Labour Court Database __________________________________________________________________________________ File Number: CD9065 Case Number: LCR12776 Section / Act: S67 Parties: MAXOL LIMITED - and - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION |
Dispute concerning the application of phases 2 and 3 of the Programme for National Recovery (P.N.R.) to the sales and administrative grades.
Recommendation:
5. The Court has very carefully considered the submissions made
by the parties and in particular the arguments made by the Company
based on the terms of the Programme for National Recovery. Having
regard to other cases in which the economic or financial
circumstances of the firm were cited to support a variation or
relief from the terms of the P.N.R. the Court is of the opinion
that the interpretation of the relevant article of the Agreement
was much narrower than the Company seeks to have applied in this
case. In the circumstances the Court does not consider it can
support the Company's case.
It seems that what the Company is seeking is a permanent end to a
close relativity in rates and conditions with major oil companies.
It might perhaps in the long term be more successful if it were to
approach this objective more directly with the Union as no doubt
many of the trading conditions which they describe will already be
familiar to the workers directly involved.
The Court therefore recommends that the Company begin negotiations
with the Union on the basis of their offer to discuss reasonable
proposals on the operative dates of the outstanding phases of the
P.N.R.
Division: Mr O'Connell Mr Brennan Mr Devine
Text of Document__________________________________________________________________
CD9065 RECOMMENDATION NO. LCR12776
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
SECTION 67
PARTIES: MAXOL LIMITED
and
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
SUBJECT:
1. Dispute concerning the application of phases 2 and 3 of the
Programme for National Recovery (P.N.R.) to the sales and
administrative grades.
BACKGROUND:
2. On 5th January, 1988 the Company wrote to the workers
requesting that they forego the increase due under phase 1 of the
P.N.R. However, the Union and the workers sought the application
of this increase and it was implemented with effect from 1st
January, 1988. In December, 1988 the Company announced a
rationalisation programme which included proposals for sixteen
redundancies in the white collar workers and no pay increases in
1989 and 1990. Following this negotiations took place between the
Company and the Union and the redundancy measures were the subject
of a Labour Court hearing in March, 1989 (L.C.R. No. 12388 of 12th
May, 1989 refers). The second phase of the P.N.R. fell due on 1st
January, 1989 and the Union subsequently sought payment of this,
which the Company refused to implement. On 14th November, 1989
the matter was referred to the conciliation service of the Labour
Court. A conciliation conference was held on 26th January, 1990
at which stage the third phase of the P.N.R. had fallen due on 1st
January, 1990. The Company was also not prepared to pay this
phase and it was therefore also included in the Union's claim.
The Company position is that it is not pleading "inability to
pay," but is of the opinion that the application of the increases
would not have due regard to the economic and commercial
circumstances of the Company. The Union position is that the
workers had fully co-operated in the rationalisation programme and
that it cannot accept the Company's refusal to honour the terms of
the P.N.R. No agreement could be reached and on 6th February,
1990 the matter was referred to the Labour Court for investigation
and recommendation. The Court investigated the dispute on 12th
February, 1990.
UNION'S ARGUMENTS:
3. 1. The claimants, like their counterparts in the oil
industry, have undergone tremendous change in the last fifteen
years. They have responded to the changed circumstances of
the industry by agreeing to a much reduced workforce and very
large increases in productivity. All of the companies in the
industry have recognised that contribution; however, in the
Company management are always seeking more from the workers.
The P.N.R. provides for very modest pay increases and places
serious obligations on the three social partners to honour its
terms in full. The workers concerned have played their part
in full and the employers in the oil industry, including small
companies, have discharged their obligations, yet the Company
fails to live up to its obligations.
2. The Minister for Industry and Commerce has made a number
of decisions in relation to oil prices, the most important of
which was a reduction in margins and the banning of
promotions. However, the interim report of the special
inquiry resulted in the restoration of some of the margins
sought by the oil companies and it is confidently expected
that the final report will go a long way towards meeting the
companies' expectations. The Company may be operating on
reduced margins but so is the rest of the industry and they
have all behaved as responsible partners within the P.N.R.
