Labour Court Database __________________________________________________________________________________ File Number: CD9035 Case Number: LCR12797 Section / Act: S67 Parties: INTERNATIONAL FACTORS (IRELAND) LIMITED - and - IRISH BANK OFFICIALS' ASSOCIATION |
Claim by the Association for a pay increase in excess of the terms of the Programme for National Recovery (P.N.R.) on behalf of clerical and administrative workers.
Recommendation:
5. Having considered the submissions made by the parties, the
Court does not find the Association's arguments, based on
inflation, company performance, or its own rejection of the
Programme for National Recovery, to be such as to warrant any
departure from the terms of the Programme nor indeed do the
changes which have been brought about within the Company since the
issue of Labour Court Recommendation 12137 justify a breach of its
provisions.
Whilst, for these reasons rejecting the Association's claim, the
Court does find it necessary to comment on the proposals made to
and accepted by certain grades of staff whose rate of pay
constituted an integral part of the wage structure negotiated by
the Association. This change is not such as to persuade the Court
to depart from the limits imposed by the Programme, but unless the
Company has some equally innovative scheme to propose to the rest
of the staff within the foreseeable future, the Court is not
satisfied that the end result of the application of the P.N.R. in
this particular case will be as equitable as its authors intended.
Division: Mr O'Connell Mr Brennan Mr Devine
Text of Document__________________________________________________________________
CD9035 RECOMMENDATION NO. LCR12797
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
SECTION 67
PARTIES: INTERNATIONAL FACTORS (IRELAND) LIMITED
(REPRESENTED BY THE FEDERATION OF IRISH EMPLOYERS)
AND
IRISH BANK OFFICIALS' ASSOCIATION
SUBJECT:
1. Claim by the Association for a pay increase in excess of the
terms of the Programme for National Recovery (P.N.R.) on behalf of
clerical and administrative workers.
BACKGROUND:
2. The Company is a wholly owned subsidiary of Bank of Ireland
Finance and part of the Bank of Ireland Group. The present claim
is for the period 1st January, 1989 to 31st December, 1989.
Following the issue of Labour Court Recommendation 12137 in
respect of the 1988 salaries claim the parties agreed to implement
the financial terms of the P.N.R. for a twelve month period from
1st January, 1988. The Company has stated that it is prepared to
apply phases two and three of the terms of the P.N.R. from the 1st
January, 1989 and 1st January, 1990 respectively. This is not
acceptable to the Association which has submitted a claim for a 5%
increase on the grounds that the Company has offered managers a
new salary scheme, which the majority accepted and the terms of
which are superior to the P.N.R. (details supplied to the Court),
while at the same time offering the P.N.R. to the workers
concerned. The Association contends that its claim is justified
on the grounds of inflation, the Company's performance, staff
co-operation and internal relativities. The Company has rejected
the claim but has paid the terms of the P.N.R. to the workers
concerned as from 1st January, 1989. This was done without
prejudice to the Association's claim. Local discussions failed to
resolve the issue which was referred to the conciliation service
of the Labour Court on the 21st August, 1989. A conciliation
conference was held on the 21st December, 1989 but no agreement
was reached. The dispute was referred to the Labour Court on the
5th January, 1990. A Court hearing was held on the 21st February,
1990.
ASSOCIATION'S ARGUMENTS:
3. 1. Inflation is generally accepted as one of the factors
which both parties should be conscious of in discussions on
pay. Historically in this Company salary negotiations have
always exceeded the rate of inflation ensuring that the
relative position of the workers concerned is improved and not
just maintained. These agreements were secured even at times
when the Company was not as profitable as it is today. The
claim should be conceded as it does not place any significant
pressures on Management and ensures that historical precedents
are maintained.
2. This Company is part of one of the most important Banks in
Ireland, i.e. Bank of Ireland which has had an outstanding
performance for the period to September, 1989. The Company
concerned has also significantly improved its profitably. The
Association contends that the background of the Group's
performance and profitability must play a significant part
when considering salary increases. The claim for a 5%
increase is therefore fair and reasonable.
3. Management has indicated that they are restricted by the
terms of the P.N.R. at negotiations. The Association was not
party to the terms of the P.N.R. and the workers concerned do
not feel in any way obliged to accept its terms. Last year a
Court recommendation that the P.N.R. be accepted by the
Association for three years was overwhelmingly rejected by the
membership. There is nothing within the P.N.R. which
inhibits unions and companies from exceeding its monetary
terms. In fact a number of companies have entered into such
deals where Management have shown a willingness to recognise
staff aspirations. Many of those companies would not have had
the performance levels or profitability of the Company
concerned.
