Labour Court Database __________________________________________________________________________________ File Number: CD91531 Case Number: LCR13441 Section / Act: S26(1) Parties: WARD INTERNATIONAL LIMITED - and - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION |
Dispute concerning: (1) the re-instatement of a 3% increase, (2) introduction of overtime step-down arrangement, (3) retention of Christmas voucher.
Recommendation:
3. The Court has considered the submissions made by the parties
in the light of the very unusual situation which has arisen
consequent to the negotiations which took place between the
Company and the Union last July.
Regardless of the outcome it is evident to the Court that the
intention of both parties directly involved in the negotiations
was to strike a bargain on the 3% provided for in P.E.S.P. if some
what prematurely. Nevertheless the idea of a return for the money
is clearly within the spirit and intent of the Programme. The
difficulty arising from the Company's decision to rescind the 3%
payment stems directly from their view that the step down
arrangements negotiated as part of the agreement seem entirely
inappropriate to their method of operation and production. In the
light of discussions which took place at the hearing this now
appears to be correct.
Having regard to all the circumstances of the case the Court is of
the opinion that the situation now existing would best be resolved
by the following procedure.
(a) In the light of commitments given, however mistakenly by
Company representatives, the Company should reinstate the
payment of the 3% increase.
(b) In return the Union will undertake to negotiate in good
faith on a return to the Company in respect of this
payment in accordance with the intention of the P.E.S.P.
(b) Having regard to the nature of the Company's work and the
current market difficulties it is clear to the Court that
the present overtime step-down proposal is inappropriate
and the parties require an agreed procedure to deal with
a situation in which workers who have had particularly
long periods of overtime may have to revert to standard
working hours with subsequent loss of income.
The Court recommends that the parties meet to negotiate
directly an appropriate procedure which will take account
of the particular circumstances in which the Company
operates.
(c) The Court considers it appropriate that the present bonus
voucher scheme be amended, in accordance with the
Company's proposals.
Division: Mr O'Connell Mr Keogh Mr Walsh
Text of Document__________________________________________________________________
CD91531 RECOMMENDATION NO. LCR13441
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
PARTIES: WARD INTERNATIONAL LIMITED
(REPRESENTED BY THE FEDERATION OF IRISH EMPLOYERS)
and
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
SUBJECT:
1. Dispute concerning:
(1) the re-instatement of a 3% increase,
(2) introduction of overtime step-down arrangement,
(3) retention of Christmas voucher.
BACKGROUND:
2. The dispute concerns thirty five workers who are employed at
the Company's Athlone plant, which is part of the privately owned
Ward Machinery Company, U.S.A. Following a number of meetings
between the Union and local Management of the Company to discuss
implementation of the Programme for Economic and Social Progress
(P.E.S.P.) a set of proposals was formulated and accepted by the
parties. These proposals provided for the following:-
(1) 4% increase.
(2) 3% increase being the local bargaining element of the
P.E.S.P.
(3) The Union agreed to drop claims for a different sick pay
scheme and loss of earnings due to a reduction in
overtime.
(4) In the event of a step-down in overtime working, the
following formula would apply
- first two weeks 100% of previous overtime worked
- next two weeks 75%
- next two weeks 50%
(5) Where overtime was being worked, up to 45 hours would be
worked by 6.30 p.m. on the Friday and up to 50 hours by
1.00 p.m. on the Saturday.
(6) Temporary machine shop position to be reviewed after the
summer shut-down.
(7) The call-out procedure would be adhered to.
(8) The Company would pay a discretionary summer bonus of
£150.
The Company implemented the increase in pay on the 11th July, 1991
back dated to 1st July, 1991. Subsequently the Managing Director
returned from a meeting with senior Management in the U.S.A. and
advised the Union that there were difficulties in relation to the
overtime step-down agreement and the Christmas bonus. The Union
was advised that the pay element of the agreement would be
honoured. However the Company by letter dated 15th August, 1991
advised the workers concerned that the pay increase of the 1st
July, 1991 was as a result of a misunderstanding and that a
corrective adjustment in pay would be made. The Company stopped
paying the 3% special increase. The Union disputed the Company's
action and a ballot was taken for industrial action. It was
suspended pending the outcome of the industrial relations
negotiations. The issue was referred to the Conciliation Service
of the Labour Relations Commission on the 27th August, 1991. A
conciliation conference was held on the 2nd October, 1991 but no
agreement was reached. The dispute was referred to the Labour
Court for investigation and recommendation by the Labour Relations
Commission on the 8th October, 1991. A Court hearing was held on
the 10th October, 1991. A Letter Recommendation issued on the
11th October, 1991.
UNION'S ARGUMENTS:
3. 1. 3% Wage Increase:
The Company advised each worker by letter dated 15th August,
1991 that the 3% increase paid on the 1st July, 1991 was a
mistake. The workers concerned were incensed at the Company's
action and following a ballot of the membership it was agreed
to take industrial action, to be deferred pending the outcome
of a Labour Relations Commission/Labour Court investigation.
The Union would point out that a self contained agreement on
implementation of the P.E.S.P. was agreed with the Company.
