Labour Court Database __________________________________________________________________________________ File Number: CD90187 Case Number: LCR12930 Section / Act: S67 Parties: IRISH LIFE ASSURANCE PLC - and - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION |
Dispute involving an Area Sales Manager and a sales representative concerning the allocation of credit for new business.
Recommendation:
5. The Court is of the view that the parties involved should
agree guidelines for dealing with disputes concerning crediting of
fees, such guidelines to include an internal appeals mechanism.
In this case before the Court, it is recommended, having regard to
the fact that the Company acknowledges that it was not the
responsibility of the claimants to enquire whether the client had
an insurance advisor, that the Union's claim be conceded.
Division: MrMcGrath Mr Brennan Ms Ni Mhurchu
Text of Document__________________________________________________________________
CD90187 RECOMMENDATION NO. LCR12930
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
SECTION 67
PARTIES: IRISH LIFE ASSURANCE PLC
AND
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
SUBJECT:
1. Dispute involving an Area Sales Manager and a sales
representative concerning the allocation of credit for new
business.
BACKGROUND:
2. The Company's life assurance products are sold in Ireland
through two main distribution channels - independent brokers and
the Company's own field staff. The Company pays commission on all
new business sold by its agents and representatives. This is paid
to whoever submits a completed proposal form from the client. In
this case, the Company paid commission on a particular business
deal to the client's broker rather than to the two claimants. The
Union claims that they should rightfully be paid the commission as
it was they who had transacted the deal. The completed proposal
form was submitted by the area sales manager. However, the broker
subsequently wrote to the Company stating that the business had
arisen as a result of discussions he had with the client and
therefore the credit should be awarded to him. The Company
subsequently carried out an investigation and concluded that there
was evidence which supported the broker's claim (details supplied
to the Court). It also concluded that both claimants had followed
up the contact given to them and had completed the client's
application in good faith. However, on the evidence available to
it, the Company awarded the credit to the client's broker. The
claimants disputed this and argued that the full credit should be
awarded to them. Having considered the matter further, the
Company offered to make an ex-gratia payment equivalent to the
commission that would have been generated on the case (#835 to the
area manager and #2,505 to the sales representative). This
proposal was rejected by the Union on the grounds that full credit
should be awarded to the claimants - that is commission plus a
salary increment (the salary increment in this case is worth #5
for the area manager and #25 for the sales representative).
Following the failure of local discussions the Union referred the
matter to the conciliation service of the Labour Court. No
agreement was reached at a conciliation conference on the 22nd
March, 1990 and the Union sought to have the dispute referred to
the Labour Court for investigation and recommendation. The
Company subsequently agreed to the referral. The Court
investigated the dispute on the 21st May, 1990.
UNION'S ARGUMENTS:
3. 1. It has long been established that the first proposal
submitted receives full credit for the business transacted.
This is fundamental to the orderly and efficient processing of
new business and affects all sales staff. Any deviation from
this practice would lead to chaos and to a divisive and
unmanageable situation.
2. Any undermining of a well-tried and fair system will not
be tolerated. The fact that Management has cited a client's
letter in support of its view is incompatible with its
absolute instructions that at no time is a client to be
implicated in any internal disputes involving credits. In
fact, in the past, the Company has threatened disciplinary
action against employees in order to discourage such practice.
3. The Company has consistently criticised malpractice in the
industry yet in this case it has accommodated a major
brokerage company rather then adhere to established and valued
procedures.
4. Commission payments/credits are due only in respect of
work done by the introducing agent. It is inconceivable that
any broker, large or small, should receive payment in
circumstances where clearly they did no work.
5. It is a matter of record and of fact that the business of
the client in question was not confined to the broker in
question and there is evidence that the client also had advice
from at least one other broker.
6. It is not normal practice for field staff to ask clients
if they have insurance advisers/brokers.
7. The Court is requested to underwrite the well-established
and agreed practice which dictates that payment is made on the
basis of 'first proposal' and for work carried out by the
introducing agent.
COMPANY'S ARGUMENTS:
4. 1. The Company decided to award credit to the broker in this
case on the basis of the relevant information available. This
decision was fair and reasonable in view of the following:-
- The broker had an established relationship as
financial adviser to the client as evidenced by recent
dealings with him in relation to both pensions and
life assurance business.
- In view of the established relationship between the
client and the broker, their claim to have briefly
discussed the client's need for a mortgage and the
imminent launch of Irish Life Homeloans is reasonable
and credible.
- The client had been referred to the area manager by
the Company's head office. It is reasonable to
assume, in view of the established relationship
between the client and the broker, that had he been
asked if he had an insurance adviser he would have
mentioned the broker. This situation is explicitly
covered by the written guidelines for determining the
allocation of credit in disputed cases - "normally
credit is allocated on the basis of the first proposal
completed and received in Chief Office. Possible
exceptions could arise where........ the proposer,
having discussed the case with a broker, contacted an
Irish Life office to complete the business."
2. The Company accepts that the claimants acted in good faith
in assisting the client to process his application for a
mortgage. Its proposal to make ex gratia payments was a most
generous response to their representations and involves a
financial loss to the Company on this particular new business
case.
3. The determination of credit allocation must be a matter
for the Company. It recognises that there is an onus on it to
have procedures for handling these disputes which are accepted
as fair by its staff and by independent brokers. The
procedures it has established over the years are fair and have
worked well; however it is prepared to examine amendments or
additions to these procedures if such changes would improve
its ability to resolve disputes. It has already proposed a
joint Company/trade union approach on this (details supplied
to the Court).
4. The Company asks the Court to recommend that its proposal
of ex gratia payments to the two members of field staff should
be accepted in settlement of their claim.