Labour Court Database __________________________________________________________________________________ File Number: CD90553 Case Number: LCR13131 Section / Act: S67 Parties: AER LINGUS - and - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION |
Claim by the Union for a review of the 1988 Operative Agreement on pay and conditions of employment, which applies to new operative recruits.
Recommendation:
5. Having considered the submissions made by the parties, and the
information supplied by the Company as to the cost of the
amendments proposed by the Union, it seems to the Court, in the
light of the Company's current financial situation, and the
circumstances which gave rise to the necessity for the changes
involved in the 1988 Agreement, that major amendments to the new
conditions introduced in the 1988 Agreement are not appropriate at
this time. The Court therefore does not recommend concession of
the Union's claims and does recommend acceptance of the change in
the shift premium as proposed by the Company.
Division: Mr O'Connell Mr Brennan Ms Ni Mhurchu
Text of Document__________________________________________________________________
CD90553 RECOMMENDATION NO. LCR13131
INDUSTRIAL RELATIONS ACT, 1946 TO 1976
SECTION 67
PARTIES: AER LINGUS
and
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
SUBJECT:
1. Claim by the Union for a review of the 1988 Operative
Agreement on pay and conditions of employment, which applies to
new operative recruits.
BACKGROUND:
2. In 1988, following protracted negotiations including a full
Labour Court hearing (L.C.R. 11871 refers) new rates of pay and
conditions of employment were agreed for new operative recruits,
effective from 1st April, 1988. The agreement provided that if
either party sought to review its content, for whatever reason,
discussions would take place within two weeks of such a request
and if issues were not resolved they would then be processed in
accordance with existing procedures. In December, 1989, the
Unions (I.T.G.W.U. and F.W.U.I.) requested a meeting with the
Company to review the Agreement. A meeting took place in January,
1990, during which the Union (S.I.P.T.U.) listed four points of
the Agreement for review i.e.
1. Basic Pay Scale.
2. Shift Pay.
3. Public/Company Holiday Pay.
4. The seven year clause on promotional position.
In February, 1990, the Company wrote to the Union rejecting three
of the four claims. It agreed to the deletion of the 7 year
clause. The issues for review were referred to the conciliation
service of the Labour Court on 27 March, 1990. At that time the
Company was involved in separate negotiations on shift pay for
pre - 1988 operatives. Both operative claims were listed for a
Labour Court conciliation conference on 24th April, 1990, but it
was agreed to deal with the claims for increased shift pay for
pre - 1988 operatives and to adjourn the review of the Agreement
to a later date. Settlement proposals for the pre - 1988
operatives claim included an increase in shift pay from one-sixth
to one-fifth and that that settlement should be taken into account
when discussing the 1988 Agreement.
The claim for a review of the Operative Agreement was the subject
of a conciliation conference on 10th May, 1990, during which the
Company offered to increase shift pay from time plus one-tenth to
time plus one-eighth. The Company rejected the other claims for
review of the Agreement and accordingly no compromise was reached.
On 6th July, 1990, the Union advised that workers had rejected the
Company proposal of shift pay at time plus one-eighth. Further
local discussions failed to resolve any of the issues and the
Union requested a full Court hearing on 23rd August, 1990. The
Company agreed on 10th September, 1990 and the Court investigated
the dispute on 15th October, 1990.
UNION'S ARGUMENTS:
3. 1. The claim covers 400 new operative recruits, out of a
total operative staff of 1,250. It is served on the basis of
experience gained by new recruits over the two years since the
Agreement came into operation and on the basis of the
arguments advanced by the Company when negotiating that
Agreement.
2. When negotiating the new intake Agreement the Company
contended that it was necessary to match competition from
other competitors, in the main Ryanair and Capital Airways.
One of those airways has now gone out of business and the
other has proved no threat at all. The main competitors at
the moment are carriers such as British Midland and British
Airways who have no similar agreement and who pay higher rates
to their workforce.
3. It is publicly agreed that Aer Lingus rank on a world
basis within the top 50 airlines for revenue purposes and
within the top 27 for being a profitable successful airline.
This is reflected in the Company's performance over the years,
with its actual net profit varying from #4.9m in 1983/84 to
#31.5m in 1989/90.
4. An Agreement similar to what has been arranged in respect
of craft workers (850) and chefs (40) is required. Those
agreements clearly state that all craft workers and chefs
recruited at age 24, receive a rate of pay equal to the
recruitment rate under the old agreement. Currently one-third
of the operative workforce operate along side the other
two-thirds who have higher basic pay and superior conditions.
They are living under terrible financial constraints, when the
cost of living, providing a home, food, clothes and educating
a family is taken into consideration. Their chances of
purchasing a home while on new intake rates are non-existent.
5. All new enterants, irrespective of service, on attaining
the age of 24 years should receive pay equivalent to the first
point of the old operative 4 scale. This would mean an
increase of #33.70 per week at that age i.e. the difference
between the old scale of #194.70 and the new intake rate of
#161. This arrangement would give the Company the advantage
of holding the new intake rates for recruitment.
