Labour Court Database __________________________________________________________________________________ File Number: CD8924 Case Number: LCR12289 Section / Act: S67 Parties: WARNER LAMBERT (IRELAND) LIMITED - and - IRISH TRANSPORT & GENERAL WORKERS' UNION |
Dispute concerning proposed increase in efficiencies in the Company's Gum Base plant.
Recommendation:
6. The Court is of the view that the existing output quota system
operating in the Gum Base Plant is clearly outmoded and needs to
be eliminated to allow the plant to operate efficiently.
As an alternative to the introduction of more precise work
measurement techniques, the Court recommends that the claimants
accept the Company's offer to increase the job skills premium to
that pertaining in the pharmaceutical plant in return for the
elimination of the output quota system.
The Company for its part should agree to increase its offer of a
lead-in payment to each of the claimants to #1,200.
The Company should also undertake, in the event of a loss in
overtime earnings arising from the changes, to negotiate a formula
for compensation, using as a base the period from 1984 to 1988
inclusive.
The Court so recommends.
Division: Mr Fitzgerald Mr Shiel Mr O'Murchu
Text of Document__________________________________________________________________
CD8924 RECOMMENDATION NO. LCR12289
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
SECTION 67
PARTIES: WARNER LAMBERT (IRELAND) LIMITED
(Represented by the Federated Union of Employers)
and
IRISH TRANSPORT & GENERAL WORKERS' UNION
SUBJECT:
1. Dispute concerning proposed increase in efficiencies in the
Company's Gum Base plant.
BACKGROUND:
2. The Company is engaged in the manufacture of both chewing gum
base and bulk pharmaceuticals at two plants in Dun Laoghaire.
This dispute concerns the Company's gum base manufacturing plant.
Following the completion of an industrial engineering study of its
gum base plant operations in 1987, the Company sought to eliminate
the existing output quota system and to introduce increased
efficiencies. At this time the parties were already discussing a
claim for a wage increase of #20 per week for 30 operatives in the
gum plant and the Union refused to negotiate on the Company's new
proposal until this issue was resolved. The dispute became the
subject of a Labour Court hearing, following which LCR11916 was
issued which stated:
"The Court, having considered the various submissions made by
the parties, recommends that the Union should accept the
Company's offer of an additional #13.82 per week to the
depanners, this to be payable with effect from 1st July,
1988. The Court also recommends that each of the thirty
operators in the Gum Base Plant should be given a lump sum
payment of #400 in respect of retrospection. Any further
payments would be conditional on the successful negotiation
of the efficiencies required by Management.
The Court recommends accordingly."
3. This recommendation was accepted by Management but was
rejected by the Union. The Union claimed that it ignored a
long-standing agreement between the parties that Leading
Hands/CPOs receive a fixed differential over the highest paid
operator in the Gum Base Plant (this matter was the subject of a
further Labour Court hearing on the 26th January, 1989, LCR12278
refers). At subsequent local discussions, the Company agreed to
pay a job skills increase of #1.73 to 24 operatives. Following
settlement of the claim, the parties met to discuss the Company's
new proposals. At a meeting on the 25th November, 1988, the
Company, in return for the elimination of all artificial
restrictions on output and the co-operation of the workforce in
implementing the Industrial Engineer's report, made the following
offer:_
- an increase of #12.42 per week on the skills premium,
- a lead-in payment of #300 per operator,
- further negotiations on a compensation formula for loss of
overtime earnings.
This offer was put to the workers concerned but was rejected by a
unanimous decision. Following this rejection, the claimants
instructed the Union to serve a claim for a #50 per week increase
together with a claim for compensation for loss of earnings based
on 1988 overtime levels. As agreement was not reached, the
Company referred the matter to the conciliation service of the
Labour Court. At a conciliation conference on the 9th January,
1989, the following proposal was put forward by the IRO as a means
of settling the dispute:
"1. The Company will negotiate an increase in the level of
lump sum payment outlined in its November proposals
and/or in the formula for compensation for loss of
overtime.
2. In return, the Union will negotiate on efficiency levels
up to 75% BSI in the Gum Base Plant.
3. If the negotiations on (1) and (2) above fail to reach
conclusion by the 30th January, 1989, any outstanding
items arising out of (1) and (2) will be referred to a
re-convened conciliation conference. If these issues
remain unresolved at that stage they will be referred to
a full Labour Court hearing. The Union reserves the
right to include in such a referral to a full Labour
Court hearing their claim for an increase in excess of
the #12.42 offered by the Company.
4. It is agreed that the process will be concluded by the
end of February, 1989."
This proposal was rejected by the Union and in the absence of any
agreement, the matter was referred to the Labour Court for
investigation and recommendation. A Court hearing was held on the
2nd February, 1989.
COMPANY'S ARGUMENTS:
4.1 The Company first opened discussions with the Union in
November 1987 on the subject of efficiencies in its gum base
plant. Since then, it has done everything possible to allay
the concerns of those Union members involved. The Company
met with individual shifts and work groups to explain its
requirements as well as actively encouraging the Union to
involve its industrial engineer in checking the Company's
report of efficiencies. Accordingly, it was for this reason
that the Company rejected the suggestion at conciliation that
the parties agree to an IPC examination of the efficiencies.
4.2 Despite all of the above and having communicated its offer to
the Union on the 25th November, 1988, it was only
subsequently that the Union introduced its claim for a #50
increase per person. This claim was introduced at a crucial
stage of the negotiations without any attempt by the Union to
justify its new position.
4.3 In pursuing its objective of increased machine output in the
Gum Base Plant, the Company is not asking the operators to
work at greater than 75% BSI. In doing so it does not
believe that it is asking employees for more than what it
might ordinarily expect from an employee. Accordingly it
does not believe that a general rate increase is in any way
justified. The achievement of this objective is critical to
the future of the plant, to future investment and to the
security of employment of those employed there.
