Labour Court Database __________________________________________________________________________________ File Number: CD90267 Case Number: LCR12949 Section / Act: S67 Parties: IRISH SUGAR PLC - and - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION |
Dispute concerning the method of introduction of a thirty nine hour week under the Programme for National Recovery (P.N.R.).
Recommendation:
5. The Court has considered all aspects of the claim presented
by the Union and the response from the Company outlined in letter
dated 22/1/90 attached to the written submissions.
The Court is of the view that certain aspects of the dispute
require further negotiation between the parties and the Court
therefore recommends as follows:-
(1) The Company concede the Union's claim that basic rate be
expressed as 1/39th in future.
(2) Overtime payment rate to commence after 40 hours worked in a
week.
(3) Seasonal workers to be included in the application of the
reduced working hours on a pro rata basis.
(4) The parties meet for further negotiations on the method of
implementing the reduced hours taking into account items 1 to
3 above, the Company's proposals for effecting some cost
savings, and the operative date.
(5) Should the parties fail to agree locally they should refer
the outstanding items back to an Industrial Relations Officer
and if necessary the Court.
Division: Ms Owens Mr Collins Mr Walsh
Text of Document__________________________________________________________________
CD90267 RECOMMENDATION NO. LCR12949
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
SECTION 67
PARTIES: IRISH SUGAR PLC
AND
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
SUBJECT:
1. Dispute concerning the method of introduction of a thirty nine
hour week under the Programme for National Recovery (P.N.R.).
BACKGROUND:
2. Following local level meetings held during 1989, the Company
wrote to the Union on 22nd January, 1990 setting out its proposals
for the implementation of a reduction in working hours (see
Appendix A). The proposals provide for the reduction in working
hours by giving a maximum of 6 days off in lieu each year the
level of which would depend on a workers attendance record. This
would be introduced by giving 3 days off in the year commencing
October, 1990 and 3 days off in the year commencing October, 1991.
No change would take place in rates of pay or in the calculation
of overtime and shift premia. The costs arising out of the
reduction in working hours would be offset to some extent by a
number of cost saving measures. These proposals are unacceptable
to the Union which is seeking the implementation of the reduction
in working hours through a one hour earlier finishing on Fridays
with the basic pay adjusted from 1/40th to 1/39th. On 5th
February, 1990 the matter was referred to the conciliation service
of the Labour Court. A conciliation conference was held on 4th
April, 1990 at which agreement could not be reached and on 17th
May, 1990 the matter was referred to the Labour Court for
investigation and recommendation. The Court investigated the
dispute on 27th June, 1990.
UNION'S ARGUMENTS:
3. 1. Most of the workers involved in this claim work a straight
day work rota for 8/9 months of the year with a 3/4 month
period of a seven day week, round the clock shift work. There
are now approximately 318 agreements on reduced working hours
in place covering 52,050 workers, over 200 of these allow for
an hours reduction per week with the rate adjusted to 1/39th
(details supplied to the Court). Where agreements allow for
days off in lieu, it is generally where round the clock shift
work or regular overtime applies, but the hourly rate has
initially been changed to 1/39th. The Court in a number of
recommendations has confirmed that the basic rate should be
adjusted to 1/39th (details supplied to the Court). Already a
number of large commercial State bodies including Bord Gais
and the ESB have agreed the hours reduction in line with this
Union's claim. In the local authorities, while agreement has
not yet been concluded in all areas, the guidelines agreed for
general operatives and related grades are quite specific in
relation to the adjustment of the hourly rate, i.e. the new
hourly rate of pay will be the current weekly rate divided by
39 and overtime will be at 1/39th. A similar arrangement
applies in respect of nursing and non-nursing staff in the
health services.
2. Management has tried to justify its proposals on the basis
of minimising any adverse effects on cost competitiveness,
productivity and employment. However, statements in the 1989
Annual Report clearly show that the Company is in a very
profitable situation (details supplied to the Court).
Therefore, from large losses in most of the 1980's the Company
made large net profits in the year ended September, 1989. The
Company is so confident of its future that it has purchased
half of the shares in Odlums and bought a third of Jas Budgett
& Sons, the second largest sugar wholesaler in the U.K. and
has bought a controlling interest in James Daly, an edible
oils manufacturer. It also plans to expand having
rationalised substantially in recent years. The dramatic
upward trend in the Company's overall financial position has
been further confirmed with the publication of the figures for
the first six months of the current year and the Company
expects performance for the second six months to at least
match the first half of the year. It is the workforce which
has made the greatest input into this turnaround. In the ten
years 1980 to 1989 the workforce has been more than halved and
even in the last year, the gross labour costs fell by 11.2% or
15.9% in real terms.
