Labour Court Database __________________________________________________________________________________ File Number: CD88229 Case Number: LCR11871 Section / Act: S67 Parties: AER LINGUS PLC - and - IRISH TRANSPORT AND GENERAL WORKERS' UNION;FEDERATED WORKERS UNION OF IRELAND |
The introduction of altered rates of pay and conditions of employment for new operative recruits.
Recommendation:
The Court has considered the submissions made by the parties.
Having regard to the commercial and competitive background against
which the Company initiated the negotiations on an amended pay
structure, the Court is satisfied that in view of the new fiercely
competitive trading environment, it was imperative that the
Company seek such amendments to its existing pay structure. This
is particularly true as the Company envisages an expansion of its
work force as necessary to take advantage of the new opportunities
open to it. In these unique circumstances, and in view of the
improved employment status of workers recruited under the proposed
new structure the Court supports the somewhat unusual amendments
to the current pay structure which emerged from negotiations with
the Unions.
With the above situation in mind the Court has looked in detail at
the proposed new wage structure and has the following specific
recommendations to make:-
(a) It is the view of the Court that the proposed starting rate
is too low and the Court recommends that the scale be amended
by the elimination of the first two points and thus provide
for a starting rate at age 18 of £124.34.
(b) It is further the view of the Court that the resulting 34
year scale is too long and it recommends that the parties
meet to negotiate the elimination of a further 4 points. It
is expected that such negotiations would provide for
continuing assurance that there would be no worsening of
conditions of staff recruited prior to the introduction by
the Company of the new structure this year.
(c) The Court also recommends that the parties arrange to keep
the resulting new structure under review to avoid possible
inequities arising in the future.
(d) On matters concerning the employment of catering staff the
Court notes that the parties have agreed to meet directly to
attempt to overcome difficulties particular to this area of
employment.
The Court recommends that the above negotiations commence without
delay and will arrange for the assistance of an IRO if required by
the parties at any stage.
Finally the Court notes with regret that the Company under
pressure of time implemented the amended terms before reaching
agreement with the Unions concerned, apparently contrary to the
terms of their procedural agreement. Whatever the circumstances
such breaches of proper procedure are always contrary to good
industrial relations.
Division: Mr O'Connell Mr Heffernan Ms Ni Mhurchu
Text of Document__________________________________________________________________
CD88229 RECOMMENDATION NO LCR11871
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
SECTION 67
PARTIES: AER LINGUS PLC
and
IRISH TRANSPORT AND GENERAL WORKERS' UNION
FEDERATED WORKERS UNION OF IRELAND
SUBJECT:
1. The introduction of altered rates of pay and conditions of
employment for new operative recruits.
BACKGROUND:
2. In the early eighties the Company carried out a review of the
airline's activities and strategies. The review dealt with the
financial position, the need to begin essential fleet renewal and
the new regulatory environment which would increase competition.
The Company considered that -
- costs would have to be drastically reduced in the air
transport division;
- sustained programmes of quality improvement in the
airline's services would be essential;
- funds would have to be generated for fleet renewal from
internal resources and borrowings;
- the contribution from ancillary activities (already the
financial mainstay) would have to be further increased.
The present dispute concerns approximately 1,050 operatives
whose existing salary scales are as follows:
Point 1 Point 10 Point 17
Grade 1 164.39 183.01 188.64
Grade 2 168.53 189.52 195.58
Grade 3 173.46 195.15 201.63
Grade 4 180.51 203.26 209.88
Grade 5 186.69 210.01 217.06
Grade 6 195.15 218.92 226.36
Grade 7 205.28 229.35 237.08
Grade 8 218.16 242.20 249.92
A shift premium of 16.66% of basic pay also applies and a roster
duty allowance of £5.93 for Saturdays and nights and £7.94 for
Sundays and public holidays. Time x 3 is paid for public
holidays.
3. In October, 1987, as a cost cutting exercise, the Company
proposed the alteration of salary scales and conditions of
operative grades, chiefly affecting new recruits. A series of
meetings with the two Unions took place which culminated in a
package, as set out in the Company's letter to the Unions dated
9th November, 1987, attached as Appendix A to this recommendation.
This package was put to a ballot of the workers with a positive
recommendation from the negotiating committees. The package was,
however, rejected.
