employed on the
new carriage building project (NCB) in Inchicore and 20 now
employed in the new DART servicing shed at Fairview, on the
basis that both projects are new additional work. In fact, 13
new employees were recruited for the new carriage building and
13 additional engineering operatives were taken on for
Fairview Depot. The Company contends that any staff
reductions are due to reductions in workload together with
productivity already credited in the list of flexibility/
productivity proposals evaluated at £7.19. The Company
supplied details of the main areas of contention.
5. Irish Rail is a new Company which has been reducing its
staff: (a) to match business requirements, and (b) to reduce
expenditure in an effort to reduce its dependence on scarce
State resources. Staff numbers are being reduced throughout
the Public Service in order to redress the State finances and
productivity payments are not being made on foot of these
reductions. To concede payments in similar circumstances in
Irish Rail could give rise to repercussive claims both within
the Company and elsewhere.
6. While the items which have emerged have been evaluated as
giving an increase of £7.19 per week on the basis of the terms
of Labour Court Recommendation No. 11845, it has not been
confirmed that the implementation of all these items is
acceptable to the staff concerned. Any deletions from the
list would alter downwards the figure of £7.19. The entire
package, as already indicated, must be submitted to the
Department of Tourism and Transport for approval. The Company
would agree that the figure of £7.19 was calculated on the
basis that such an increase would apply on the basic rate of
pay. The method of evaluation by reference to the basic rate
is that used in all previous productivity agreements
negotiated by the Company and hence this practice was followed
in the current discussions. However, the Company has recently
received guidelines on productivity from the Department which
contain the provision that any pay increases, bonuses or other
payment should be met out of realised savings and should not
be consolidated with basic pay increases. In presenting any
package to the Department, the Company would be explaining the
prevailing situation in this regard.
RECOMMENDATION:
8. The Court was greatly assisted in its deliberations by the
detailed presentations made by both parties to this dispute, which
has its origins in productivity agreements made in the last
decade. All the parties are aware of the substantial changes in
the economic situation in the country which have taken place over
that period, the impact those changes have had on the structure of
the Company itself, and of the view which is now taken of the
influence which productivity agreements can be allowed to have on
wage rates.
In Recommendation No. 11845 the Labour Court dealt with two
aspects of a proposed productivity agreement. The matter now
before the Court is the outstanding item which remains to be
resolved.
The Court accepts that the period for the determination of the
savings in manning levels should be December, 1983 to December,
1987, and notes that while there are some differences between the
parties on the actual number of jobs to be considered, the dispute
revolves primarily around the contention of the Company that in
its present viability situation savings made must be allocated
towards sustaining that viability, and cannot be viewed in the
same way as if they were an actual contribution to profits.
The Court is satisfied:-
1. That the present claim should be regarded as the culmination
of an issue which has its origins in an earlier Productivity
Agreement covering engineering operatives which was followed
by a proposal for further productivity in 1984.
2. That the basis for evaluation of the savings made submitted by
the Union is reasonable.
3. That the difference between the Company and the Union
evaluation of those savings is not, in the context of the
overall claim, significant.
4. That the circumstances of the claim are quite unique to the
group in the claim and can have no bearing on groups outside
it.
The Court recommends:
A. That on acceptance and full implementation of the productivity
elements, the Company agree to the additional £2.80 claimed by
the Union in addition to the £7.19 already agreed (rounded up
to £10 p.w.)
B. That this increase should be applied to the basic rate.
~
Signed on behalf of the Labour Court
4th July, 1988
AK/PG Evelyn Owens
Deputy Chairman