Labour Court Database __________________________________________________________________________________ File Number: CD93461 Case Number: LCR14300 Section / Act: S26(1) Parties: COMER INTERNATIONAL LIMITED - and - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION |
(i) Clause 3 of the Programme for Economic and Social Progress (P.E.S.P.); (ii) Implementation of Werner report (rationalisation and redundancies).
Recommendation:
Having considered all of the views expressed by the parties in
their oral and written submissions the Court recommends that the
3% be paid with effect from the date of acceptance of the
recommendation.
That the Werner proposals be implemented with immediate effect and
be monitored by both parties for a period of six months.
That at the end of this period both parties review the operation.
That the severance terms be increased to 3 week's pay per year of
service.
The Court does not recommend concession of the other claims at
this time.
CLARIFICATION:
18TH MARCH, 1994
MR KARL MCDONAGH
I.B.E.C.
BAGGOT BRIDGE HOUSE
84/86 LOWER BAGGOT STREET
DUBLIN 2
RE: COMER INTERNATIONAL LTD AND S.I.P.T.U.
CLARIFICATION OF LCR14300
DEAR MR MCDONAGH
The Court has fully considered the issues of clarification raised
and the views expressed by both parties, and gives below the
clarifications as requested.
1. Redundancies
The Court is fully conscious of the problems created by
redundancy in the present employment situation. In arriving
at its recommendation the Court considered all of the issues
raised and the current constraints on the Company. The
Company had indicated the extent of the redundancies
necessary and the possibility of these being reduced. The
lower number was dependent on investment in a new area.
In this context the Court would ask the parties to seek to
maximise job retention and thereby endeavour to keep
redundancies necessary to a minimum.
2. Redundancy Terms
The Court recommended that the offer of the Company be
increased to 3 weeks pay per year of service inclusive of
statutory entitlement.
3. Bonus
It was clear to the Court that the Werner proposals were
intended to restore performance levels to those envisaged
under the bonus scheme. The Court recognises that strict
application of performance to bonus levels would have the
effect of reducing bonus payments which for historical
reasons have become inflated. It was not the intention of
the Court that changes in the bonus scheme would result in a
loss of earnings.
((2))
The Court anticipated the parties would in discussion agree
arrangements to enable a smooth transition to the new
situation. To assist the parties the Court proposes that the
present payment of bonus of #58.20 at 100% Performance should
continue to be paid until increases in the basic rate of pay
bring the bonus achievement of 1/3 of basic pay into line.
4. Review
The intention of the recommendation was that the proposals
would be introduced and monitored over a period of six
months, the parties during that period making such changes as
may be necessary to ensure effective operation and reviewing
the operation at the end of the trial period.
5. Werner Proposals
The proposals should be explained to employees as was
proposed by the Company.
6. Trade Union Claims
It was not the intention of the Court that these claims would
form part of the review. The Union is free to raise such
claims as it considers appropriate, subject to the provisions
of any agreements which may be in force.
Trusting the above clarifies the Courts intentions in respect of
LCR14300 and that this can now be accepted and implemented by the
parties.
Yours sincerely
---------------
Tom McGrath
Deputy Chairman
Division: MrMcGrath Mr Keogh Ms Ni Mhurchu
Text of Document__________________________________________________________________
CD93461 RECOMMENDATION NO. LCR14300
INDUSTRIAL RELATIONS ACTS, 1969 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
PARTIES: COMER INTERNATIONAL LIMITED
(REPRESENTED BY THE IRISH BUSINESS AND EMPLOYERS CONFEDERATION)
AND
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
SUBJECT:
1. (i) Clause 3 of the Programme for Economic and Social
Progress (P.E.S.P.); (ii) Implementation of Werner report
(rationalisation and redundancies).
BACKGROUND:
2. The Company, which is part of the Canadian-owned Comer
International Group, employs approximately 155 people. It is
engaged in the production of yarn for the weaving industry. In
the period 1986 to 1991, the Company invested #7 million in new
technology.
In early 1992, the Union submitted a claim under Clause 3 of the
P.E.S.P. Local level discussions took place but no progress was
made and the matter was referred to the Labour Relations
Commission. A conciliation conference was held on 26th March,
1992. The Company's position at conciliation was that it was not
prepared to enter into discussions on Clause 3 until a report
(Werner report) it had commissioned on the plant was available.
Towards the end of 1992, the Werner report was published (details
supplied to the Court) and it was presented to the Union in
January, 1993. The report concluded that there would be a
reduction of 28 jobs if it were implemented.
