Labour Court Database __________________________________________________________________________________ File Number: CD88866 Case Number: LCR12227 Section / Act: S67 Parties: ELKAY EIREANN TEO - and - FEDERATED WORKERS' UNION OF IRELAND |
Claims on behalf of 40 general operatives under the 27th wage round for (a) Application of the terms of the Programme for National Recovery (P.N.R.) plus a payment in recognition of past and continuing productivity (including operation of new machinery). (b) Service pay, (c) A bonus scheme, (d) A sick pay scheme.
Recommendation:
15. Having regard to the current financial position of the
Company the Court recommends that the offer of service pay and the
introduction of a sick pay scheme, as proposed by the Company be
accepted by the Union.
On the basis of the submissions made, the Court is not satisfied
that the present production system is suitable for the application
of an incentive scheme, and the Court therefore does not recommend
concession of the Union's claim in this regard.
Division: Mr O'Connell Mr Collins Mr Devine
Text of Document__________________________________________________________________
CD88866 RECOMMENDATION NO. LCR12227
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
SECTION 67
PARTIES: ELKAY EIREANN TEO
(REPRESENTED BY THE FEDERATED UNION OF EMPLOYERS)
AND
FEDERATED WORKERS' UNION OF IRELAND
SUBJECT:
1. Claims on behalf of 40 general operatives under the 27th wage
round for (a) Application of the terms of the Programme for
National Recovery (P.N.R.) plus a payment in recognition of past
and continuing productivity (including operation of new
machinery). (b) Service pay, (c) A bonus scheme, (d) A sick pay
scheme.
BACKGROUND:
2. The Company commenced manufacturing operations in Costelloe,
Co. Galway seven years ago. It is a low technology manufacturer
producing primarily liquid handling disposables for medical
laboratories.
3. The Union, on the 22nd June, 1988 lodged the above mentioned
claims with the Company. In response the Company put forward the
following offer:-
Wages: To implement the terms of the P.N.R. effective from
1st July, 1988.
Service Pay: The following service pay to be introduced from
1st February, 1989 and will be paid annually at the
end of January.
After 5 years' service 50p per week.
After 10 years' service #1.00 per week.
After 15 years' service #1.50 per week.
After 20 years' service #2.00 per week.
Sick Pay Scheme: A sick pay scheme to be introduced from 1st
January, 1989 on a trial basis of 3 years and
the following conditions to apply:-
(a) An employee must have two years' service to qualify.
(b) An employee must contact the Company within 6 hours on
first day of absence and to supply a doctor's
certificate by end of second day.
(c) No payment for first 3 days of any absence due to
illness.
(d) Duration of benefit to be 4 weeks in a calendar year.
(e) Payment to be net pay less social welfare benefits.
Onus on employees to claim social welfare benefits and
pay same over to Company.
(f) Management will have the right to call at the home of
an employee who is on sick leave. The Company can also
refer the employee to the Company doctor.
The Company emphasised that its offer must be dealt with as a
package and not as devisable claims.
4. As the Company's offer failed to meet the Union's aspirations
the matter was referred to the conciliation service of the Labour
Court on 9th August, 1988. A conciliation conference was held on
26th October, 1988. As no agreement was possible both parties
subsequently consented to a referral to the Labour Court for
investigation and recommendation on the question of the service
pay, sick pay scheme and bonus. A Court hearing was held in
Galway on 14th December, 1988.
Claim B - Service Pay:
BACKGROUND:
5. The issue of service pay was first raised by the Union on 20th
December, 1985 as part of its 25th wage round claim. It was
agreed to defer discussion on service pay until the 26th wage
round. The matter was further postponed and under the 27th wage
round the Company put forward its offer as outlined above.
6. This offer was rejected by the Union and at the conciliation
conference the Union claimed a service pay scheme to be introduced
from the 1st July, 1988 and paid weekly at the following rates:-
1 to 3 years' service..................... #1.50
4 to 7 years' service..................... #3.00
8 to 11 years' service..................... #4.50
12 to 15 years' service..................... #6.00
15 years' service and over..................... #7.00
UNION'S ARGUMENTS:
7. 1. The Company's offer is unreasonable in that there are now
only 4 people with over 5 years service who stand to benefit
in the short term. It is the Union's view that the high entry
point should be looked at in a reasonable way to reflect the
actual service which the workers have.
2. The monetary element of the scheme is too low. The
Company has argued that given its present financial position
its offer is the best it can afford. However the Union
believes that if the Company had been willing to negotiate a
settlement could have been reached which would in no way call
into question the stability of the Company.
COMPANY'S ARGUMENT:
8. 1. On top of agreeing to implement the P.N.R. the Company has
implemented a service pay scheme for the very first time.
This scheme is in line with those recommended by the Labour
Court. The Company is not prepared to increase its costs
which would endanger its competitive position. The service
pay scheme will come into effect on 1st February, 1989,
therefore, the Company is satisfied that it has made the
effort with regard to this claim. The implementation of the
service pay on a weekly basis as requested by the Union is not
feasible. This is due to the limited number of staff employed
in the office.
