Labour Court Database __________________________________________________________________________________ File Number: CD91142 Case Number: LCR13269 Section / Act: S20(1) Parties: IRISH SUGAR P.L.C. - and - MANUFACTURING SCIENCE FINANCE |
Claim for improvement in the payment of overtime within the Special Allowance System.
Recommendation:
6. Having considered the submissions made by the parties the
Court does not consider the Union's case for the changes sought to
have been substantiated. The Court therefore recommends that the
amendments to the Special Allowance System proposed by the Company
should be accepted. The Court is further of the opinion that
possible distortion of the system arising indirectly out of the
reduction of working hours for hourly paid staff should be
discussed by the parties with a view to agreeing equitable
amendments.
The Court so recommends.
Division: Mr O'Connell Mr McHenry Ms Ni Mhurchu
Text of Document__________________________________________________________________
CD91142 RECOMMENDATION NO. LCR13269
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 20(1), INDUSTRIAL RELATIONS ACT 1969
PARTIES: IRISH SUGAR P.L.C.
and
MANUFACTURING SCIENCE FINANCE
SUBJECT:
1. Claim for improvement in the payment of overtime within the
Special Allowance System.
BACKGROUND:
2. In the Company a Special Allowance System operates for staff
on technical, sales and particular computer salary scales. The
workers concerned are not paid directly for overtime and the
system is designed to compensate for the working of exceptional
hours such as overtime, shift-work, on-call, etc. The hours
worked vary, particularly for some groups of employees, as between
the beet sugar campaign period and the off-season due to the
seasonality of the work. Also, a number of workers do rotational
shift during beet campaigns. The system allows for a minimum
payment of 7% of annual salary with an 8.33% minimum applying at
factories where hours of work are related to those of hourly paid
employees (a minimum of 8% for sales staff and 10% for
agricultural staff also applies). The 7% or 8.33% elements are
pensionable and are applied to all staff eligible for Special
Allowance Payments. The system allows for extra payments for
particular circumstances up to an overall maximum of 27% of salary
as follows:
(a) Shift work - up to 23% of annual salary depending
on type of shift and number of shift
weeks.
(b) Overtime formula - to go beyond the "7% threshold" 225
calculated hours must be worked. Up
to 22% of annual salary can be
generated (e.g. 851-900 calculated
hours = 22%). Saturday morning is at
1.50T, Saturday afternoon is at 2T and
Bank Holidays at 3T in assessing
calculated hours.
(c) On-Call - for workers 'on-call' during campaign
periods, etc, the following would
apply:
20% of the salary involved would be
payable for the period on call, eg. a
person 'on-call' for 90 days would
receive.
20% x 90/260 = 7% of salary.
On-call is only paid for immediate
availability and where serious
disruption of normal social life
occurs.
3. During 1990 the Union served a claim on the Company on behalf
of approximately 55 technical, technical supervisory and
management staff mainly involved in the operation of the sugar
factories and therefore directly involved in the campaign season
which lasts for approximately 16 weeks from the end of September.
The Union claimed that the workers should be adequately
compensated for extra hours worked and that the maximum of 8 1/3%
included for pension purposes should be increased. The Company
rejected this claim but by letter of 11th December, 1990 made an
offer to increase the compensatory formulae under shift work and
extend the overtime formulae and overall maximum allowed (see
Appendix A). The offer was unacceptable to the Union and the
claim along with a number of other issues was referred to
conciliation, no further progress was subsequently made on this
issue. The Union's claim is that the payment which is included
for pension purposes should be increased to a minimum one of
approximately 20% and that all hours worked over 350 should be
paid at the appropriate rate. On 26th February, 1991 the Union
referred the matter to the Labour Court for investigation and
recommendation under Section 20(1) of the Industrial Relations
Act, 1969. The Union agreed to be bound by the decision of the
Court. The Court investigated the dispute on 5th April, 1991.
UNION'S ARGUMENTS:
4. 1. During the campaign season which lasts for approximately
sixteen weeks from the end of September workers directly
involved in production (including all of the workers concerned
here), are expected to cover 24 hours a day, 7 days a week,
either by shift working, overtime or both. They are also
expected to work all bank holidays including October bank
holiday, Christmas day, St. Stephen's day and New Year's day.
While the general operatives and craftsmen are allowed to have
time off in lieu the workers concerned here are not. The
general and craft workers are also paid for all overtime
worked including shift premiums where appropriate. In
contrast, the supervisory group are paid for overtime on a
percentage basis up to 22% for 851 to 900 calculated hours per
annum (details supplied to the Court). The majority of the
workers concerned in this claim would work between 800 and 900
hours and in some cases more. As this equals more than half
a year's working time they should obviously receive more than
50% of their salary. In fact when these workers are on
overtime they are paid less per hour than the people they
supervise. While it is commonplace for supervisory staff to
be paid overtime, it is not so common for managers to be paid.
However, it is not normal for such workers to be on structured
and compulsory overtime and managers' wages normally reflect
payment for occasional overtime, expected to be to a maximum
of 10%. However this is not so in this case, where the basic
wage for the senior group is less than #23,000 and 75% of this
group is below this (details supplied to the Court). In
effect the highest paid group have to work for a year and a
half in order to receive #27,000. This is hardly adequate
compensation for workers with over twenty years service and an
engineering degree.