6. Currently new intake operatives receive time plus
one-tenth for shift work during the first five years of
service. They should be in receipt of a rate of time plus
one-fifth, in line with the rate applicable to other workers
in the Company. During negotiations the Union suggested a
phasing in of time plus one-fifth over the five year period -
complete concession of the claim is now being sought.
7. There is no justifiable or genuine reason as to why there
should be a difference in the method by which workers are
compensated for working public holidays. Currently new
intakes receive one day's pay plus a day's pay and no lieu
days while other workers receive a day's pay plus two day's
pay or alternatively the option of taking two lieu days along
with the day's pay. All workers should be compensated equally
for public holiday cover.
COMPANY'S ARGUMENTS:
4. 1. Cost control/fund generating issues behind the 1988
Operative Agreement are more important for the survival of the
airline in 1990, than they were in 1987. In recent months the
financial performance of air transport has declined
disastrously. The Gulf crisis has led to less demand and
higher costs. Fare increases alone will not resolve the
resulting financial loss. This year the airline's nett loss
will be much higher than budgeted. The airline is in a major
financial crisis which must be rectified. Management have set
up task forces to examine its problems and to develop recovery
and survival plans. Profits from ancillary activities are
insufficient to deal with such a financial crisis and so other
cost improvements must be sought. The expansion forecast in
1987/88 has taken place with an increase in the workforce
between March, 1988, and June, 1990, of 1277 new employees.
An expansion of this nature would not have been possible if
new entry pay agreements were not negotiated. The Company may
be forced to reduce its workforce if costs cannot be
curtailed.
2. The Airline is not achieving the levels of operating
profit estimated in its budget. Revenue is seriously down
whereas the Airline should be making a profit of at least #20m
in order to fund the #1.5 billion capital expenditure needed
over the next ten years for fleet renewal and replacement.
Apart from the Gulf crisis the Airline is being affected by
the beginning of a recession in the United Kingdom and North
America which is resulting in fewer people travelling. The
whole airline industry is experiencing difficulties. This
week Air Canada announced that it will lay off 3,000 workers
while Delta, United and British Airways have announced
cutbacks. Ryanair has also announced redundancies.
3. The 1988 Agreement reduced the 8 operative grades to 4 -
A, B, C and D. The recruitment grade is operative A, with a
30 point scale, the first eight of which are age-related. The
Union is claiming an increase in the scale so that at age 24
an operative A would receive the same payment as the first
point on the old operative 4 scale. This would amount to an
approximate #34 per week increase on basic pay for all
operatives recruited under the 1988 Agreement. Of the 363
operatives recruited under the Agreement 205 are over 25 years
of age. The cost of such an increase would be #1.5 million.
The increase will be ongoing in each subsequent year,
increasing as more workers reach 24 years of age. The
increased cost does not take account of knock-on effects from
others workers such as clerks, cabin crew and pilots recruited
under similar agreements. The operative 4 grade was a
promotional grade, while operative A is the basic grade. The
Company simply cannot afford any such pay increases.
4. The claim on shift pay is for the same payment as those
recruited prior to 1988 i.e. time plus one-fifth. The Company
has offered to increase the shift pay from one-tenth to
one-eighth. The 1988 Agreement was designed to provide for
the transfer to full shift rates after five years. This is in
contrast to the clerical agreement where full rostered duty
allowances are not reached until 7 years (this was reduced
from 11 to 7 years following a review).
5. The Union has claimed the same public holiday conditions
for new operative recruits as those which apply to workers
recruited prior to 1988. Under the 1988 Agreement and during
the first five years of employment payment is at double time
for each such holiday with no option to take time in lieu.
After five years of service public holiday remunerative
conditions are the same for all workers. To change either the
payment or the time in lieu would result in increased costs.
All of the other agreements have the same conditions and any
change with the operative group would be followed by counter-
claims from the other groups.
6. The Company has launched a Quality Improvement Programme
aimed at improving the quality of service to both external and
internal customers. This in turn should reduce costs but it
will not solve the Company's cost problems and it cannot be
construed as a cost-saving that provides scope for concession
of the Union's claim.
7. The Company has put proposals to the Union on a programme
entitled 'Performance Challenge in the Nineties.' It is an
incentive designed to reward workers for improvements. If the
proposal is accepted a fund will be created each year from
which bonus payments will be made on the basis of contribution
towards improvements and changes necessary to maintain the
Company as a modern expanding and improving airline. However,
profit-performance targets must be met in order to create such
a fund. While the Unions generally have not displayed any
real enthusdiasm for the initiative, this sort of approach can
enhance earnings through improved commercial performance and
profit. Straight cost-generating claims cannot be sustained
in the Company's present serious financial position.
RECOMMENDATION:
5. Having considered the submissions made by the parties, and the
information supplied by the Company as to the cost of the
amendments proposed by the Union, it seems to the Court, in the
light of the Company's current financial situation, and the
circumstances which gave rise to the necessity for the changes
involved in the 1988 Agreement, that major amendments to the new
conditions introduced in the 1988 Agreement are not appropriate at
this time. The Court therefore does not recommend concession of
the Union's claims and does recommend acceptance of the change in
the shift premium as proposed by the Company.
~
Signed on behalf of the Labour Court
John O'Connell
________________________
19th December, 1990. Deputy Chairman
A.McG./J.C.