4.4 It must be emphasised however that the Company does recognise
that in agreeing to eliminate all artificial restrictions on
output the gum base operators are conceding the same
flexibility to the Company as is currently given by their
colleagues in the pharmaceutical plant. In return for this
the Company is willing to pay the pharmaceutical jobs skill
premium to the gum base operators - an increase of #12.42 per
week. This approach is consistent with Labour Court
Recommendation No. 11916. In drawing the Court's attention
to the differential which has existed between the rates of
pay for operators in the company's gum base and
pharmaceutical plants since 1978 the Court should be aware of
stark implications for relativities between the two plants
and between manufacturing operators and other groups in the
company if its monetary offer of #12.42 to the gum base
operators is exceeded.
4.5 The Company has also recognised that increased machine
efficiencies may result in a loss of overtime earnings and is
willing to agree a formula to compensate the gum base
operators for such a loss. The Company has suggested to the
Union a base overtime rate below which the Company's loss of
earnings formula would apply.
4.6 The Company asked for negotiations with the Union against the
background of claims that the introduction of the Industrial
Engineer's Report would lead to redundancies. Since
negotiations commenced, the Company has increased the number
of gum base operators by 5. It believes that there are
further opportunities to increase employment but only if
plant and machinery can be run at maximum efficiency.
4.7 The Company is now at a crossroads. The Gum Plant has to be
in a position to compete now and in the future with other
Warner Lambert gum producing plants. An unsatisfactory
outcome to these negotiations will be interpreted at
Corporate Headquarters as a vote of no confidence by the
Irish management and workforce in the future of the gum base
plant. The Company is seriously concerned that significant
capital expenditure planned for later this year will be
transferred to a sister plant in the US and the Irish plant
will become increasingly marginalised as a contributor to
Warner Lambert's total gum base output. In the short term
this could mean that production transferred to Ireland from
the US, in anticipation of the capital expenditure on
equipment, will be transferred back to the US. In the medium
term, as capacity is increased elsewhere, redundancy in the
Irish plant will follow.
UNION'S ARGUMENTS:
5.1 The Union claim may be understated or overstated as it has no
means of assessing the savings to the Company as a result of
increased efficiencies. The Company made no effort to
provide information on costs under the usual headings, e.g.
labour, materials, direct expenses, sales price, margin for
overheads and profits. It is in fact Company policy to
withhold this information.
5.2 Efforts by the Union to convince the Company that the
claimants are paid on a time basis and not on piece rate have
been ignored.
5.3 The fact that the pharmaceutical plant rates were arrived at
by reference to rates obtaining nationally when the plant
opened in 1976 and not by reference to rates in the existing
gum base confectionery plant has been ignored by the Company
which persists in insisting that no productivity concessions
could cause the gum plant employees to ever receive a greater
rate of pay than that obtaining in the pharmaceutical plant.
The stated rationale of the Company was that an increase of
more than #13.82 would cause industrial relations problems
with the employees of the pharmaceutical plant, who at the
moment carry a job premium of #13.82 in excess of the highest
paid operators in the Gum Base Plant (excepting the depanners
who now carry the same premium).
5.4 In support of its argument Management has stated (but
provided no evidence to this effect) that the pharmaceutical
plant operators already achieve a standard of 75%
performance. The Company also contend that the concession of
#13.82 on the depanners premium was made on the basis of that
group reaching 75% performance or at least making themselves
available to achieve this level at some time in the future.
However, it should be noted that the depanners accepted the
increase for the use of nylon liners and not for any further
concessions on productivity.
5.5 The Company claim that 75% BSI is, or should be, the normal
rate of working has long been disputed on the basis that it
is a totally arbitrary level and workers do not on average,
tend to work at that level under non-incentive conditions.
This rejection of the 'normal' level of performance is no
longer just a trade union position. Many years ago the
British Standards Institution, a body invested with the role
of setting standard definitions for terminology used in
techniques including work study, set up a committee to
investigate this very question. This committee, composed of
Employer, Management, Professional and Trade Union
representatives, concluded:-
"It thus seems quite unrealistic and artificial to
suggest that there is a level of rating which is
characteristic of time workers, and which is three-
quarters of that of piece-rate workers".
The significance of this conclusion is that actual worker
performances, whatever they are, rather than 75% or any other
preconceived level should be the criteria against which
standards should be set or alternatively against which
savings should be measured in the event of standards being
set at a higher level.
5.6 As Warner Lambert has not provided the Union with the
financial information necessary to quantify savings, the
Union can only ask the Court to recommend concession of its
claim based as it is on a gut reaction to the additional work
sought and loss of earnings involved or failing this to
recommend a competent authority who will agree terms of
reference with the parties and establish the value of the
productivity concessions.
RECOMMENDATION:
6. The Court is of the view that the existing output quota system
operating in the Gum Base Plant is clearly outmoded and needs to
be eliminated to allow the plant to operate efficiently.
As an alternative to the introduction of more precise work
measurement techniques, the Court recommends that the claimants
accept the Company's offer to increase the job skills premium to
that pertaining in the pharmaceutical plant in return for the
elimination of the output quota system.
The Company for its part should agree to increase its offer of a
lead-in payment to each of the claimants to #1,200.
The Company should also undertake, in the event of a loss in
overtime earnings arising from the changes, to negotiate a formula
for compensation, using as a base the period from 1984 to 1988
inclusive.
The Court so recommends.
~
Signed on behalf of the Labour Court
22nd February, 1989 Nicholas Fitzgerald
DH/PG -------------------
Deputy Chairman