Labour Court Database __________________________________________________________________________________ File Number: CD91622 Case Number: LCR13550 Section / Act: S26(1) Parties: KILKENNY TEXTILE MILLS - and - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION |
Claim by the Union for grade amalgamation incorporating a 20% increase in basic pay.
Recommendation:
5. The Court has given lengthy consideration to the claims
placed before it, namely that the revised rates consequent to
the reduction of grades be implemented retrospective to June,
1990, and that the said rates be increased by 20% retrospective
to the same date.
Insofar as the first element of the claim is concerned the Court
is of the opinion, having regard to all of the circumstances and
to the sequence of negotiations in relation to the reduction of
the number of grades, that the appropriate date of retrospection
should be February, 1991.
A number of important factors had to be considered by the Court
as being relevant insofar as the second element of the claim is
concerned. While not necessarily in sequential order, these
included an overall rationalisation programme, an injection of
£3½ million, reduction in number of grades and consequent
consolidation of rates (yet to be finalised), implementation of
revised bonus scheme, redundancy of 61 employees, introduction
of 10% technical allowance to fixers.
Basically, the argument by the Company to the Court was to the
effect that the above measures were required in order to put the
Company on par with its competitors, and that in doing so it had
also improved the earnings potential of the workers. They also
maintained that the new system of production did not impose any
extra effort or responsibility on the workers concerned.
The Union for its part contended that the implementation of the
above measures warranted an across-the board increase of 20%,
its main contention being that the acceptance by the workers of
a reduction in numbers of employees, increase in volume, and
introduction of new technology not alone imposed change on them
but also reflected a fair division of the cost savings achieved
by the Company.
The Court has considered all of the above factors. It has also
carefully balanced the arguments made by the parties and has
come to the conclusion that there are insufficient grounds to
warrant concession of the claim as made. However, it does
consider that an increase of 3% on basic should be applied from
the date in April, 1991 from which the bonus scheme was
implemented in recognition of the overall increased levels of
output and responsibility accepted by the workers as a result of
the rationalisation.
Division: Ms Owens Mr McHenry Mr Walsh
Text of Document__________________________________________________________________
CD91622 RECOMMENDATION NO. LCR13550
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
PARTIES: KILKENNY TEXTILE MILLS
(Represented by Federation of Irish Employers)
and
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
SUBJECT:
1. Claim by the Union for grade amalgamation incorporating a
20% increase in basic pay.
BACKGROUND:
2. 1. The Company is involved in spun yarn production.
Between November, 1989 and June, 1990 the Company
implemented a major redundancy and rationalisation
programme with a capital investment of £3.5m on new plant
machinery and a reduction in the workforce from 142 to 78.
The Company and the Union held local negotiations on a
revised pay structure in the context of the rationalisation
and a dispute arose concerning the implementation of a
bonus scheme and basic/additional payments. In October,
1990 the Labour Court issued LCR13040 which stated that in
the context of the negotiation of a new bonus scheme "the
Union's claim for regrading and the Company's response
should be further addressed". Agreement on the dispute was
not reached at further local level discussions or at
subsequent conciliation talks held under the aegis of the
then Conciliation Service of the Labour Court. An official
strike commenced in November, 1990 and terminated on 8th
December, 1990 under settlement proposals made by the
Industrial Relations Officer (I.R.O.). The I.R.O.
proposals included the following provisions:-
"immediately on a resumption of work the parties will
commence negotiations on the outstanding issues
relating to the technical allowance for shift fixers,
regrading/additional basic pay, and the proposed
weekend shift working":.
Further talks on the outstanding issues were held at local
level and at conciliation conferences held on 6th March,
20th March, and 12th June, 1991 but no agreement was
reached on the Union's claim for regrading/additional basic
pay.
2. There are at present 7 operative grades in operation
with different hourly rates of pay. In response to the
Union's regrading claim the Company in June, 1990 proposed
a new 3 grades structure with increased hourly rates. In
February, 1991 the Company offered a 2 grade structure.
