Labour Court Database __________________________________________________________________________________ File Number: CD89568 Case Number: LCR12546 Section / Act: S67 Parties: ATLANTIC MILLS LIMITED - and - IRISH TRANSPORT AND GENERAL WORKERS' UNION |
The implementation of a rationalisation plan.
Recommendation:
3. The Court has considered the submissions made by the parties.
Having regard to the circumstances in which the changes proposed
by the Company are taking place, ie: a history of recent large
losses and a lack of competitiveness, the Court is of the opinion
that despite the lack of any assurances on future employment
levels the only realistic hope for the future lies with acceptance
of the rescue package offered by the principals.
On the specific issues before it the Court does not therefore at
this stage recommend concession of claims for a basic increase,
increased redundancy payment, changes in the manner of calculation
of overtime, or payment of the Christmas bonus to those not
qualified under existing arrangements to obtain it.
Further, as submitted to the Court the current arrangements for
compensation for loss of earnings due to a change in shift cycles
and regrading for those whose jobs have changed, appear to be
adequate.
On the matter of transfer of certain duties it is the Court's view
that the transfer of jobs to persons not directly employed by the
Company should be avoided if at all possible. On the matter of
the afternoon tea break the Court recommends that the Company
negotiate compensatory terms for those who lose the benefit of the
arrangement which appears to have become customary in the plant.
The Court takes the view that the Company should now endeavour to
take the workforce into its confidence as far as possible and
particularly keep it informed as to the progress arising from the
proposed changes while the workers should, pending the proposed
review at the end of 1990 familiarise themselves with the
principles and techniques of profit sharing.
Division: Mr O'Connell Mr Brennan Mr Walsh
Text of Document__________________________________________________________________
CD89568 RECOMMENDATION NO. LCR12546
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
SECTION 67
PARTIES: ATLANTIC MILLS LIMITED
and
IRISH TRANSPORT AND GENERAL WORKERS' UNION
SUBJECT:
1. The implementation of a rationalisation plan.
BACKGROUND:
2. The Company has two manufacturing plants, in Tullamore and
Longford and employs 400 production workers. It was taken over in
mid 88 and is now owned on a fifty/fifty basis by two companies,
one Dutch and one French. (It was formerly the Sportswear
division of Burlington Industries). Since the takeover,
international consultants have reviewed the entire operation of
the Company on their behalf. The report that ensued indicated an
overmanning in certain areas, lack of flexibility and a need to
eliminate demarcation. As a result, the Company has formulated a
rationalisation plan to bring the operation into line with
comparable international companies. This includes redundancies
and some changes in work practices. Substantial investment is
required to replace outdated equipment. The parent company is not
prepared to go ahead with the investment until the cost base is in
line. To achieve this the Company proposes to make 11 workers
redundant out of a total of 180 in Tullamore, and 39 out of a
total of 320 in Longford, on a voluntary basis. Sufficient
volunteers are available. The Union has served claims as follows
on the Company.
Group 1:
Claims on behalf of employees who will become redundant.
(i) Change in the formula for calculation of redundancy pay
from 3 weeks' pay per year of service to 5 weeks' per
year of service for the Company scheme. (The Company
stated that it understood this claim to be for 4 weeks'
pay per year of service).
(ii) Improvement in the calculation base to include overtime
in the calculation of the weekly wage of shift workers,
in addition to shift premium which is currently
included.
(iii) Payment to those applying for voluntary redundancy of an
amount equivalent to that notionally earned under the
yearly bonus scheme. The bonus itself is paid on 1st
December each year.
Group 2:
Claims on behalf of those employees remaining with the
Company.
(i) A 15% increase in basic pay.
(ii) Regrading for those whose jobs have changed.
(iii) Compensation for those who would experience a loss of
earnings due to changes in shift cycles.
(iv) Objections to the transfer of a tea break and transfer
of some duties to a craft category.
(v) Commitments on job security for those remaining.
The Company's response to these claims is detailed hereunder.
Agreement could not be reached and the matters were referred to
the conciliation service of the Labour Court on 28th June, 1989.
A conciliation conference was held on 25th August, the earliest
suitable date. Again, no agreement was reached and the issues
were referred, on 30th August, to a full hearing of the Labour
Court. A hearing took place on 1st September, 1989.
UNION'S ARGUMENTS:
3. 1. The Company is one of the largest denim manufacturers in
Europe and is very successful in the European textile market.
It has excellent production facilities, enjoys I.D.A. grants,
and its accumulated profits in 1987 were considerable. During
and before the take-over in 1988 there was significant
operational innovation, yet, the workforce maintained
production at a high level and gave their full co-operation.
A claim which the Union had served for a share in benefits and
savings arising from an earlier rationalisation programme was
suspended in response to the Company's request to consider the
effect on prospective purchasers. Cognisance must now be
taken of this background to the present claims.
2. At the request of the new owners a report on the operation
of the Company was issued by a firm of international
consultants. The Union has not been given access to this
report despite repeated requests. The workforce is not being
openly communicated with as to the extent of further possible
rationalisation and the consequent effect on their employment.
There exists a fear that a programme of labour retrenchment is
being implemented by steath.
