Labour Court Database __________________________________________________________________________________ File Number: CD90726 Case Number: LCR13190 Section / Act: S67 Parties: GUINNESS IRELAND LIMITED - and - GUINNESS STAFF ASSOCIATION |
Claim for a salary increase.
Recommendation:
1988
Division: Mr O'Connell Mr McHenry Mr Devine
Text of Document__________________________________________________________________
CD90726 RECOMMENDATION NO. LCR13190
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
SECTION 67
PARTIES: GUINNESS IRELAND LIMITED
ARTHUR GUINNESS SON AND COMPANY (DUBLIN) LIMITED
GUINNESS GROUP SALES (IRELAND) LIMITED
and
GUINNESS STAFF ASSOCIATION
SUBJECT:
1. Claim for a salary increase.
BACKGROUND:
2. In April, 1988 the Company and the Association reached
agreement on a rationalisation plan called the Continuing
Competitiveness Plan (C.C.P.). The Company in a letter to the
Association dated 24th April, 1988 outlined the following
provisions in relation to pay:
"Following agreement to implementation of the plan the Company
will pay those not eligible and those eligible but not
applying for voluntary parting terms the following:-
- Year 1 Lump Sum #1,000
- Year 2 Lump Sum #1,000
- Year 3 New pay structure or if not introduced
then a basic increase of 3%. This 3%
increase would be subsumed subsequently
into the pay structure."
The first payment was made in October, 1988, and the second
payment in October, 1989. In September, 1990 the Association
wrote to the Company requesting payment of the remaining 3% to all
Association members with effect from 6th October, 1990. The
Company responded by letter on 4th October, 1990 stating that it
would not be paying the 3% at this time as negotiations with other
unions on a salary structure were taking place. The Company
stated that in the event of there not being a new pay structure,
the 3% would be applied from October, 1990, however it would not
be applicable to all Association members. This was rejected by
the Association which claims that the Company is in breach of the
C.C.P. agreement. The dispute could not be resolved at local
level negotiations and was referred to the conciliation service of
the Labour Court on the 26th October, 1990. A conciliation
conference was held on the 30th November, 1990 but no agreement
was reached. The dispute was referred to the Labour Court on the
3rd December, 1990. A Court hearing was held on the 25th January,
1991.
ASSOCIATION'S ARGUMENTS:
3. 1. During negotiations on the C.C.P. in April, 1988, the
Association's negotiating team sought a salary increase as a
participation payment in line with what it had achieved in the
previous rationalisation plan i.e. two lump sum payments
followed by a 3% increase at agreed intervals. The Company's
negotiating team introduced the idea of new salary structures
for all categories. These structures would be either
interlinked or integrated. The Association resisted this idea
on the basis that, while it might improve the lot of other
categories there appeared to be no advantage to the workers
concerned. However, in order to qualify for the 3% and to
ensure that no special arrangements were made with the other
categories to the Association's disadvantage, it agreed to
enter into joint discussions on a new salary structure
provided that 3% would be paid to all Association members
(apart from those taking voluntary parting terms) in the event
of the new salary structure not being in place when the 3%
became due.
2. It should be noted that the 3% was payable if the new
salary structure was not in place on the due date. Payment or
withholding of payment was not dependent on the progress of
discussions on the new salary structure. In fact it was
forseen that the new salary structure would not be in place
and the 3% would be subsequently subsumed into the new salary
structure.
3. In the discussions in April, 1988 it was specifically
agreed that the 3% would be applied to all Association members
and that only the graded staff (A1 to D Bands) would be
involved in the new salary structure. This meant that whether
or not the new salary structure was in place on the due date,
3% would be paid to all senior managers.
4. During the negotiations the Association sought to have the
first payment made on the 1st July, 1988, the second payment
in July, 1989, and the third payment in July, 1990. The
Company resisted this on the basis that acceptance of the
C.C.P. by the Association was uncertain. Therefore it was
eventually agreed that the first payment would take place two
months after the signing of the agreement, and the second and
third payments would be made 12 months and 24th months later
respectively.
