Labour Court Database __________________________________________________________________________________ File Number: CD91486 Case Number: LCR13517 Section / Act: S67 Parties: MARATHON PETROLEUM IRELAND LTD - and - NEETU;SIPTU |
Dispute concerning the formula used for calculating the basic hourly rate for overtime purposes in the context of the introduction of the 39 hour week under the Programme for National Recovery (P.N.R.).
Recommendation:
The Court has considered all aspects of this case contained in
the written submissions and expanded upon at the oral hearing.
The Court notes in particular the Unions firm statement with
regard to co-operation and flexibility on the implementation of
a 39 hour week.
The actual implementation of a 39 hour week has been agreed in
principle by the parties and the Court is now asked to recommend
on a residual matter - calculation of overtime.
The Court recommends that overtime be calculated at 1/39th. The
Court notes that the current agreement provides that the
hourly rate is decided by dividing the consolidated basic annual
salary by 2184 hours. Therefore, to reflect the reduction of
one hour per week the Court recommends that the divisor should
be altered to 2132, i.e. 2184 - 52.
Division: Ms Owens Mr McHenry Mr Rorke
Text of Document__________________________________________________________________
CD91486 RECOMMENDATION NO. LCR13517
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(4) INDUSTRIAL RELATIONS ACT, 1990
PARTIES MARATHON PETROLEUM IRELAND LTD.
(Represented by Federation of Irish Employers)
and
NATIONAL ENGINEERING AND ELECTRICAL TRADE UNION
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
SUBJECT:
1. Dispute concerning the formula used for calculating the
basic hourly rate for overtime purposes in the context of the
introduction of the 39 hour week under the Programme for
National Recovery (P.N.R.).
BACKGROUND:
2. 1. The Company operates two production platforms in the
Kinsale Head Gas Field. Each platform has two crews
which operate on an alternating week on/week off basis.
A work week on the platform is comprised of 7 shifts of
12 hours per shift (i.e. 84 hours per week). Crew
members work "trips" which is the term given to a 2 week
period comprising both the week scheduled on the
platform and the following week on shore leave. Each
crew member has 4 weeks holidays per year and can earn
an additional two weeks holidays through normal
attendance. Each crew member normally has 3 "trips"
leave per year and works 23 weeks offshore per year.
2. The 84 hours worked per "trip" consists of 40 hours at
the flat rate, 24 hours at time and one half, and 20
hours at double time. The working year is based on 26
trips per year. Under the Company/Union agreement the
hourly rate is calculated by dividing annual salary by
2184 (26 "trips X 84 hours per "trip"). For the
purposes of this calculation annual salary includes
allowances for shift premium, offshore allowance, travel
allowance, and all other overtime payments which could
be associated with 84 hours worked.
3. In 1989 the parties commenced negotiations on the
introduction of the 39 hour week. Due to the uniqueness
of the Company's operations the negotiations were
conducted on the basis of agreement in principle for
time off on a cumulative basis of one "trip" in just
under 2 years. A dispute arose regarding the method for
calculating the hourly rate for overtime purposes in the
context of a 39 hour week. The Unions claim that the
divisor of 2184 as per the Company/Union agreement
should be reduced by 52. The Company rejects the claim.
No agreement on the dispute could be reached at local
level discussions and the matter was referred on 22nd
June, 1990 to the then Conciliation Service of the
Labour Court. Conciliation conferences were held on
18th October, 1990 and 14th August, 1991 but no
agreement was reached. The dispute was referred on 11th
September, 1991 to the Labour Court for investigation
and recommendation. The Company by letter dated 25th
October, 1991 made proposals to the Unions involving
cost saving measures in relation to the introduction of
a 39 hour-week on a cumulative time off basis (details
supplied to the Court). Included in the proposed
measures was a proposal that the divisor of 2184 for
calculating the hourly rate should be reduced by 46.
The Union did not accept the Company's proposals of 25th
October, 1991. The Labour Court investigated the
dispute in Cork on 19th November, 1991.
UNION'S ARGUMENTS
3. 1. The Company/Union agreement clearly states that the basic
hourly rate equals annual salary divided by 2184, time
and one half rate equals hourly rate multiplied by 1.5,
and double-time rate equals basic hourly rate multiplied
by 2. To reflect the reduction of one hour per week the
new hourly rate of pay must be calculated by dividing
the annual salary by 2132 (i.e. 2184-52).
2. The Company will not suffer major cost increases due to
the implementation of the 39 hour week. There will be
no reduction in the level of production as the present
workforce will be required to increase their
productivity. There will be no extra costs in respect
of shift replacement or additional overtime. The only
additional cost involved is the amount of the increase
in the hourly rate. The Unions have calculated that
the increase is in the order of £90 per year for each of
the 39 crew members.
COMPANY'S ARGUMENTS
4. 1. The implementation of the 39 hour week has cost
implications because in order to maintain productivity
the Company will have to provide cover for the
consequent work weeks lost. To add to the Company's
costs by reducing the divisor for calculating the
overtime rate is unreasonable. The divisor should be
left alone or the Company should be allowed to recoup
the additional expense through the cost saving measures
outlined to the Unions in its letter of 25th October,
1991.
2. The present formula of dividing the consolidated base
annual salary by 2184 for the calculation of the hourly
rate for overtime purposes is an administrative tool and
does not reflect the true hourly rate. For the purposes
of this formula the base annual salary includes a
significant level of overtime payments. In addition to
the base annual salary there are significant additional
payments based on the calculated hourly rate (e.g.
travel payments and public holiday payments). Any
reduction in the divisor would not only increase the
calculated overtime rate but would also lead to an
increase of £5000 per annum in the additional payments.
Such a cost increasing claim is contrary to the terms of
the P.N.R..
3. The Company has already agreed arrangements for the
implementation of a 39 hour week at another location
without a reduction in the divisor element of the
formula. Concession of the Union's claim would lead to
repercussive claims and could require changes in
arrangements made with contractors providing offshore
services to the Company.
RECOMMENDATION:
The Court has considered all aspects of this case contained in
the written submissions and expanded upon at the oral hearing.
The Court notes in particular the Unions firm statement with
regard to co-operation and flexibility on the implementation of
a 39 hour week.
The actual implementation of a 39 hour week has been agreed in
principle by the parties and the Court is now asked to recommend
on a residual matter - calculation of overtime.
The Court recommends that overtime be calculated at 1/39th. The
Court notes that the current agreement provides that the
hourly rate is decided by dividing the consolidated basic annual
salary by 2184 hours. Therefore, to reflect the reduction of
one hour per week the Court recommends that the divisor should
be altered to 2132, i.e. 2184 - 52.
~
Signed on behalf of the Labour Court
Evelyn Owens
--------------------
20th December, 1991
A.S./N.M. Deputy Chairman