2. In the past the Company has argued that the losses
sustained by it did not allow for adequate wages or payment
for overtime. However, the position now is that the workforce
has been reduced by more than half but without any reductions
in output. This substantial increase in productivity per
worker places greater demands on supervision and management.
In addition, the Company has made profits of #40m over the
last two years and is likely to do even better this year. The
Company has made greater demands on the workers to meet
production targets with less staff and should, therefore, now
pay for all overtime worked on the same basis as all other
workers. Another problem for the group of workers concerned
is that pensions are restricted to the basic rate + 8 1/3%.
This problem could easily be rectified by an increase on the
basic rates, but even within the present system a minimum
payment in the order of 20% of salary could be included for
pension purposes and all hours over 350 per year paid at the
appropriate rate.
COMPANY'S ARGUMENTS:
5. 1. The Union has suggested that recent profits being attained
by the Company are such that the Company "can afford to pay
out." This is not the case, the Company's core business,
sugar manufacturing, has to operate within the controls and
restrictions of the E.C. sugar regime and the current thrust
in E.C. and G.A.T.T. policies is to reduce price supports.
Since 1983 the inflation index in Ireland increased by an
average 5% while wage/salary costs increased by more than
5.25% per annum. In the same period the intervention price
for sugar increased by only 2.25% per annum. The Company's
sugar manufacturing activity is very small in E.C. terms and
essentially operates in a stagnant 'island market.' The
Company is extremely vulnerable to imports and over the past
four years has had to rationalise its sugar manufacturing back
to two production units. It is simply not commercially
possible to currently take on board special pay increases.
The other trading divisions within the Company all compete on
the Irish market against national and multinational
competitors and find it extremely difficult to absorb the
sugar division's level of costs. For some of these activities
the Company has proposed to the Unions that some pay rounds
not be implemented or that actual rates be reduced. The
Company still shows an accumulated deficit in the most recent
Company accounts to September, 1990. This deficit in trading
remains although the Company has paid no dividend to its
shareholders for ten years and during that period the
shareholders invested more than #60m (details supplied to the
Court).
2. The range of normal hours worked varies from 36.25 to 40
when staff are on day work at factories without overtime or
shift (details supplied to the Court). Based on this the
Company position is that 38.75 hours represents the average
"normal" working hours for staff who can qualify for Special
Allowance System (excluding overtime/shift). At previous
conciliation conferences held in 1975 and 1978 on the Special
Allowance System it was stated and agreed by two separate
senior conciliation officers that companies were entitled to
expect certain additional time commitments from staff
categories before claims for overtime might arise. The amount
of time indicated was up to 1 hour per day/5 hours per week.
Due to the range of hours varying from 35 to 40 it was agreed
that calculations would commence from normal finishing time.
Adjustments were made in the overtime bands to take account of
those working the longer hours.
3. The Special Allowance System was developed to reflect the
needs of this business. There are arrangements within the
system to deal with the range of exceptional hours encountered
by staff outside of "normal" hours, which in themselves vary
considerably from one situation to another. The system is
adequate, fair and reasonable and does not need to be
radically changed in the manner being suggested by the Union.
This would in effect be a disruptive form of salary claim and
be at variance with the Company offer on the current Programme
for National Recovery ending on 30th November, 1991 for this
group of staff (details supplied to the Court). The system
was instituted and developed to cater, as fairly as possible,
for the very wide range of circumstances obtaining throughout
the group. For the style of demand which the Union seems to
be putting forward, the Company would require the introduction
of a very strict time measurement system. In addition, the
whole approach of applying the pensionable 7% and 8.33% would
have to be reviewed and almost certainly dropped. Such an
outcome would have a most damaging and disruptive effect on
the whole Company. In all the circumstances, the amendments
proposed by the Company in December, 1990 which expanded the
allowances for certain categories should be accepted.
RECOMMENDATION:
6. Having considered the submissions made by the parties the
Court does not consider the Union's case for the changes sought to
have been substantiated. The Court therefore recommends that the
amendments to the Special Allowance System proposed by the Company
should be accepted. The Court is further of the opinion that
possible distortion of the system arising indirectly out of the
reduction of working hours for hourly paid staff should be
discussed by the parties with a view to agreeing equitable
amendments.
The Court so recommends.
~
Signed on behalf of the Labour Court
John O'Connell
__________________________
2rd May, 1991. Deputy Chairman
U.M./J.C.
APPENDIX A
COMPANY'S OFFER OF 11TH DECEMBER, 1990 IN
RELATION TO THE SPECIAL ALLOWANCE SYSTEM
(a) "...the Compensatory Formulae under Par. (A) of Special
Allowances could be relaxed to maxima of 25/25/25/19/15%
as compared with current 23/23/23/19/15% because of the
substantial amount of Rotational or 7-day Shift
encountered by that group (shift work formulae).
(b) Also, that the Overtime Formulae (Par. B) which currently
runs to a maximum of 22% for 900 hours could be relaxed
to 23% for 901/950 hours and to 24% for 951/1000 hours
but only for those whose hours are directly measurable
and who are directing shift situations.
(c) Should such changes in those specific categories bring
anyone of them above the 27% overall maximum allowed, the
Company would permit a 29% maximum but only for those who
would exceed the 27% arising from either or both of those
specific circumstances.
The current limits would continue to apply for all
others.
(d) Before agreeing to any change under these two headings
the Company would in return be requiring agreement on a
more definite "time at work measurement system" than that
which currently obtains so as to substantiate and verify
claims.