4. At a meeting in January 1988 the Company advised the Unions
that it was proceeding to advertise for new operative staff under
the conditions proposed. An advertisement was placed in the press
on 16th January, 1988 and 150 new operative staff were
subsequently recruited, 60 in Dublin Station, 50 in catering and
40 in Shannon, all of whom work shift. The Unions objected to the
Company's action in recruiting these new staff without reaching
agreement on the matter and a ballot on industrial action was
held. The workers voted against industrial action and the matter
was referred, on 22nd February, 1988, to the conciliation service
of the Labour Court. A conciliation conference was held on 11th
March, 1988. No agreement being reached, the matter was referred
to a full hearing of the Labour Court. The hearing commenced on
15th April, 1988 and was resumed on 29th April, 1988.
UNIONS' ARGUMENTS:
3. 1. Breach of Agreements
The Company's action in proceeding to recruit new operatives
under the proposed terms which had been rejected by the
Unions was in breach of existing Agreements and also of point
14 of the Company's letter of 9th November (see Appendix A).
Clause 1.5 of the 1971 Operative Grades Agreement required
the Company to:
"apply the National Agreement and to provide substantial
additions to basic pay based on internal relationships
which shall be maintained for the currency of this
agreement".
Since 1967 there has been a pay relationship between
tradesmen and operative grades in the Company. The Company,
on a number of occasions attempted to deviate from the terms
of Clause 1.5 by breaking this relationship. The validity of
Clause 1.5 was, however, upheld in Labour Court
Recommendations Nos. 5068 and 5936. Following rejection of
Labour Court Recommendation No. 7224 by the Company in 1982 a
special agreement on Clause 1.5 was entered into. This
stated as follows:
"........
b) Collective Bargaining Agreements:
In the absence of agreements at national level, it is
normal Company practice to have full regard to offers
being made to other negotiating groups. Previous history
of Pay Rounds clearly indicates that in Pay Agreements
with Operative Grades, full account was taken of the
settlements with both the Craft, and Clerical Grades in
determining the level of increases, and the duration of
pay agreements. The basic Company policy is for parity
of treatment for all categories. This policy will be
maintained.
........
d) Special Pay Increases:
1) It is recognised that Operative Grades have a
traditional relativity with other groups. In the
event that another category procure a special pay
increase for all in that category, this will be
construed as a disturbance in that relativity. In
the event of disagreement on the merits of the issue,
conciliation or Labour Court procedures will be used.
........"
It is considered that the current actions of the Company are
a further attempt to break the existing relationship with
tradesmen.
The Union's objective is to retain unchanged the terms and
conditions of the existing Operative Grades Agreement. The
Company is attempting to change major conditions of the
Agreement in a manner not provided for. Article 17.3.1
specifically states that in the absence of agreement to
alterations by both parties, the existing Agreement shall
stand.
The proposed new pay scales are in contravention of the
spirit and intent of the Programme for National Recovery.
2. Financial Situation
The Company is expanding and is highly profitable. Figures
for the year ending April 1988 are likely to show a net
profit after taxation of £31m compared to a figure last year
of less than £17m. Air transportation will show a profit in
the region of £6m which is £7m ahead of budget and almost £6m
ahead of last year. Cumulative net profit (pre tax) in the 5
years ending April 1984 to April 1988 is almost £100m. The
Company's employees play an important part in the generation
of profits. The existence of numerous subsidiary companies,
the purchase of new aircraft and the establishment of new
routes all indicate the healthy financial position of the
Company.
It is acknowledged that competitors with low wage costs exist
in the market. This does not justify the Company's present
position in relation to Operative Grades. Aer Lingus has and
will continue to have a considerable advantage because of
accrued profits (c £100m), a high capital cost infrastructure
already in place and, due to economy of scale, a much higher
efficiency level. Aer Lingus is also the established name in
the major markets. Employees in the competitor companies
will be fighting for improvements in the present low wage
rates and in working conditions.
3. Proposed rates of pay
The proposed new rates of pay are too low to live on,
particularly when combined with the reduction in shift pay
and public holiday pay in the first five years of employment.
It is inappropriate that such conditions should be accepted
by existing staff, who are not adversely affected, on behalf
of staff who have not yet been employed. The Unions provided
the Court with detailed examples of take home pay for various
workers under the proposed scales. These range from £88.09
at age 18 to £103.83 at Point 10 of the scale for unmarried
workers, the figures to be increased by £13.80 for married
workers. The Unions do not accept the figure of £138 as
average basic pay, as the Company claim. The Unions consider
that the proposed pay scale is much too long. A worker would
frequently be over fifty years of age before reaching the
maximum point. It would be almost impossible under the
proposed scales for these workers to purchase property.
