Labour Court Database __________________________________________________________________________________ File Number: CD92774 Case Number: LCR13911 Section / Act: S26(1) Parties: WATERFORD CRYSTAL LIMITED - and - AMALGAMATED TRANSPORT AND GENERAL WORKERS' UNION |
Company proposal to implement cost improvement measures.
Recommendation:
This Recommendation is contained in the full Document only.
Division: Mr Heffernan Mr Keogh Mr Walsh
Text of Document__________________________________________________________________
CD92774 RECOMMENDATION NO. LCR13911
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
PARTIES: WATERFORD CRYSTAL LIMITED
and
AMALGAMATED TRANSPORT AND GENERAL WORKERS' UNION
SUBJECT:
1. Company proposal to implement cost improvement measures.
BACKGROUND:
2. The Labour Court investigated the above dispute on the 18th
December, 1992.
*RECOMMENDATION:
INTRODUCTION:
The cost improvement measures proposed by Waterford Crystal Ltd
have a significance and context rarely encountered in industrial
relations in Ireland. At stake is an industry for long synonymous
with Ireland and the city of Waterford and the livelihood of some
1600 of its employees.
The urgent necessity for the Waterford manufacturing plants to
become internationally competitive is clearly borne out by market
and market-share trends while the prospective alternative to a
cost-effective operation in Waterford is radically increased
branded out-sourcing and the reduction of Waterford to a small
specialist operation and administrative centre. Negotiations have
taken place between the local Company Management and the Union
concerned, but other interested parties including international
share-holders/investors and Banking institutions have limited the
Company's negotiating parameters and set rigid commercial criteria
for business continuance and expansion in Waterford.
Against this background the Court has examined both the proposals
and the general and detailed arguments put forward by the parties,
not just by comparison with earlier agreements and practices, but
as a fresh basis for workable arrangements that will re-establish
Waterford Crystal as a viable business within a reasonable period.
GENERAL ISSUES:
The Court accepts that the final cost improvement proposals, put
to the Union, are of a nature and extent that, in normal
circumstances, would be regarded as severe in an industrial
relations context.
It is however symptomatic of the understanding of the knife-edge
situation in the business that in general terms, and subject to
certain undertakings, the work-force accepts the need for a
significant range of cost-saving measures. When the arguments are
distilled, the main issues between the Union and the Company are:
- The extent of cost savings
- The extent of pay-reductions
- Investment
- Out-sourcing
- Compulsory redundancy
Accordingly the Court has considered the cost improvement
proposals in terms of:
- Whether the extent of cost savings sought is
reasonable
- Whether the pay reductions sought are necessary and
are reasonably equitable as between the various
sections of the workforce
- Whether the Company's commitments are reasonably
supportive of the cost savings measures to retain
production in Waterford.
EXTENT OF COST-SAVINGS:
The Court has considered the Company's objective of #5.16m savings
and its underlying rationale of meeting the Company's interest
charge on its present borrowings. The labour intensive nature of
the Waterford operation dictates that these savings must be
achieved predominantly from payroll costs even though it is
acknowledged that earlier agreements made significant reductions
in payroll. Until recently, interest charges have been funded in
part by Wedgewood and partly by increased borrowings. Due to
changed circumstances they must now be fully funded by Waterford
Crystal through borrowings. The Court considers it reasonable in
the circumstances that, as a prelude to further investment for
production in Waterford, the Company's shareholders should seek to
curtail accumulating losses by funding interest charges directly
from cost-savings.
PAY-REDUCTIONS:
The agreement sought by the Company ranges over all sections of
the work-force although affecting individual sections to differing
degrees. Its overall objective is to achieve the required total
savings and as these constitute an immutable figure, any change
that would significantly benefit one section must have a
corresponding change to the detriment of another. Bearing this in
mind, the Court has examined the proposals and finds them broadly
equitable as between sections having regard to the need for a bias
in favour of lower-paid workers, the fact that some sections are
already subject to work-study methods while others are only now
being subjected to that discipline and the fact that acceptance of
the proposals will significantly reduce short-time working. In
the circumstances, the Court does not consider that there is a
basis for any significant change in the proposed pay-reductions
for individual sections.
COMPANY COMMITMENTS
General
At the Court hearing, the Company reiterated its commitment,
subject to cost considerations, to retaining production in
Waterford and re-stated the undertakings given in the final
proposals to the Union in relation to out-sourcing. The Union on
the other hand expressed doubts regarding the Company's commitment
to Waterford and had serious concerns in relation to out-sourcing,
the question of compulsory redundancy and a programme of company
investment.
Investment
The Court noted that the Company, in the course of the hearing,
undertook to seek the re-instatement of the re-configuration
investment originally planned for December, 1992 and that they
were confident of Board agreement. The Court also noted that
other planned investment for 1993 (making a total of #2m) has a
similar undertaking. The Court regards these undertakings as
reflecting a positive commitment by the Company to the
continuation and development of production in Waterford.