The Company sought the implementation of the report (with a
requirement for fewer redundancies than specified in the report).
Local level discussions took place but no agreement was reached
and the matter was referred to the Labour Relations Commission. A
conciliation conference held on 29th March, 1993 was adjourned to
allow for an examination of the report by the Union's industrial
engineer. Local level discussions took place on 19th May, 1993 at
which the union submitted alternative proposals (details
supplied).
The matter was referred to the Labour Relations Commission. A
conciliation conference was held on 25th June, 1993 but no
agreement was reached and the matter was referred to the Labour
Court on 26th of July, 1993. The Labour Court hearing took place
on 17th October, 1993.
CLAUSE 3, P.E.S.P.
UNION'S ARGUMENTS:
3. 1. Despite the Company's unwillingness to co-operate in
relation to Clause 3, the workers concerned co-operated fully
with the consultants on the shop-floor and indicated to
management that if the report proved feasible, the first 3%
of savings would be off-set against the increase under Clause
3.
2. The Company has confirmed that it has been making a
profit for at least 10 years. The workers have contributed
to this, having regard to the relatively low wage increases
under the Programme for National Recovery (P.N.R.) and
P.E.S.P.
3. The workers have co-operated on an on-going basis
towards the introduction of new machinery/technology in the
pin drafting area and to changes in the preventive
maintenance and cleaning programmes, which resulted in
improved quality. The workers were also prepared to add 5%
to bonus targets which would result in further savings to the
Company.
4. The Union rejects the Company's attempt to link Clause 3
of the P.E.S.P. to redundancies.
5. Given the Company's position of on-going profitability,
the workers' contribution to change and the existing low
level of wages, there is no justification for rejecting the
claim under Clause 3.
COMPANYS ARGUMENTS:
4. 1. The Company has offered to apply the increase under
Clause 3 in return for the introduction of the changes
proposed in the Werner report. There is no justification for
any further cost increases.
2. The Union's aspirations in relation to the investment
programme were addressed by the Labour Court in 1987 (LCR
11176), when the Court recommended a basic pay increase well
in excess of the wage round norm. In accepting the
recommendation, the Company advised the Union that it would
"on no account countenance any further application for
productivity benefits as the plant capacity continues to grow
with the further installation of new machinery".
3. The current productivity claim relates to the equipment
programme which commenced in 1986 and which is now complete,
and the Company considers that this claim has already been
addressed.
4. The Company is seeking to return performance to the
previously agreed level.
5. Cost increases of the order sought cannot be
countenanced at a time when the Company must restore its
international competitiveness. If the Company is to survive,
careful and prudent labour cost control is paramount.
IMPLEMENTATION OF WERNER REPORT (RATIONALISATION AND REDUNDANCIES)
UNION'S ARGUMENTS:
5. 1. It is not reasonable for the Company to seek to
implement the report when it refuses to discuss or negotiate
the proposed changes with the Union.
2. The Union considers that both parties should commence
negotiations on the document over a reasonable time frame,
and, if any matters remain outstanding, refer the issues back
to the Court.
3. The Company's proposals in relation to the bonus scheme
would reduce the workers' earnings by 7.50%.
4. The changes proposed in the Werner report would result
in substantial savings to the Company.
5. The Union's industrial engineer has identified a number
of factors in the job content which would expand and
would need to be addressed before any increase in workloads
would go into effect.
6. The Company has stated that the document could only be
implemented on a team work or cell-unit basis. The workers
are committed to self-supervision which would reduce the
number of redundancies required and result in substantial
savings to the Company.
7. Should the findings of the report be feasible then all
resultant redundancies should be voluntary and on agreed
terms of 5 weeks pay per year of service plus statutory
entitlements and without an upper limit.
COMPANY'S ARGUMENTS:
6. 1. Werner Textiles, consultants, were engaged to study the
entire factory to re-set job loading to 100% and to recommend
any changes necessary to ensure that the plant was operating
to world standards and on a cost-effective basis.
2. Werner confirmed the Company's view that the technology
and running performance of the machines had improved
gradually since 1988 and that optimum performance could now
be achieved. The factory at Castlecomer is significantly
under-utilised and overstaffed. Costs are consequently too
high. Werner identified overstaffing of 22 full-time and 8.5
part-time posts.
3. The Company might have expected to benefit significantly
from the changes which had commenced in 1986. However, this
has not been the case. World economic problems since 1988
have resulted in a flat performance up to the end of 1992 and
a very steep decline in 1993, coinciding with the German
recession (most of the Company's output is exported to
Germany).