4. Staff Reductions
Overall permanent staff numbers have been reduced by more
than 1,000 since 1982. There has also been a reduction in
temporary staff and in overtime. Many staff have experienced
a reduced earning capacity while, at the same time, workloads
have been increasing. The Unions believe that it is the
Company's intention to continue to reduce staff numbers and
that there is no real intention to create the additional jobs
promised for operative recruits. These new workers will
replace others.
5. Negotiations
The Company should have dealt centrally with an issue of this
magnitude rather than commence negotiation in Dublin and then
in Shannon. No negotiations took place in Cork. As already
stated, the implementation of the proposals without agreement
was in breach of existing agreements. The Unions' attitude
in entering into negotiations on this issue indicates their
awareness that a competitive marketplace exists. The fact
that the workers voted against industrial action shows
patience and a belief in the negotiating machinery.
6. Catering Department
There is a well established recall system in operation in the
Catering Department which provides for seasonal staff to be
recalled every season. While negotiations were taking place
on this issue a requirement to engage extra staff in the
Catering Department arose. Separate discussions took place
on this issue and, notwithstanding the Unions' demand to have
these extra staff employed under the agreed conditions of
employment, the Company insisted that they be engaged under
the proposed new conditions and proceeded to employ these
recruits on a personal contract basis. It was agreed that
should the proposals be rejected, then these catering staff
would revert to the agreed conditions of employment and
discussions would take place on their employment status.
Despite this, the Company have failed to honour their
agreement with the Unions in this regard.
COMPANY'S ARGUMENTS:
4. 1. New job creation
The Company has guaranteed an additional 150 permanent jobs
within a year of implementing the new rates. It is
emphasised that this figure is net of any retirements or
early severances. The Company cannot guarantee these jobs
into the future, as requested, due to normal prudence. This
in no way indicates the absence of a genuine job creation
project. The Company would be happy to discuss traffic
estimates at the end of one year and indicate how many jobs
will be created/maintained in the following year. The
Company is unique in the Irish Public Sector in engaging in
major job creation in 1988.
2. Earnings
In negotiations the Company tried to address the matter of
earnings both at the beginning of a career and throughout the
later years. Given the requirement for a full driving
licence for most operative applicants, 18 year old employees
are an exception. The average age of a new operative is
about 24. The average 24 year old new operative can expect
the following:
Basic Pay £138.30
Shift pay @ time
and one-tenth £ 13.83
Roster Duty Allowance £ 7.62 (average)
£159.75 (average)
Weekly average value
of Public Holidays £ 4.67
Weekly average value of
5 hours overtime per week £ 32.00
Overall average earnings
per week £196.42
The new operative will also have a free bus pass which
equates to £10 net per week.
The Company designed all of its new entry proposals through
radical restructuring of its grading structures so that in
the course of time the new entrant achieves all existing
benefits. Unlike other airlines which operate two-tier
grading structures this new integrated structure cannot be
termed divisive.
New recruits start mainly in the rostered areas, with the
expectancy of average earnings of over £196 per week. Unlike
the position in the majority of industries, the employee is
then placed on an incremental salary scale with an unpromoted
basic maximum of £219.25 per week (substantially better than
current rates). Full shift pay (time plus one-sixth) and
Public Holiday payments (time x 3) apply after 5 years
service and there are further promotional grades which can be
achieved. When one considers the other perks available in
Aer Lingus - staff travel, a large sports complex, full
pension scheme and sick pay benefits, the Company offers a
very desirable, attractive job at favourable rates and,
having quoted the new entry rates in newspaper ads, over
8,000 applicants responded.
These pay rates and conditions of employment compare very
favourably with those of competitor companies and very many
companies in the private sector.
3. Negotiations
The airline negotiated its new entry rates and conditions.
It did not act on advertising or recruiting staff until it
had reached agreement at the negotiating table. Because of
the complexities in grading structures and conditions of
service it was not possible to negotiate on a 'global' basis
and all discussions were therefore with the appropriate
negotiating groups. The problems that face the airline also
face each staff group and trade union equally. The onset of
the largest ever Summer operation meant that recruitment
could not be postponed. In the context of the use of normal
negotiating procedures and resulting agreement at that level,
there can be no argument of unilateral action.
4. Business Position
A new trading environment exists involving low airfares and
low cost competitors. The Company described this environment
in some detail to the Court. The Company has been
experiencing the need to reduce the cost of air transport,
improve the quality of services, renew aircraft at great cost
and increase the contribution of ancillary activities. These
objectives were put into effect and the "Trim 87" programme
designed. There is no room for complacency in the radically
altered business environment. The Company, in conjunction
with the various groups of employees must plan for the decade
ahead. While the Company is not recruiting into the trades
areas at present it has advised the Craft Unions of the need
to change the entry structures and current intensive
negotiations with the Craft Unions are concerned with major
changes necessary for the survival of the contract overhaul
business.
