Labour Court Database __________________________________________________________________________________ File Number: CD8950 Case Number: LCR12441 Section / Act: S67 Parties: IRISH CASINGS LIMITED - and - IRISH TRANSPORT AND GENERAL WORKERS' UNION |
Dispute concerning bonus targets and rates.
Recommendation:
11. The Court is of the opinion that it is vital that the Company
be in a position to change its quality standards to enable it to
compete successfully. On the evidence presented it seems clear
that a return to previous standards as requested by the Union
would be neither feasible or desirable.
The Court is of the view however that the terms suggested by the
I.R.O. in his letter of 12th December, 1988 which evolved from
direct negotiations between the parties represent the best
solution to the problem, in particular the difficulty arising from
the necessity to change standards.
The Court therefore recommends that these terms be accepted by
both parties and implemented from date of acceptance.
Division: Mr O'Connell Mr McHenry Mr Walsh
Text of Document__________________________________________________________________
CD8950 RECOMMENDATION NO. LCR12441
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
SECTION 67
PARTIES: IRISH CASINGS LIMITED
(REPRESENTED BY THE FEDERATED UNION OF EMPLOYERS)
and
IRISH TRANSPORT AND GENERAL WORKERS' UNION
SUBJECT:
1. Dispute concerning bonus targets and rates.
BACKGROUND:
2. The Company is German owned and is engaged in the processing
of sheep, beef and hog gut for the purpose of making sausage
casings. The Company employs 135 people at its Tullamore plant.
All of the Company's produce is exported to Europe.
3. The Company operates a piece rate system which guarantees a
basic wage and provides a bonus for productivity in excess of the
target rate. The target rate is determined solely on the basis of
the selection procedures which are in turn determined by
marketplace demand.
4. There are three different types of quality casings produced by
the Company. "A" = good; "B" = fair and "C" = poor. The
difference in the quality is determined by the degree of fatiness
in the materials used.
5. Prior to July, 1988 the Company had established a target rate
of 1268 bundles per week, which meant that if an employee exceeded
this target, she would receive a piece rate of 8.76p plus 3% on
every bundle over this amount. Up to this time the Company had
been producing approximately 65% "A" quality casings, 25% "B"
quality casings, and 10% "C" quality casings. From July, 1988 in
response to changes in the marketplace the Company introduced a
new scheme whereby 90% "A" and "B" quality mixed and 10% "B" and
"C" quality mixed casings were produced. The Company also decided
that, in view of these changes, to revise the target for bundles
to 1431 and to pay a piece rate of 7.76p per bundle.
6. Before implementing the new rate and selection procedures
throughout the factory the Company used one employee for a one
week trial period. The Company found that the new system did not
affect the employee's bonus earnings. The new system was
introduced throughout the factory from the second week in July.
7. In August, 1988, the Union met management and expressed its
dissatisfaction at the introduction of the new system. The Union
contended that the employees now had to work much harder in order
to maintain their existing earnings and that the employee used for
the trial period had been allocated good quality material hence
enabling her to reach the target. The Company refuted the Union's
claim. A further meeting took place between the parties at which
no further progress was possible. The matter was then referred to
the conciliation service of the Labour Court on the 5th October,
1988. A conciliation conference was held on 9th December, 1988,
following which the Industrial Relations Officer (I.R.O.) put
forward the following proposals by letter dated 12th December,
1988.
(1) It will be recognised by both sides that ongoing changes
in selection procedures and targets are necessary in
order to meet market requirements. Where possible, such
changes should be the subject of prior consultation with
the Union. Where such consultation is not possible, such
changes should be accepted under protest pending
discussions and, if necessary, the usual industrial
relations procedures.
(2) The target will be reduced to 1400 and the rate per
bundle increased to 8 pence.
(3) While it is appreciated that no commitment can be given
at this stage, both target and rate should be reviewed
again at the end of March, 1989.
8. Following further meetings between the parties it was agreed
to put the above proposals to the workers with a recommendation
for acceptance. These proposals were rejected by the workers
in a ballot and the parties subsequently agreed to a referral to
the Labour Court for investigation and recommendation. A Court
hearing was held in Portlaoise on 23rd May, 1989.
UNION'S ARGUMENTS:
9. 1. The changes in mixing the quality of the product are
insignificant. The level of potential earnings depends very
much on the quality of the material. If the quality is good
the through put will be high but if it's poor the amount
turned out will be much lower. High standard materials
enables the selection process to be much faster because there
is less inspection, less cutting, less measuring and less
duplication of effort and attention than when the quality
is poor. Some processing plants are credited with supplying a
high grade material while others are renowned for an
inconsistent supply and tending to be on the lower side for
most of the time.
2. The workers are prepared to operate the old system,
despite its faults (details supplied to the Court) because
when the material was good it was possible to make money.
However under the new system they have to produce more bundles
in order to make the same amount of money. If the quality of
the material is poor, which it quite often is, then it is not
possible for most of the workers to reach the bonus target.
3. The workers have been under tremendous pressure to achieve
the revised targets, particularly the new young girls some of
whom don't make it after probation, as the Company do not want
to keep in employment people who cannot achieve the target
figures. The workers feel this is most unfair and far too
high a price to pay for such a hit and miss affair.
4. A standard that has existed for five years should only
be changed where significant changes had occurred to justify
it and even then only after proper consultation and agreement.
The changes have resulted in a lessening of earnings
potential. The old system should be restored until agreement
is reached on any changes.
COMPANY'S ARGUMENTS:
10. 1. The Company in response to market demands had to readjust
its quality standards in order to compete cost effectively
within the marketplace. In doing this it reduced considerably
the time a selector had to take in examining casings and
therefore a corresponding adjustment was made in the piece
rate to offset this.
2. The Court should be aware that in comparing the periods
January-April, 1988 under the old system and January-April,
1989 under the adjusted system, it was noted that in the first
period the average bonus earned per week was #1.36 while under
the adjusted system, it was #4.08 per week. It is obvious
from these figures that even more individuals, including
trainees, are earning bonus under the adjusted system than
heretofore. Also for the 1989 period, the Company is
producing on average 4 bundles more per hour than in 1988.
3. The Company's decision to change its quality standards has
been very successful. It has meant that the Company has
recovered its share of the market and as a result is producing
more and selling more. Stock levels, which were extremely
high back in July, 1988, have now returned to their normal
levels. A very positive benefit out of all of this has been
the fact that the Company has been able to increase employment
levels and have taken on 6 new employees on the beef line over
the last 8 months. Any further adjustments on the Company's
piece rate could have a detrimental and retrograde effect on
the competitive edge that the Company has now re-established
on the European market and that is very definitely not a
position the Company wishes to face again.
RECOMMENDATION:
11. The Court is of the opinion that it is vital that the Company
be in a position to change its quality standards to enable it to
compete successfully. On the evidence presented it seems clear
that a return to previous standards as requested by the Union
would be neither feasible or desirable.
The Court is of the view however that the terms suggested by the
I.R.O. in his letter of 12th December, 1988 which evolved from
direct negotiations between the parties represent the best
solution to the problem, in particular the difficulty arising from
the necessity to change standards.
The Court therefore recommends that these terms be accepted by
both parties and implemented from date of acceptance.
~
Signed on behalf of the Labour
John O'Connell
______________________
15th June, 1989. Deputy Chairman
M.D./J.C.