The Union gave good consideration to this agreement and the
Company obviously thought it worthwhile also. It was
implemented for a period of seven weeks by the Company and was
confirmed orally by the Managing Director on the 18th July,
1991. The Union requests the Court to recommend that the
agreement on pay as outlined in the Union's letter of 11th
July, 1991 be honoured by the Company, i.e. that the 3%
increase in wages be confirmed from 22nd August, 1991.
2. Step-down in overtime working:
The Company's policy of tight manning levels gave rise to huge
overtime working in some instances. Earnings for some workers
amounted to £22,000 p.a. This continued up to September,
1990, when the Company suddenly terminated overtime in the
machine shop. A claim for compensation for the loss of
overtime was served on the Company. The Company rejected the
claim. Subsequently the Union agreed to drop the claim in
return for the 4% increase. The 3% increase dealt with
compensation for the cancellation of future overtime. The
Company now wish to withdraw from the Agreement. The Union is
not asking for money in respect of overtime not worked or for
lump sum payments. The Union is simply requesting Management
to ensure that the workers concerned be given notice of the
Company's decision to terminate overtime over a six week
period. The principle of a step-down agreement has already
been conceded by the Company and was used by Management in
March, 1991 to block the Union's claim for compensation for
loss of overtime.
3. Christmas and Summer Bonus:
The Company's decision to tax bonuses at the marginal rate
will reduce their value by 50%. This is in breach of custom
and practice and in breach of an agreement between the Union
and the Company. The Union requests that the Company ensure
the net value of the bonus be maintained, if necessary by
increasing the amount of bonus paid by the Company.
COMPANY'S ARGUMENTS:
4. 1. 3% Increase:
Local Management have not had any problem in the past with
approval for annual pay rounds. It was not expected that
there would be a difficulty on this occasion. However Company
Headquarters in the U.S.A. subsequently advised local
Management that the overall package was not approved and that
inappropriate wage payments should be reversed as soon as
possible. The payment of the additional 3% wage increase in
the first year was not acceptable to U.S.A. Headquarters under
any circumstances and was contrary to the terms of P.E.S.P.
This decision was conveyed to all relevant workers by letter
dated 15th August, 1991. The Company, in recognition that
local Management had been responsible for implementing the
wage increase ahead of approval, agreed that the excess
payment already given to the workers, should not be claimed
back. The Company regrets the situation and the resulting ill
feeling which the action caused. However it took immediate
and proper action by notifying and meeting with the Union to
explain the circumstances, and by correcting the situation in
a timely and responsible manner.
2. Step-down in Overtime Working:
Because of the nature of the Company's business it is
necessary to work considerable overtime in order to commit to
a delivery date which will win an order even though there may
be no business on the books to follow. While the Company will
endeavour to scale down overtime over a period, it is not
always possible in the Company's made-to-order situation. Due
to the competitive nature of the Company's business it is not
possible to absorb costs for which there is no return. It is
therefore essential that the Company maintains the flexibility
to operate overtime only when required. The claim for loss of
overtime was proceeding through the grievance procedure long
before the recent negotiations commenced. The Company has
advised the Union to continue to proceed with the claim
through the approved procedures to finalise the issue.
Christmas Bonus
3. The Company has for some years facilitated its employees
with discretionary vouchers for nominal amounts, as opposed to
putting this payment through the payroll and subjecting it to
the normal P.A.Y.E. and P.R.S.I. deductions. Having
thoroughly investigated the matter the Company finds that this
practice is not proper and could likely cause onerous
liabilities for the employees of the Company with the Revenue
Commissioners. The Company takes the view that in future its
employees' total remuneration must be paid through the proper
system.
RECOMMENDATION:
3. The Court has considered the submissions made by the parties
in the light of the very unusual situation which has arisen
consequent to the negotiations which took place between the
Company and the Union last July.
Regardless of the outcome it is evident to the Court that the
intention of both parties directly involved in the negotiations
was to strike a bargain on the 3% provided for in P.E.S.P. if some
what prematurely. Nevertheless the idea of a return for the money
is clearly within the spirit and intent of the Programme. The
difficulty arising from the Company's decision to rescind the 3%
payment stems directly from their view that the step down
arrangements negotiated as part of the agreement seem entirely
inappropriate to their method of operation and production. In the
light of discussions which took place at the hearing this now
appears to be correct.
Having regard to all the circumstances of the case the Court is of
the opinion that the situation now existing would best be resolved
by the following procedure.
(a) In the light of commitments given, however mistakenly by
Company representatives, the Company should reinstate the
payment of the 3% increase.
(b) In return the Union will undertake to negotiate in good
faith on a return to the Company in respect of this
payment in accordance with the intention of the P.E.S.P.
(b) Having regard to the nature of the Company's work and the
current market difficulties it is clear to the Court that
the present overtime step-down proposal is inappropriate
and the parties require an agreed procedure to deal with
a situation in which workers who have had particularly
long periods of overtime may have to revert to standard
working hours with subsequent loss of income.
The Court recommends that the parties meet to negotiate
directly an appropriate procedure which will take account
of the particular circumstances in which the Company
operates.
(c) The Court considers it appropriate that the present bonus
voucher scheme be amended, in accordance with the
Company's proposals.
~
Signed on behalf of the Labour Court
John O'Connell
____________________
30th October, 1991 Deputy Chairman.
T.O'D./J.C.