3. A "Cost Reduction Programme" was published by the Company
in June, 1989 involving major alterations to current work
practices and voluntary redundancies. The Union believes that
it is the Company's intention to eventually create a highly
automated and capital intensive operation at both plants with
a corresponding reduction in manning levels, and requiring
greater flexibility, productivity and responsibility of
remaining workers. There will also be a loss of overtime
opportunity.
4. The specifics of the Union's claims are as set out in
paragraph 2 above. The redundancy settlement sought compares
with settlements in good employments in Ireland. It is also
hoped that the severance formula may act as a deterrent to
further redundancies. The Union and the workers are
particularly anxious that the Company should make a commitment
regarding future job security. The Union is prepared to
co-operate with a rationalisation/investment plan on the basis
of shared benefits and for this reason has sought a 15%
increase in basic pay.
COMPANY'S ARGUMENTS:
4. 1. The Company initiated this process because of the
necessity of improving its competitive position. The heavy
investment required can only be justified in an operation
which will be cost competitive. The Company has indicated
that the necessary investment would be forthcoming and that it
would commit itself to a sharing of the profits which would
emanate from this programme, the positive results of which
should begin to emerge by the end of 1990. There can be no
question of any basic pay adjustment in the context of the
Company's commitments under the pay terms of the National
Plan, together with the proposed introduction of a 39 hour
week.
2. Behind the proposals for a reduction in the workforce were
the following principles.
(a) The Company can no longer afford to employ extra
employees to double check work.
(b) The Company had to reduce the manning for loom
maintenance to more realistic levels.
(c) Work which could only be justified on the basis of
outdated demarcation between general and craft
workers could no longer be tolerated.
(d) Demarcation practices within the same Union had to
be eliminated to allow a flexible response when an
imbalance in numbers and work flow required a
movement of workers from one category to another.
3. The proposed redundancy formula is consistent with
precedent and exceeds the industry average. The Company has
conceded to change the basis of calculation of redundancy
payments to include overtime for day workers. It considers
that to extend this concession to shift workers is not
appropriate. The Company also does not consider it
appropriate that payment equivalent to the annual bonus should
be extended to workers who volunteer for redundancy. Such
payment in the past has related only to involuntary
redundancy.
4. The Company operates a standard job evaluation system to
value jobs which have been changed. Arising from the current
proposals jobs have been revalued and in 3 cases the values
have been changed. The Company is willing, at all times, to
allow industrial engineers on behalf of the Union to discuss
the values assigned to jobs.
5. For operational reasons the Company has had to vary its
shift cycle in some departments between two, three and four
cycle. The Company has had a standard accepted formula over
the years. This pays the higher shift premium for a period of
13 weeks for those with less than 2 years' service in the
position, and 20 weeks for those with more than 2 years'
service. The total number affected by shift change would be
55. The Company sees no reason for changing this standard
formula which has been established practice for many years.
6. The purpose of an afternoon tea break for day workers was
to facilitate those who were remaining back to work overtime.
The Company is now scheduling this break for 4.30 p.m. and
those remaining for overtime will take their break at that
time.
7. The Company intends to change practices where more people
are used than are needed to carry out work.
8. Regarding job security, the Company advised the Union that
change is inevitable in a competitive environment particularly
in the context of an era of substantial automation in what
continues to be a high labour intensive industry. It must be
borne in mind that the Company continues to be the largest
employer in the industry and that the only major redundancy
programme previously implemented was at the Tullamore Plant in
1983 with the introduction of an automated spinning process.
It is unlikely that any Company in this industry could
guarantee that further changes will not take place in the
future or that such changes will not result in the
displacement of some workers. It is worth noting that
redundancy notifications have in the past been invariably
over subscribed and all redundancies to this point have been
on a voluntary basis.
RECOMMENDATION:
3. The Court has considered the submissions made by the parties.
Having regard to the circumstances in which the changes proposed
by the Company are taking place, ie: a history of recent large
losses and a lack of competitiveness, the Court is of the opinion
that despite the lack of any assurances on future employment
levels the only realistic hope for the future lies with acceptance
of the rescue package offered by the principals.
On the specific issues before it the Court does not therefore at
this stage recommend concession of claims for a basic increase,
increased redundancy payment, changes in the manner of calculation
of overtime, or payment of the Christmas bonus to those not
qualified under existing arrangements to obtain it.
Further, as submitted to the Court the current arrangements for
compensation for loss of earnings due to a change in shift cycles
and regrading for those whose jobs have changed, appear to be
adequate.
On the matter of transfer of certain duties it is the Court's view
that the transfer of jobs to persons not directly employed by the
Company should be avoided if at all possible. On the matter of
the afternoon tea break the Court recommends that the Company
negotiate compensatory terms for those who lose the benefit of the
arrangement which appears to have become customary in the plant.
The Court takes the view that the Company should now endeavour to
take the workforce into its confidence as far as possible and
particularly keep it informed as to the progress arising from the
proposed changes while the workers should, pending the proposed
review at the end of 1990 familiarise themselves with the
principles and techniques of profit sharing.
~
Signed on behalf of the Labour Court
John O'Connell
5th October, 1989. ---------------
A.K./J.C. Deputy Chairman