In the current business environment, fleet replacement and
expansion is only possible with the acceptance of radical
changes in costs and thinking. Traditional arguments and
philosophies must be set aside. For years to come low fare
operations, charters and new fifth freedom rights face direct
low cost competition. Pay scales which include old
productivity, relativity and league table monies relate to
the past because of the present environment.
5. Alleged Breach of Agreements
The Company does not accept that it is in breach of any
agreements. Clause 1.5 quoted by the Unions was deleted by
Labour Court Recommendation No. 7224 and does not any longer
constitute part of any Agreement.
RECOMMENDATION:
The Court has considered the submissions made by the parties.
Having regard to the commercial and competitive background against
which the Company initiated the negotiations on an amended pay
structure, the Court is satisfied that in view of the new fiercely
competitive trading environment, it was imperative that the
Company seek such amendments to its existing pay structure. This
is particularly true as the Company envisages an expansion of its
work force as necessary to take advantage of the new opportunities
open to it. In these unique circumstances, and in view of the
improved employment status of workers recruited under the proposed
new structure the Court supports the somewhat unusual amendments
to the current pay structure which emerged from negotiations with
the Unions.
With the above situation in mind the Court has looked in detail at
the proposed new wage structure and has the following specific
recommendations to make:-
(a) It is the view of the Court that the proposed starting rate
is too low and the Court recommends that the scale be amended
by the elimination of the first two points and thus provide
for a starting rate at age 18 of £124.34.
(b) It is further the view of the Court that the resulting 34
year scale is too long and it recommends that the parties
meet to negotiate the elimination of a further 4 points. It
is expected that such negotiations would provide for
continuing assurance that there would be no worsening of
conditions of staff recruited prior to the introduction by
the Company of the new structure this year.
(c) The Court also recommends that the parties arrange to keep
the resulting new structure under review to avoid possible
inequities arising in the future.
(d) On matters concerning the employment of catering staff the
Court notes that the parties have agreed to meet directly to
attempt to overcome difficulties particular to this area of
employment.
The Court recommends that the above negotiations commence without
delay and will arrange for the assistance of an IRO if required by
the parties at any stage.
Finally the Court notes with regret that the Company under
pressure of time implemented the amended terms before reaching
agreement with the Unions concerned, apparently contrary to the
terms of their procedural agreement. Whatever the circumstances
such breaches of proper procedure are always contrary to good
industrial relations.
~
Signed on behalf of the Labour Court
25th May, 1988 Nicholas Fitzgerald
AK/PG -------------------
p.p. John O'Connell
Deputy Chairman
APPENDIX A
9 November 1987
Mr George Sheehan Mr Jim O'Donnell
Number 17 Branch Assistant Branch Secretary
ITGWU FWUI
Liberty Hall Corballis House
Dublin 1 Dublin Airport
IRT 527 87
SALARY SCALES - NEW ENTRANTS
Dear Sirs
I refer to the position reached on 5 November regarding the above
and the general reconstruction of grades and salary scales for
your members.
1. Basic starting salary will be £117 per week rising by annual
increments to a maximum of £216 per week. The scale is age
related from 18 to 25 years with a double increment at age 21.
The employee goes on to the appropriate age related point on
April 1 of each year. I attach the actual scale, point by
point, for clarification. This scale is inclusive of the Pre
BAC Payment.
2. The grades will be redesignated for all Operatives as
Operative A, B, C, D. Operative A will encompass all existing
Operative grades from 1 to 4, Operative B will encompass
Operative grades 5 and 6, Operative 7 will now be Operative C,
Operative 8 will now be Operative D. The Operative grades 8A
and B will retain their differential. The grading position of
the Operative 8A and B will be discussed in conjunction with
the examination to be carried out with the Job Ranking Board.
3. A payment of £12 per week will apply for promotion from
Operative A to B, £13 B to C and £14 C to D. While these
payments will be shown separately they will be part of basic
pay and will be taken into account for shift pay, overtime and
superannuation contributions, etc. These payments are
applicable on promotion irrespective of a person's point on
the basic salary scale and normal salary increases will be
applied to them.
4. The present Operative scales will be abolished. Existing
staff will be placed at the appropriate point of the new scale
on the combination of basic and promotional pay. This
transfer will not adversely affect anybody's current pay. We
re-iterate our guarantee that your members will not lose money
as a result of this transfer. Anomalies will be dealt with as
they arise. Up to 31 March 1988 any anniversary increments
due on the long service scale will be paid. Thereafter all
the increments will be paid on 1 April each year.
