Labour Court Database __________________________________________________________________________________ File Number: CD91642 Case Number: LCR13609 Section / Act: S26(1) Parties: FARAH LIMITED - and - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION |
A dispute concerning the implementation of the pay terms of the Programme for Economic and Social Progress (PESP).
Recommendation:
5. The Court has considered the views expressed by the parties in
their oral and written submissions.
The Court notes the considerable efforts made by the parties to
secure the employment in the Company's plants and the current
economic realities.
It is regrettable that the offer made at the Court had not been
communicated to the Union representatives prior to the hearing, as
this might have formed a basis for further discussion on an
agreement on the matter.
In all the circumstances, including the further restructuring of
the Company which is likely to take place, the Court considers
that the offer of the Company should be accepted at this time. It
should be accepted however by both parties that payment of the
P.E.S.P. is a charge on the Company which requires to be addressed
at a suitable opportunity and in any case before the expiry of the
agreement. In any such restructuring the effect of the P.E.S.P.
should be taken into account in respect of any staff affected by
the negotiations.
The Court so recommends.
Division: MrMcGrath Mr McHenry Mr Devine
Text of Document__________________________________________________________________
CD91642 RECOMMENDATION NO. LCR13609
THE LABOUR COURT
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 20(1) INDUSTRIAL RELATIONS ACT, 1990
PARTIES: FARAH LIMITED
(Represented by the Federation of Irish Employees)
and
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
SUBJECT:
1. A dispute concerning the implementation of the pay terms of
the Programme for Economic and Social Progress (PESP).
BACKGROUND:
2. 1. The Company manufactures mens' slacks for the export
market (U.K.) and operates 3 plants in Galway, Kiltimagh and
Ballyhaunis and employs 276 workers. The Company's product is
geared for the cheaper end of the market. Due to over
capacity, 145 workers were made redundant in 1991 and the
plants have been on short-time (3 day week) since February,
1991.
2. The Programme for National Recovery (PNR) expired for
the workers on 31st December, 1990. The first phase of the
PESP was due from 1st January, 1991. Trading difficulties for
the Company (details supplied), which lead to negotiations on
redundancies and short-time working, delayed consideration of
the PESP increases until April, 1991.
3. The Company formally pleaded inability to pay the PESP
increases and the dispute was referred to the Labour Relations
Commission. A conciliation conference was held on 20th
November, 1991. The parties failed to reach a settlement of
the matter and the dispute was referred to the Labour Court on
29th November, 1991. A Labour Court investigation was held in
Galway on 11th February, 1992.
UNION ARGUMENTS:
3. 1. The first and second phases of the PESP are due to be
paid to the workers. The Company has acted unilaterally in
imposing a wage freeze and its inflexibility on this issue has
angered workers. The workers have responded very positively
and constructively in dealing with the Company's trading
difficulties (details supplied). The Company, however, has
not reciprocated this response in its efforts to negotiate a
resolution to the wage increases outstanding.
2. Employment in the Company has declined significantly in
the last year. The take-home pay of the remaining workers has
reduced. The reduction is due to to the short-time week and
the change from single jobs to multi-jobs performance. The
changes have impacted severely on the workers' salaries and
living standards. The workers earnings are less than the norm
in the industry, which has been identified as a low pay
industry.
3. Wages in the industry are regulated by a Joint Labour
Committee (JLC). The Company which is a party to the JLC,
must apply the terms of the PESP as they are set out in the
Employment Regulation Order for the industry. The Company's
obligations to the PESP agreement must be met.
COMPANY ARGUMENTS:
4. 1. The Company has experienced severe losses worldwide due
to recession in its main markets. The Irish and UK operation
was forced to take measures to reduce its losses (details
supplied). Despite this action, the losses have continued and
further action is now being considered. The Company has
pleaded inability to pay the PESP increases due to its
deteriorating financial position (details supplied). The best
offer which the Company can make is an increase of 4% from 1st
April, 1992. There are no funds available for any
retrospective payment of this offer.
2. The current rates of pay are in excess of those applying
for the Tailoring Joint Labour Committee (JLC) (details
supplied). Total output from the 3 plants has declined in the
last 18 months from 30,000 units to 13,000 units per week.
The plants are designed to produce 45,000 units per week. The
Company's traditional markets have been eroded by
international competition which is able to supply a much
cheaper product. The Company is reviewing its position in the
marketplace. Its financial position remains critical and its
future trading prospects look bleak.
3. At present, with low volume through-put in all 3 plants,
efficiency is low and the Company still has to carry the
overheads. A pay increase as outlined in the PESP agreement
would only make a difficult situation worse and it may lead to
closure. The Company aims to stay in Ireland but it can only
do so at a certain cost.
RECOMMENDATION:
5. The Court has considered the views expressed by the parties in
their oral and written submissions.
The Court notes the considerable efforts made by the parties to
secure the employment in the Company's plants and the current
economic realities.
It is regrettable that the offer made at the Court had not been
communicated to the Union representatives prior to the hearing, as
this might have formed a basis for further discussion on an
agreement on the matter.
In all the circumstances, including the further restructuring of
the Company which is likely to take place, the Court considers
that the offer of the Company should be accepted at this time. It
should be accepted however by both parties that payment of the
P.E.S.P. is a charge on the Company which requires to be addressed
at a suitable opportunity and in any case before the expiry of the
agreement. In any such restructuring the effect of the P.E.S.P.
should be taken into account in respect of any staff affected by
the negotiations.
The Court so recommends.
~
Signed on behalf of the Labour Court
Tom McGrath
30th March, 1992 ------------
J.F./U.S. Deputy Chairman
NOTE:
Enquiries concerning this Recommendation should be addressed to
Mr Jerome Forde, Court Secretary.