3. 3. The Company proposals in respect of the 39 hour week do
not accord with the terms of the PNR or the Framework
Agreement on Working Hours. Benefits to permanent workers
have always been applied pro rata to seasonal workers. The
trends throughout industry clearly show that the reduction in
hours is implemented by an appropriate adjustment in the basic
rate. The workers involved along with many more throughout
the industry, see the implementation of the reduced hours as
some consolidation for the acceptance of very modest wage
increases. In all the circumstances, the Union's claim that
the reduction in hours be implemented through a one hour
earlier finishing on Friday with the basic rate adjusted from
1/40th to 1/39th to ensure no loss of pay should be conceded.
COMPANY'S ARGUMENTS:
4. 1. The Company's proposals conform totally with the PNR and
Framework Agreement on Working Hours. The Company approach is
to effect a reduction in basic working hours to the equivalent
of 39 hours per week in such a manner as to minimise any
adverse effects on cost competitiveness, productivity and
employment. It is essential that the method implemented has
full and adequate regard to the highly seasonal nature and
very unusual work patterns and payment systems of the business
of the Company. There is already an extraordinarily high
"hours pay to hours work" relationship and the business would
not be able to sustain the extent of the increases which would
arise from the Union's proposal of reducing each week by one
hour with knock on increases in hourly rate and overtime cost
premia. The seasonal nature of the business means that the
production cycle is conducted at a very high cost over a 3 to
4 month period which is followed by 8 to 9 months 'off-season'
at a very much reduced activity.
2. The Company's approach fully meets the objective of
reducing hours spent at work without loss or gain of pay and
it concurrently increases the opportunity for extra
employment. The Company's proposals would apply to permanent
hourly paid workers whose basic working week is at or above 40
hours, as follows:-
(a) The Company's approach of giving "days off in lieu" in
order to effect the reduction in working hours is the
obvious one, having regard to the very high degree of
seasonality, etc. in the business. The European sugar
industry employs far fewer people in the off-season.
While the Irish system is to compensate those working
shift in Campaign in an expensive monetary fashion via
shift premia/overtime and consolidation, the European
approach is to accord time off in the off-season, which
is far less expensive. The Company proposal of "days in
lieu" therefore accords with the European approach.
This would cost approximately #240,000.
(b) The payment system for the "days off in lieu" would be
flat time at 8 hours per full day off. "Days off in
lieu" are not holidays and payment is not calculated as
for holiday pay which in the Company is governed by
'average hours'. The extra costs for paying these days
as if they were holidays would attract "on costs" of
between 12% and 50% and the extra cost to the Group
would be approximately #70,000. The fundamental
objective of the Framework Agreement is to reduce time
spent at work without loss or increase in pay and to
increase employment.
(c) No change would take place in rates of pay or in the
calculation of overtime and shift premia. This approach
results in no loss or gain in pay, especially in the
very expensive production period, and consequently no
increase in the very high costs already arising in that
particular period. To use the approach of converting
each week from 40 to 39 hours with consequent increase
in rate by 40:39 would attract exorbitant cost
increases. The cost of such an approach would be
#420,000 which could not be justified.
3. Even on the basis of the Company's approach considerable
extra costs arise. Cost saving measures such as those already
outlined by the Company in its letter of 22nd January, 1990
(details supplied to the Court), need to be achieved so as to
try to offset the extra on costs involved. The timing of the
PNR for the workers concerned is October, 1988 to September,
1991 and therefore the Company's proposal for the timing of
the introduction of the reduction in hours of work is in line
with the Framework Agreement. The Company view is that the
Framework Agreement did not intend that seasonal workers would
qualify to claim as a result of reduction in working hours, as
they are not permanent workers normally working 40 hours per
week all year round. If the Framework Agreement had been
intended to cover such workers, the relevant minute and
wording would have so stated. The Company proposal of
according "days off in lieu" to permanent workers has the
specific merit sought in the PNR and the Framework Agreement
of creating some opportunity for extra work for seasonal
workers to make up for the deficit in output produced by
reducing time spent at work by the permanent workforce for
whom the reduction in hours was obviously specifically
targeted. The benefit for seasonal workers is the increased
job opportunity created, while that for permanent workers is
the reduction in time spent at work. A number of other
companies have used "days in lieu" and have not changed the
hourly rate (details supplied to the Court).
4. 4. Two of the fundamental objectives of the PNR and Framework
Agreement on Working Hours are the effect on jobs and
effecting change without recourse to overtime working. The
Company's proposals face up to and meet these two key issues.
