Labour Court Database __________________________________________________________________________________ File Number: CD9010 Case Number: LCR12796 Section / Act: S67 Parties: CONOCO IRELAND LIMITED - and - SERVICES INDUSTRIAL PROFESSIONAL AND TECHNICAL UNION |
Claim by the Union for the payment of a 5% bonus to approximately 32 clerical and administrative workers.
Recommendation:
5. The Court has considered the submissions made by the parties
and, on the basis of the documentary evidence produced, the Court
is in no doubt that the bonus elements of salaries in the
comparator firms were to be taken into consideration in arriving
at an eventual settlement. As matters stand the Court is of the
opinion that the original purpose of paying such bonuses in some
of the comparator companies is not now relevant in this case and
the Court therefore recommends concession of the Union's claim.
Division: Mr O'Connell Mr Brennan Mr Devine
Text of Document__________________________________________________________________
CD9010 RECOMMENDATION NO. LCR12796
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
SECTION 67
PARTIES: CONOCO IRELAND LIMITED
(REPRESENTED BY THE FEDERATION OF IRISH EMPLOYERS)
AND
SERVICES INDUSTRIAL PROFESSIONAL AND TECHNICAL UNION
SUBJECT:
1. Claim by the Union for the payment of a 5% bonus to
approximately 32 clerical and administrative workers.
BACKGROUND:
2. The Company is involved in the marketing and distribution of
petroleum products to the retail and commercial sectors. In
recent years as a result of a reduction in the price of petrol,
increasing competition and Government control of margins, the
Company's profits have been significantly reduced. In 1989 the
Company launched a survival plan which led to a reduction in the
workforce by way of a voluntary redundancy programme. During the
course of negotiations the Union pointed out to Management that
certain anomalies existed in salaries between Union and non-Union
members. The parties agreed to enter discussions on a salary
package by reference to salaries in four nominated companies
(details supplied to the Court). Agreement was reached on salary
scales and a number of other issues such as telephone rental, meal
allowance etc. However no agreement was reached on the 5% bonus
issue. The Union states that the bonus is part and parcel of the
salary package in the comparator companies and that Management is
now reneging on a commitment given to pay the bonus. The Company
argues that while it agreed to examine the validity of the bonus
claim it never indicated an intention to make an offer on the
issue. Local discussions failed to resolve the matter and the
dispute was referred to the conciliation service of the Labour
Court on the 8th November, 1989. A conciliation conference was
held on the 18th December, 1989 but no agreement was reached. The
issue was referred to the Labour Court on the 3rd January, 1990.
A Court hearing was held on the 21st February, 1990.
UNION'S ARGUMENTS:
3. 1. The issue of the payment of the 5% bonus has been
outstanding for a considerable period and the workers
concerned are resolved that the matter be finalised once and
for all. They feel they have been unfairly treated in that
while their salaries were lower than other comparators in the
industry, their non-Union colleagues were enjoying better than
the industry norms.
2. Both parties have agreed on two fundamental issues i.e.
the league table of four companies and the basis of comparison
to be the salary package not the salary scales. In fact an
earlier offer from the Company in September, 1989 which
referred only to salary scales had been rejected for its
failure to address itself to the salary package i.e. the
absence of provision for the bonus.
3. The Union contends that the Company has enjoyed a higher
level of productivity and flexibility from the workers
concerned than any other comparable workers in the industry.
While this is a subjective judgement, it is one based on a
fair knowledge among the staff concerned of the situation
obtaining in comparable companies. It should be noted that
Management were at one stage insisting on carrying out some
form of investigation into productivity levels in other
companies in the industry with a view to comparing their
findings with the defacto position in this Company. They did
not do so and the Union would argue that it is because the
findings demonstrated that this Company was well ahead of the
industry vis a vis productivity.
4. At the original discussions between the parties in 1989
margins allowed by Government were tighter, however in recent
times these have considerably improved even to a point where
significant profits are now being generated. The parties have
agreed the salary scales and logically must average the
remaining element of the salary package i.e. annual
bonus/service pay. It must be emphasised that the workers
concerned are determined to see this issue to finality on this
occasion given the long history of the claim.
COMPANY'S ARGUMENTS:
4. 1. The Company's survival plan led to a reduction in the
workforce of 24 (18 blue collar and 6 white collar workers).
It was minimal (in its impact on the grades of the workers
concerned) only two of their members became redundant when the
Company eliminated its domestic heating business. The vast
majority of the workers concerned were totally unaffected by
the programme and in fact five workers were promoted.
4. 2. The Company agreed to correct anomalies in the salary
scales and addressing this specific problem led to an increase
in salaries of more than 6%. Consequently, despite a
substantial investment in redundancy payments the savings
generated by the survival plan were eliminated. The Company's
success in the Irish retail market is dependent on remaining
the low price marketer and the low price stance cannot be
supported unless the Company is a low cost operator. This
point is accepted by the Union.
3. Where bonus payments are made in the industry they were
introduced for substantial productivity improvements and
significant head count reductions, at a time when the industry
was making a reasonable return on its investment. These
circumstances do not apply within the Company concerned and
the Union's claim is made without reference to Company or
individual performance and without any compensating
productivity improvement. Payments incurred to correct
efficiencies in one Company cannot reasonably be imposed on
competitors who have managed their operations efficiently.
4. The Union has emphasised relative productivity in support
of its claim. The Company does not accept that comparisons of
productivity have any merit in determining whether or not a
bonus payment is justified. The Company's costs must be
determined by what it does not by what competitors choose to
do. Management have always controlled costs and manning
levels while some competitors negotiated bonus payments to
reduce theirs.
5. While clerical productivity is difficult to compare
Management have examined two productivity indicators which
clearly demonstrate that this claim is not supported:-
1. Analysis of volume per white collar worker across the
industry shows that the Company concerned has absolutely
no productivity advantage.
2. An analysis of volume per sales representative across
competitor companies suggests that this Company is below
the industry average (details 1,2, supplied to the Court).
A further revealing statistic is the number of workers in each
company who are classified in this Company's grade six or
above (highest grades). The analysis demonstrates that a
significantly higher proportion of the Company's clerical
workers are in these higher grades. 57% versus 34% as the
average across the industry. This suggests that the Company's
workers are being paid to a higher grade than their industry
counterparts.
4. 6. With the arrival of the open market in 1992 the Company
will be faced with even steeper competition from companies in
Northern Ireland who will have free access to the market. If
job preservation is the main concern then Management must
insure that the Company can compete with those North of the
border. An examination of equivalent jobs here versus
Northern Ireland shows that the industry here pays more than
36% above their rates. On this basis instead of being able to
expand this Company will face further job losses because it
will not be able to compete against the lower costs of
competitors. Over the period of the Programme for National
Recovery the salaries of the workers concerned have increased
by more then 27%, they are 65% above their counterparts in
other industries, yet the employment level in this industry
has declined 60% since 1981.
RECOMMENDATION:
5. The Court has considered the submissions made by the parties
and, on the basis of the documentary evidence produced, the Court
is in no doubt that the bonus elements of salaries in the
comparator firms were to be taken into consideration in arriving
at an eventual settlement. As matters stand the Court is of the
opinion that the original purpose of paying such bonuses in some
of the comparator companies is not now relevant in this case and
the Court therefore recommends concession of the Union's claim.
~
Signed on behalf of the Labour Court,
John O'Connell
___________________
19th April, 1990
T. O'D. / J. C. Deputy Chairman.