4. Competition from underdeveloped countries, always strong
in labour intensive industries, has been joined by
competition from Eastern Europe's low cost economies.
Already part of the Company's customer base in Western
Germany is having its manufacturing done in Eastern Europe.
5. Comer's stocks of finished product have risen in the
past year from a little over one weeks' production to over
six weeks' production - an increase in stock value of almost
#2m, carrying interest of #160,000 per annum. The recent and
protracted lay-off of staff is as a direct result of this.
6. The Company urgently needs to reduce its cost base to a
level at which it can compete with competitors, and to bring
performance to international standards.
7. Pay increases have already applied on foot of this
project. The Company is now seeking to implement the benefit
of the project.
8. Terms and conditions of employment at Castlecomer
compare very favourably and are in the upper quarter of
textile rates in this country.
9. A bonus/ productivity scheme was agreed with the Union
and was designed to produce the standard 33 1/3% bonus. It
is imperative that appropriate production targets as
identified by Werner, be implemented.
10. The Company's proposal to apply the maximum pay increase
under clause 3 is very favourable in the present
circumstances and further cost increases are not justified.
11. The Union has advised that the average length of
service of staff who wish to apply for redundancy is 18
years. Therefore, the cost of redundancy payments will be
expensive, given that the Company has agreed to remove a
#10,000 upper limit.
12. Local management believes that decisions on further
investments and technological up-gradings will be influenced
by the Union's approach to the current programme.
RECOMMENDATION:
Having considered all of the views expressed by the parties in
their oral and written submissions the Court recommends that the
3% be paid with effect from the date of acceptance of the
recommendation.
That the Werner proposals be implemented with immediate effect and
be monitored by both parties for a period of six months.
That at the end of this period both parties review the operation.
That the severance terms be increased to 3 week's pay per year of
service.
The Court does not recommend concession of the other claims at
this time.
~
Signed on behalf of the Labour Court
20th December, 1993 Tom McGrath
F.B./A.L. _______________
Deputy Chairman
Note
Enquiries concerning this Recommendation should by addressed to
Mr. Fran Brennan, Court Secretary.
CLARIFICATION:
18TH MARCH, 1994
MR KARL MCDONAGH
I.B.E.C.
BAGGOT BRIDGE HOUSE
84/86 LOWER BAGGOT STREET
DUBLIN 2
RE: COMER INTERNATIONAL LTD AND S.I.P.T.U.
CLARIFICATION OF LCR14300
DEAR MR MCDONAGH
The Court has fully considered the issues of clarification raised
and the views expressed by both parties, and gives below the
clarifications as requested.
1. Redundancies
The Court is fully conscious of the problems created by
redundancy in the present employment situation. In arriving
at its recommendation the Court considered all of the issues
raised and the current constraints on the Company. The
Company had indicated the extent of the redundancies
necessary and the possibility of these being reduced. The
lower number was dependent on investment in a new area.
In this context the Court would ask the parties to seek to
maximise job retention and thereby endeavour to keep
redundancies necessary to a minimum.
2. Redundancy Terms
The Court recommended that the offer of the Company be
increased to 3 weeks pay per year of service inclusive of
statutory entitlement.
3. Bonus
It was clear to the Court that the Werner proposals were
intended to restore performance levels to those envisaged
under the bonus scheme. The Court recognises that strict
application of performance to bonus levels would have the
effect of reducing bonus payments which for historical
reasons have become inflated. It was not the intention of
the Court that changes in the bonus scheme would result in a
loss of earnings.
((2))
The Court anticipated the parties would in discussion agree
arrangements to enable a smooth transition to the new
situation. To assist the parties the Court proposes that the
present payment of bonus of #58.20 at 100% Performance should
continue to be paid until increases in the basic rate of pay
bring the bonus achievement of 1/3 of basic pay into line.
4. Review
The intention of the recommendation was that the proposals
would be introduced and monitored over a period of six
months, the parties during that period making such changes as
may be necessary to ensure effective operation and reviewing
the operation at the end of the trial period.
5. Werner Proposals
The proposals should be explained to employees as was
proposed by the Company.
6. Trade Union Claims
It was not the intention of the Court that these claims would
form part of the review. The Union is free to raise such
claims as it considers appropriate, subject to the provisions
of any agreements which may be in force.
Trusting the above clarifies the Courts intentions in respect of
LCR14300 and that this can now be accepted and implemented by the
parties.
Yours sincerely
---------------
Tom McGrath
Deputy Chairman