5. The deciding factor in the Association's acceptance of the
C.C.P. in 1988 was the fact that 3% increase in salary would
be paid to all members, except those taking voluntary parting
terms, on the 6th October, 1990. Never once until the 20th
September, 1990 did the Company indicate that, in their view,
the Association was mistaken, or that there would be any
difficulty in making the payment on the due date.
6. The Association is satisfied that the implementation of
the 3% salary increase for all its members, except those
availing of voluntary parting terms, on the 6th October, 1990
in the absence of a new salary structure, was an integral part
of the agreement and the Company, in refusing to make the
payment, is in breach of the agreement.
COMPANY'S ARGUMENTS:
4. 1. The Company's commitment under the C.C.P. is to attempt to
introduce a pay structure during year 3 to apply to all posts
below senior management level, and if the pay structure is not
brought in during year 3, it will pay the 3%. The timing of
that payment is at issue now. In its letter of the 4th
October, 1990, the Company assured the Association that in the
event of the pay structure not being introduced the 3% would
be applied from October, 1990.
2. In accordance with the agreement under C.C.P., a joint
negotiating committee comprising nine representative unions
has been for some time engaged in the complicated process of
negotiating in an integrated pay structure. Job descriptions
are currently being written and the exercise is well under
way.
3. The Company cannot accept that the Association should
press for the payment of the 3% in view of the Company's
commitment that in the event of the pay structure not being
introduced the 3% would be applied from October, 1990. Under
the C.C.P. agreement, the pay structure (or the 3%) would only
apply to those who were remaining in the Company and had not
opted for voluntary parting terms. The benefit of either a
new pay structure or a 3% increase on basic salaries will
arise to those staying.
4. The Association is not the only union in the Company
involved in the potential eventual application of the 3%. The
enforced payment now to the Association without payment to
other unions (e.g. another union's third year commenced in
May, 1990) will create major industrial relations problems in
the Company.
5. The 3% payment is fundamentally a penalty on the Company
to ensure its commitment to the introduction of a new pay
structure before the end of year 3. The Company has never
attempted to avoid paying the 3% as evidenced in its letter of
the 4th October, 1990 and subsequently reiterated at a
conciliation conference in November, 1990.
6. The Company has also clearly stated in its letter of 4th
October, 1990 that if the eventuality of a 3% payment arose,
it would not be applicable to all Association members. The
Company is currently engaged in restructuring a range of
senior management posts into a new management structure, and
has stated that the 3% C.C.P. payment will not be applicable
to workers who opt to go into the new management structure.
Any senior management personnel not being incorporated into
the new management structure will have the 3% applied to them.
7. The Company is not in breach of the C.C.P. agreement, as
it believes it gave a commitment to introduce a new pay
structure during the third year of the plan. The 3%
participation payment was sought by the representatives as a
regulation on the Company to attempt to bring in the new pay
structure within the agreed time scale. The Company accepted
this and indeed reaffirmed in its letter of the 4th October,
1990 that the 3% would be paid in the event of there not being
a new pay structure during year 3.
RECOMMENDATION:
5. The Court has considered the submissions made by the parties.
Having carefully examined the wording of the agreement and other
documents the Court is satisfied that as the Company's undertaking
to pay the 3% with effect from the 6th October, 1990 still stands
and that the delay in payment arises from the continuing
negotiations on the relevant and related issue of pay structures,
that the Company is not in breach of the Agreement 27th April,
1988.
On the issue of the limitation on the benefits of the Agreement,
from its understanding of the word subsume, the Court is of the
opinion that those members of staff who accepted the new
structures would be led to expect an increase of not less than 3%
but this of course in a new structure need not be a direct
benefit.
~
Signed on behalf of the Labour Court
John O'Connell
_______________________
21st February, 1991. Deputy Chairman
T.O'D/J.C.