4. Management have created a major internal anomaly within
the Company by offering significant enhanced terms to managers
under a new agreement (details supplied to the Court). This
offer has been accepted by the majority of managers. Against
this background there is absolutely no justification for the
Company's claim that they can only pay the terms of the P.N.R.
Fairness and equity must apply equally to all staff and the
Company cannot be justified in its offer against a background
where other members of the same Association working in the
same Company receive general increases in excess of the
majority of staff.
5. The morale generally within the Company is at a very low
ebb as a result of its stance on pay. Management continue to
place intense pressure on staff with no appreciation of their
loyalty, co-operation and significant contribution to the
Company's success. The selective and preferential treatment
of certain grades is divisive and has caused resentment;
co-incidentally if managers now seek to achieve significant
pay levels based on performance they depend totally on the
support of the rest of the staff who have been insulted by the
offer of the terms of the P.N.R. The Association's claim is
justified and is a legitimate case for seeking a minimum 5%
increase for a twelve month period.
COMPANY'S ARGUMENTS:
4. 1. The application of phases two and three of the P.N.R. is
appropriate and should be accepted as such by the Association.
The P.N.R. has been agreed and implemented by the social
partners. There is universal agreement that the Programme's
objectives are in progress and are being realised and that
same will benefit both the individual and the country. There
are no valid grounds for the Association to seek terms in
excess of this Programme.
2. For the past number of years the Company has been either
loss-making or operating at marginal profitability. A
strategy to secure the future of the business was introduced
towards the end of 1988 and has begun to show positive results
during 1989. A key element of that strategy is to maintain
costs at a level which will enable the Company to increase its
business by offering facilities to the market at competitive
prices. By far the largest single element of costs are staff
costs representing almost 60% of total overheads, compared to
50% in 1980. The traditionally high margins which in the past
could be earned in this business are no longer available and
the Company must compete with all other financial institutions
on equal terms. This has significantly cut the margin which
can be charged on funds advanced to customers and highlights
further the need to effectively control costs so that the
Company can maintain its competitiveness. All competitors in
the market are implementing the terms of the Programme for
National Recovery and if the Company did anything other than
implement the P.N.R., it would further erode its competitive
position.
3. It is now generally accepted that real take-home pay has
increased over the period of the Programme particularly when
account is taken of the tax concessions that form an integral
part of the Agreement. Staff at the Company have of course
benefited from these tax concessions and have also availed of
incremental increases. When the terms of the Programme are
combined with the incremental increases, staff have received
increases ranging from 5-6% per annum. Furthermore, the
Company's house loan and mortgage subsidy arrangements
provide benefits over and above those generally available and
essentially means that the interest rate component of the
Consumer Price Index is irrelevant for borrowing members of
the Company's staff.
4. The Association has suggested that the introduction of the
Performance Related Pay System for Management staff would
justify pay increases for the remainder of its staff members
in excess of the Programme. In the Company's view there is no
justification whatsoever for this view. The managerial pay
system referred to is totally merit-based and it was open to
each individual Manager either to remain with the existing
remuneration/incremental system within collective bargaining
arrangements, or to opt for the alternative performance
related system. With the latter system, salaries are decided
at the Company's sole discretion and are based on overall
Company performance and the performance of the individual
Manager. In the circumstances the Company requests the Court
to reject the Association's claim.
RECOMMENDATION:
5. Having considered the submissions made by the parties, the
Court does not find the Association's arguments, based on
inflation, company performance, or its own rejection of the
Programme for National Recovery, to be such as to warrant any
departure from the terms of the Programme nor indeed do the
changes which have been brought about within the Company since the
issue of Labour Court Recommendation 12137 justify a breach of its
provisions.
Whilst, for these reasons rejecting the Association's claim, the
Court does find it necessary to comment on the proposals made to
and accepted by certain grades of staff whose rate of pay
constituted an integral part of the wage structure negotiated by
the Association. This change is not such as to persuade the Court
to depart from the limits imposed by the Programme, but unless the
Company has some equally innovative scheme to propose to the rest
of the staff within the foreseeable future, the Court is not
satisfied that the end result of the application of the P.N.R. in
this particular case will be as equitable as its authors intended.
~
Signed on behalf of the Labour Court,
John O'Connell
___________________
23rd April, 1990.
T. O'D. / J. C. Deputy Chairman.