Claim C - Productivity Bonus:
BACKGROUND:
9. 1. Discussions on the possibility of introducing a bonus
scheme have taken place over a number of years. However it
was during the negotiations on the current round that the
Union lodged a formal claim for the introduction of a bonus
incentive scheme. The Company rejected the claim and the
matter was the subject of discussion at both local level and
at the conciliation conference of the 26th October, 1988.
UNION'S ARGUMENTS:
10. 1. The type of manufacturing system this Company engages in
lends itself readily to the practical use of some form of
incentive scheme.
- it operates 10 injection moulds and 4 blow moulds
producing units of production which are easily
measured.
- it has a range of time cover, i.e.
- day work 8.30 a.m. to 5.00 p.m.
- two weekend shifts (Sat/Sun).
- three shift system 8 to 4, 4 to 12, 12 to 8.
which would present little or no problem in
calculating and applying an agreed bonus scheme.
- the items manufactured maintain sufficient
production regularity to allow a bonus scheme apply
with the minimum of fuss.
10. 2. All the necessary administration work associated with a
bonus scheme is already in place as the Company tends to keep
extensive records of production figures and targets. We
further understand that the system of record keeping is
computerised which is another advantage already in place.
3. The Company would appear to have no difficulty in
principle with the concept of 'incentive' as some such scheme
operates at other levels in the Company e.g. supervisory
staff, toolmakers and perhaps at other higher levels within
the Company.
COMPANY'S ARGUMENTS:
11. 1. The introduction of a productivity bonus in the present
trading climate (details supplied to the Court) would put the
Company out of business. All cash which is generated as well
as the Company's increasing level of borrowing must be
re-invested in additional as well as more efficient equipment
in order to reduce unit costs, remain competitive and cope
with the present market trends.
2. Recent developments in the healthcare industry has
created new trends, e.g. public tendering. Over 50% of
purchasing in the hospital laboratory market is now being
done through this process and price under-cutting is very
widespread with very little opportunity to sell the finished
product on quality aspects. Selling prices have fallen by
15% on average per annum since 1981.
3. Investment in equipment in this manufacturing business is
very expensive i.e. the cost of one moulding machine is
#100,000 and an investment in 2/3 moulds per annum ranges
from #50,000 to #80,000. Also because of the severe increase
in raw material prices which occurs during the period of
tender (recently 50% resulting in a 20% increase in cost of
product) it would be commercially impossible for the Company
to implement a productivity bonus apart altogether from the
constraints in administering such a scheme.
Claim D - Sick Pay Scheme:
BACKGROUND:
12. 1. The Union discussed the introduction of a sick pay scheme
along with other issues in June, 1988. Following these
discussions the Company proposed to introduce a sick pay
scheme as outlined in paragraph 3. The Company's proposal
was considered by the workers who felt that the service
requirement should be reduced to cover all permanent
full-time and part-time workers; notification to the
employer to be "where possible within 6 hours"; duration
should be substantially increased and reference to service
introduced; the Company do not have a right to visit an
employee at home unless they believe an abuse is taking place
and the required disciplinary procedure has been adhered to;
the workers would require more information regarding the
Company doctor and also would require details of the
insurance cover available and in operation.
2. As no progress was possible at local level the matter was
referred to the conciliation service of the Labour Court and
was the subject of a conciliation conference held on the 26th
October, 1988. At the conciliation conference the Union
stated it was seeking the following in respect of benefit
periods:-
After probation - 2 years' ............. 4 weeks,
2 - 4 years' ........................ 6 weeks,
4 - 6 years' ........................ 8 weeks,
6 - 8 years' ........................ 10 weeks,
8 - 10 years' and over................ 12 weeks.
UNION'S ARGUMENTS:
13. 1. As the scheme proposed and sought is of the "topping up"
variety the cost to the Company should not be prohibitive.
2. The Union has no objection in principle to a trial period
provided the trial scheme had itself been the subject of
negotiations and that at the end of the trial the scheme
could be improved.
3. The Union does not support, abuses of sick pay schemes no
more than the FUE would support abuses of managerial power.
4. The Court has dealt favourably with similar cases in the
past (details supplied to the Court). Also the scheme sought
by the Union compares favourably with local good to
reasonable employments (details supplied to the Court).
COMPANY'S ARGUMENT:
14. 1. The Company examined its records before making an offer
on sick pay and the records reveal that the average days lost
in the plant is 4 working days per person per year. It was
against this background that the Company was prepared to
introduce a sick pay scheme for a trial period of three
years. Management is very concerned that the effect of
introducing a sick pay scheme could lead to a deterioration
in attendance. The Company will examine all aspects of the
scheme during the trial period against the information it has
to hand and will be prepared to discuss its findings with the
Union.
RECOMMENDATION:
15. Having regard to the current financial position of the
Company the Court recommends that the offer of service pay and the
introduction of a sick pay scheme, as proposed by the Company be
accepted by the Union.
On the basis of the submissions made, the Court is not satisfied
that the present production system is suitable for the application
of an incentive scheme, and the Court therefore does not recommend
concession of the Union's claim in this regard.
~
Signed on behalf of the Labour Court,
John O'Connell
___19th___January,__1989. ___________________
M. D. / M. F. Deputy Chairman