5. For the first five years of service Public/Company Holidays
will be paid at double time with no lieu time available. From
then on these holidays will be paid for at the appropriate
rates and conditions. For the first five years of service
shift pay will be at time and one tenth. From then on shift
will be at the appropriate rates and conditions. The present
weekend/Public Holidays/nights supplements will be paid.
6. Only staff recruited into departments which have hitherto
engaged in seasonal recruitment, e.g. Group Operations and
Catering, are liable - at the Company's discretion - to up to
six months per year compulsory lay-off in the first five
years. During these lay-offs full incremental credit will
accrue and the Company will maintain the Employees
Superannuation Payments. For new staff who are members of
ALSAA the Company will maintain their membership during
periods of lay-off.
It is recognised that M&E and Cargo among other departments,
have not hitherto engaged seasonal or temporary staff and
accordingly intake staff into these areas will not be subject
to lay-off.
7. During the first year's lay-off we will allow one free,
subject, return flight on Aer Lingus services only. During
the subsequent four years the normal concessions granted to
existing staff availing of Winter leave will apply.
8. This lay-off is not certain and will depend on the level of
business, demand from existing staff for unpaid leave and
numbers taking voluntary severance. The liability for lay-off
will be part of the conditions of employment and will be
explained in detail to new staff on recruitment.
9. On promotion new staff will cease to be liable for seasonal
lay-off. Where there are suitable applicants for promotional
positions from existing staff, new staff will be excluded from
applying for these positions for the first seven years.
10. As the Catering Department currently operates a recall system,
these staff will be dealt with separately.
11. Before any recruitment takes place an SVN inviting interested
staff to apply for vacancies in specific areas at Grade A
level will be processed.
12. This agreement will not interfere with other existing
agreements except as explicitly provided for in this
agreement. Both sides confirm that this agreement cannot be
used in support of arguments to either maintain or alter the
status quo in respect of any conditions of employment.
In relation to general working conditions this agreement does
not alter custom and practice nor the use of established
procedures for the negotiation and settlement of claims.
13. Where this agreement gives rise to losses among existing
staff, claims arising therefrom shall be processed in
accordance with existing agreements.
14. Should either party give notice of a wish to initiate a review
of this agreement for any reason then the other will agree to
meet and discuss the matter within two weeks of its receipt.
Should any differences arising fail to be resolved by
discussion then the matter will be processed in accordance
with existing procedures.
Yours sincerely
Terry MacManus
Head of Industrial Relations
APPENDIX I
NEW SALARY SCALES
1 NOVEMBER 1987
AGE 18 INCREMENT 1 118.76 INCREMENT 19 171.80
19 2 121.55 20 174.59
20 3 124.34 21 177.38
21 4 129.93 22 180.17
22 5 132.72 23 182.96
23 6 135.51 24 185.75
24 7 138.30 25 188.55
25 8 141.09 26 191.34
9 143.88 27 194.13
10 146.67 28 196.92
11 149.47 29 199.71
12 152.26 30 202.50
13 155.05 31 205.29
14 157.84 32 208.09
15 160.63 33 210.88
16 163.42 34 213.67
17 166.21 35 216.46
18 169.01 36 219.25
PROMOTION SCALE:
A to B - £12.18 per week
B to C - £13.20 per week
C to D - £14.21 per week
APPENDIX II
As part of the agreement on restructuring salary scales and
conditions Aer Lingus guarantees that there will be not less than
150 additional permanent operatives employed at Dublin Airport
within twelve months from the date of that agreement.
APPENDIX III
A yearly commuter bus ticket will be provided for new employees
until they reach the 13th point of the Operative scale. At that
time compensation of 18 months nett value will be paid. At any
stage prior to the 13th point permanent employees may forego the
bus ticket and opt for compensation on a similar basis. If the
bus pass becomes impracticable for any reason the Company
guarantees to provide an alternative of equivalent nett value.
Nothing in this agreement should be construed as affecting the
existing arrangements and entitlements to Company transport except
as otherwise agreed.
APPENDIX IV
The Company recognise the Unions right to pursue a claim seeking
improvement in shift rate premium and/or public holiday pay.
In recognition of this right the Company guarantees not to use in
whole or in part the agreement in relation to shift premium and/or
public holiday pay for new intake employees as part of their
(Company) argument in any 3rd party forum as a legitimate argument
for not conceding to the Unions demands.