The following table sets out the position:-
Grade Current Company Company Union's
Hourly Proposal Proposal Claim
rate of of (2 Grades)
11/6/90 1/2/91
(7 grades) (3 grades) (2 grades)
1 3.881 3.99(+2.9%) 3.881(nil) 4.65(+19.8%)
2 3.680 3.99(+8.4%) 3.881(+5.5%) 4.65(+26.3%)
3 3.577 3.577(nil) 3.577(nil) 4.20(+17.4%)
4 3.525 3.577(+1.5%) 3.577(+1.5%) 4.20(+19.14%)
5 3.475 3.577(+2.9%) 3.577(+2.9%) 4.20(+20.8%)
6 3.420 3.420(nil) 3.577(+4.6%) 4.20(+22.8%)
7 3.383 3.420(+1.1%) 3.577(+5.7%) 4.20(+24.1%)
The Company subsequently offered a lump sum compensatory
amount (£300) in respect of Grade 3 which is the only grade
not to benefit under the 1st February, 1991 proposals. The
Union rejected the offer and as no agreement was reached
the Labour Relations Commission referred the dispute on
22nd November, 1991 to the Labour Court under Section 26(1)
of the Industrial Relations Act, 1990. The Court
investigated the dispute on 13th December, 1991.
UNION'S ARGUMENTS:
3. 1. The Company has benefited significantly from the
rationalisation which was effected on 1st June, 1990. The
workers co-operated where possible with increased
flexibility. The Company has increased output with a
workforce reduced to 78 (from 142). The workers are
entitled to a share in the benefits and savings achieved by
the Company through the rationalisation programme.
2. As the rationalisation was effected by 1st June, 1990
the Union's claim is from that date. The workers should
not be penalised for delays in negotiations occasioned by
the number of complex issues which had to be resolved. The
Company in its proposals for a 3 grade structure recognised
the need to implement grade amalgamation from June, 1990.
3. The principle of a 2 grade system is now accepted by
the Company. The Union's claim for a 20% pay increase is
reasonable when the savings made by the Company are
considered. Labour costs per ton have been reduced and
output has increased. Concession of the Union's claim will
cost the Company 24% of the total savings made. This
leaves an ample return for the Company on its investment in
the business.
COMPANY'S ARGUMENTS:
4. 1. The rationalisation programme implemented by the
Company was necessary in order to catch up with
competitors' technology and to maintain job security. It
has been costly both in terms of capital investment and
severance payments. The Company has changed the
remuneration structure to reflect the rationalisation by
increasing the average bonus payments, by the introduction
of weekend shift premium, and by the introduction of a
technical allowance for the "fixer" grade. The Company's
proposals on grading which gives an increase of 3%
approximately is fair and reasonable in the circumstances.
2. The Unions claim for a 20% across the board increase is
unjustified. Out of the 78 jobs involved only 14 are
affected in any way by the operation of the new technology.
The remaining 64 are still doing the same work that they
did before rationalisation.
3. The Company has not made major savings from
rationalisation. It does not accept that the Union's claim
will only cost 24% of the savings made. There are costs
other than labour costs involved. A claim for a 20%
increase in pay which is totally unjustified cannot be
entertained.
4. The Company has honoured the increases due under the
Programme for National Recovery, which had provisions for
no further cost increasing claims.
RECOMMENDATION:
5. The Court has given lengthy consideration to the claims
placed before it, namely that the revised rates consequent to
the reduction of grades be implemented retrospective to June,
1990, and that the said rates be increased by 20% retrospective
to the same date.
Insofar as the first element of the claim is concerned the Court
is of the opinion, having regard to all of the circumstances and
to the sequence of negotiations in relation to the reduction of
the number of grades, that the appropriate date of retrospection
should be February, 1991.
A number of important factors had to be considered by the Court
as being relevant insofar as the second element of the claim is
concerned. While not necessarily in sequential order, these
included an overall rationalisation programme, an injection of
£3½ million, reduction in number of grades and consequent
consolidation of rates (yet to be finalised), implementation of
revised bonus scheme, redundancy of 61 employees, introduction
of 10% technical allowance to fixers.
Basically, the argument by the Company to the Court was to the
effect that the above measures were required in order to put the
Company on par with its competitors, and that in doing so it had
also improved the earnings potential of the workers. They also
maintained that the new system of production did not impose any
extra effort or responsibility on the workers concerned.
The Union for its part contended that the implementation of the
above measures warranted an across-the board increase of 20%,
its main contention being that the acceptance by the workers of
a reduction in numbers of employees, increase in volume, and
introduction of new technology not alone imposed change on them
but also reflected a fair division of the cost savings achieved
by the Company.
The Court has considered all of the above factors. It has also
carefully balanced the arguments made by the parties and has
come to the conclusion that there are insufficient grounds to
warrant concession of the claim as made. However, it does
consider that an increase of 3% on basic should be applied from
the date in April, 1991 from which the bonus scheme was
implemented in recognition of the overall increased levels of
output and responsibility accepted by the workers as a result of
the rationalisation.
~
Signed on behalf of the Labour Court
Evelyn Owens
___________________________
5th February, 1992. Deputy Chairman
A.S./N.NiM.