3. Management is trying to justify its action in not paying
the increases by declaring its intention to pay less than the
rest of the industry and to ultimately lower their rates to
those in other independent companies. There is no provision
in the P.N.R. for the workers to seek more than the 2.2%
increase and equally there is no provision for the Company to
pay less. There is certainly no provision in the P.N.R. for
management to use the non-payment of the cost of living
adjustment as a strategy for lowering the whole wage
structure. The workers spent years securing a position of
parity with Texaco, and rates are roughly on a par with Shell,
BP and ESS0. Management's attempt to use the P.N.R. to depart
from the parity situation is totally unacceptable. When all
staff and assets were transferred from McMullen Bros to the
Company (now a wholly owned subsidiary of McMullen Bros) a
guarantee was given that there would be no interference with
"the historical relationship on the matter of salaries and
conditions within the oil industry." (details supplied to the
Court). The workers should be paid the second and third
phases of the P.N.R. from 1st January, 1989 and 1st January,
1990 respectively.
COMPANY'S ARGUMENTS:
4. 1. The Company is not "pleading inability to pay" but,
rather, believes that the application of these increases would
not have due regard to its particular economic and commercial
circumstances. The Company has been losing money in recent
years and has had to rely heavily on financial institutions
for support. In addition, sales performance has suffered
since the ban on stamps and forecourt promotions in the first
half of last year and, on top of this, the profit margin per
litre has been curtailed significantly by arbitrary Government
intervention. The Fair Trade Commission preliminary report,
following on from its enquiry into the oil industry,
recommended a restoration of margins. However the Minister
for Industry and Commerce has only made small improvements.
The end result of this situation is that the Company is
starved of financial resources which are required for it to
compete commercially with large multi-national companies. The
more the Company spends on pay increases, the less it has
available for filling-station development and other essential
sales and marketing activities.
2. Traditionally, pay increases for the white collar workers
have followed on from adjustments in the pay of the blue
collar workers who have not received an increase since the
application of phase 1 and there is no claim outstanding at
present. The Company has told the workers that it cannot
guarantee job security in return for pay moderation, but it
has assured them that further pay increases must, inevitably,
result in further redundancies (details supplied to the
Court). The workers concerned are already amongst the highest
paid in the country for their range of duties and therefore,
are also amongst the highest taxed (details supplied to the
Court). The Company has also informed the Union that its aim
is to have a meaningful gap between the rates of pay in the
Company and those in the largest companies within the
industry. The most painless way of achieving this is by the
non-application of pay round increases.
3. In the last two cases between the Company and the Union
investigated by the Court (L.C.R. No.'s 11375 and 12388 refer)
one of the main planks of the Company's submission in each
case related to the need for the Company to be considered in a
different light to its multi-national competitors. The
Company also stressed the incongruity of comparing a
relatively small Irish concern to these. It would be
inconsistent of the Court to have accepted the validity of the
Company's arguments on those two previous occasions and not to
support them now. Most of the major companies in the industry
are involved in on-going rationalisation plans, which means
that they are becoming more and more competitive. Unless the
Company has some means of improving its competitiveness as
well, there will be a further adverse affect on its position
in the market place.
RECOMMENDATION:
5. The Court has very carefully considered the submissions made
by the parties and in particular the arguments made by the Company
based on the terms of the Programme for National Recovery. Having
regard to other cases in which the economic or financial
circumstances of the firm were cited to support a variation or
relief from the terms of the P.N.R. the Court is of the opinion
that the interpretation of the relevant article of the Agreement
was much narrower than the Company seeks to have applied in this
case. In the circumstances the Court does not consider it can
support the Company's case.
It seems that what the Company is seeking is a permanent end to a
close relativity in rates and conditions with major oil companies.
It might perhaps in the long term be more successful if it were to
approach this objective more directly with the Union as no doubt
many of the trading conditions which they describe will already be
familiar to the workers directly involved.
The Court therefore recommends that the Company begin negotiations
with the Union on the basis of their offer to discuss reasonable
proposals on the operative dates of the outstanding phases of the
P.N.R.
~
Signed on behalf of the Labour Court
John O'Connell
________________________
10th April, 1990. Deputy Chairman
U.M./J.C.