The Framework Agreement makes special mention of the need to
have regard to costs, competitiveness, flexibility, effect on
production and services, jobs, the exigencies of the work
involved and the efficient use of human resources, plant,
equipment, machinery. The Company's approach while fully
meeting the conditions in the Framework Agreement has very
considerable cost implications and the savings suggested will
in no way balance the "on costs". The Company's main
business, sugar production, is restricted by regulations of
the EEC. As a result a number of realities and constraints
impinge on the Company (details supplied to the Court). The
Company is operating in a stagnant island market with minimal
exports, providing little or no margin but needing to be
operated depending on sugar volumes and circumstances. Due to
the restrictive quota system in the EEC, the Company cannot
increase normal sugar production even if it felt it could
export effectively. The european sugar industry is dominated
by large companies and this Company remains in an extremely
vulnerable position in a highly competitive business area.
The most recent group profit and loss statement still shows a
remaining accumulated deficit, this deficit remains even
though no dividends have been paid for ten years. The sugar
industry, which is the core activity of the Group, continues
to be under extreme pressure and the Company cannot afford any
cost increases. The Company considers that its proposals,
which will cost an extra #240,000, represent a fair and
business like response and are totally in accord with the PNR
and Framework Agreement on Hours of Work.
RECOMMENDATION:
5. The Court has considered all aspects of the claim presented
by the Union and the response from the Company outlined in letter
dated 22/1/90 attached to the written submissions.
The Court is of the view that certain aspects of the dispute
require further negotiation between the parties and the Court
therefore recommends as follows:-
(1) The Company concede the Union's claim that basic rate be
expressed as 1/39th in future.
(2) Overtime payment rate to commence after 40 hours worked in a
week.
(3) Seasonal workers to be included in the application of the
reduced working hours on a pro rata basis.
(4) The parties meet for further negotiations on the method of
implementing the reduced hours taking into account items 1 to
3 above, the Company's proposals for effecting some cost
savings, and the operative date.
(5) Should the parties fail to agree locally they should refer
the outstanding items back to an Industrial Relations Officer
and if necessary the Court.
~
Signed on behalf of the Labour Court,
Evelyn Owens
___18th___July,___1990. ___________________
U. M. / M. F. Deputy Chairman
APPENDIX A
COMPANY'S LETTER OF 22ND JANUARY, 1990 TO UNIONS
Re: Reduction of Working Hours.
Dear Sirs,
I confirm that in accordance with the Programme for National
Recovery the Company is prepared to negotiate a reduction in time
spent at work for those permanent workers whose basic working week
is at or above 40 hours.
Having regard to the nature of the various activities in which the
Company is involved our objective is to effect a reduction in
basic work hours to the equivalent of 39 hours per week in such a
manner as to minimise any adverse effects on cost competitiveness,
productivity and employment. This approach accords with the
Framework Agreement on Hours of Work. It is essential that
savings be agreed so as to offset the very substantial increase in
costs which will arise in each activity with a reduction in hours
of work.
The Company accordingly makes the following proposals for
permanent hourly paid employees:-
1. The reduction in working hours would be done by way of
according up to 6 days off in lieu per annum taken at times
specified by the Company to suit the business needs. The
maximum "time off in lieu" would be 6 days and would be
liable to reduction having regard to the individuals
attendance record. For example someone absent for 8 weeks
would lose "1 day in lieu", 16 weeks would lose 2 days in
lieu, etc.
2. The period of the year for according "days off in lieu" could
vary from location to location in accordance with local
circumstances. The periods to be agreed locally so as to
have regard for the location's specific circumstances and
cost requirements.
3. No change would take place in rates of pay or in the
calculation of overtime and shift premia. The basic weekly
rate of pay will continue to apply with overtime applicable
after 40 hours and calculated on 1/40th of basic weekly rate.
4. The considerable extra costs involved to be offset by such
cost saving measures as:-
(a) elimination of time off during working hours for
attending Mass since Mass can be heard on previous day.
(b) improvement in punctuality at work through removal of
"grace times" for clocking in and improvement in
clocking-in procedures/locations.
(c) improvement in co-operation in regard to use of
contractors; elimination of repercussive overtime; more
flexibility in arranging annual leave (including "days"
generated through working Bank Holidays in campaign,
etc.) to suit the needs of the business.
We would welcome additional Union/employee suggestions in
regard to cost saving measures as it is essential that cost
competitiveness is not worsened.
5. In regard to the timing of the reduction in hours of work we
would propose that time off in lieu be introduced as
follows:-
(i) 3 days in year commencing October, 1990.
(ii) 3 days in year commencing October, 1991.
I appreciate that during our direct meetings your Union did
propose a different approach to the implementation of a 39
hour week, but I would ask you to give favourable
consideration to the Company's proposals in the interests of
maintaining cost competitiveness and of the future viability
of our different activities.