Compulsory Redundancies
The Union has expressed concern that despite the far-ranging scope
of the proposals, they emphasise the Company's right to implement
compulsory redundancies albeit in the context of unforeseen future
trading difficulties. Having regard to the demands being made on
staff, the Union considers that there should be a significant
commitment by the Company to the job-security of its existing
workforce.
Out-sourcing
The Court accepts that the whole thrust of the proposals is to
ensure continuation of the business in Waterford, but also
understands the concerns expressed by the Union that the exercise
might be a stop-gap measure by the Company while it expands and
consolidates its out-sourcing.
Commitments Summary
Having considered the impact of the proposals on the workers and
having regard to the fact that the re-configuration and technology
investment will only become effective as the year progresses, the
Court recommends that the Company's commitments should be
strengthened as follows:
- the moratorium already given on out-sourcing of
existing product currently manufactured at Waterford
should be extended to 12 months
- all clauses and references in the proposals to
compulsory redundancy should be withdrawn and the
position as obtained prior to 20th August, 1992 in
relation to redundancies should apply.
--------------------------
ISSUES OF DETAIL
Despite the Company's insistence that the present proposals
reflected their final position, the Court, having considered the
detailed presentations made by the Union recommends that the
following implementation changes should be made.
1. PAY-REDUCTIONS:
The 25% cap on pay reductions should be extended to 31/12/95.
In the event that in 1996, following expiry of the 3 years'
guaranteed 25% cap, there are individual cases where the pay
reduction, as defined in the proposals, exceeds 25% and subject to
the Company being in profit (after interest and tax), the Company
should compensate such individual cases on the basis of a once-off
lump-sum equal to one full year's value of the amount of the
average weekly loss in excess of 25%.
If during the guaranteed period to 31/12/95, there are cases in
dispute regarding the application of the 25% cap, such cases
should be referred to the Court for final determination.
2. ROSTERED OVERTIME: (Clause 3.4)
Where rostered overtime is abolished, the guaranteed overtime for
the workers concerned should be extended as follows:-
1/1/93-31/12/93 - Guaranteed minimum of 2/3rd current level of
rostered overtime.
1/1/94-31/12/94 - Guaranteed minimum of 1/2 current level.
1/1/95-31/12/95 - Guaranteed minimum of 1/3rd current level
3. SICK-PAY SCHEME:
The Court does not consider the total withdrawal of the Company
from funded sick-pay scheme (Clause 2.7.1) as appropriate even in
the difficult financial circumstances of this case. Accordingly,
the Court recommends that the sick-pay scheme be varied to provide
75% of net pay with 50% of the Company's costs recovered on a six
monthly basis.
4. DISABILITY SCHEME: (Clause 2.72)
To ensure reasonable protection for a worker, who under the new
arrangements has to retire on ill-health grounds at an early age,
the Company should make provisions to ensure at the end of the
benefit period (i.e. 4 years), that, in addition to social welfare
benefits, the "ill-health" retirement pension should not be less
than #4,000 p.a. for craft workers and pro-rata for non-craft
workers.
5. ANNUAL BONUS:
Having regard to the impact of the implementation of the proposals
on the workers in the initial year and to the contribution of the
workforce to the survival of the business in Waterford, the
Company should on a once-off basis for 1993 make an additional
payment of #300 to bring the total annual bonus in 1993 to #800
per person, payment to be subject to the conditions for annual
bonus payments as set out in Clause 2.3(1) of the proposals.
6. REDEPLOYMENT:
Where a craft worker (Blower or Cutter) voluntarily redeploys to
semi-skilled or general duties, having regard to the financial
impact on the worker and the benefits involved for the Company,
the Court recommends that the compensation as proposed by the
Company and submitted at the hearing should be increased by 25%.
7. BALL-BLOWERS/BIT-GATHERERS: (Clause 4.2.)
The rates proposed should be altered to read:-
1/1/93 - 31/12/93 82.5% of master's rate.
1/1/94 - onwards 80% of master's rate.
Where dual-skilled payments are appropriate they should be at
82.5% of master's rate.
8. CUTTERS:
Having regard to the extensive "short-time" working endured by
cutters, the Company, where possible, should seek to arrange for
them a sufficient period of continuous productive employment, in
any capacity, so as to legitimately protect their social welfare
benefits.
9. WORK-STUDY APPRECIATION:
With the introduction of the new B.S.I. scheme the Court
recommends that the Company initiates a work-study appreciation
course of at least 5 days for an appropriate number of employees.
Such course should result in the persons involved gaining a
reasonable knowledge of the techniques/practices used in the
installation of time study values. It is not envisaged by the
Court that any employee who receives such training should as a
result have a negotiating role in relation to the scheme but
should have an explanatory role to allay the anxieties of employees
in regard to its implementation.
Where a dispute on a value exists it should be processed under the
procedures set out in Clauses 3.1.1. to 3.1.7. of the proposals.
Running in allowance (Trial period) Clause 3.1
The Court recommends that the trial period for new incentive
schemes should be as follows:-
First two weeks lead in
Following two weeks up to 20% allowance
Following two weeks up to 15% allowance
Following two weeks up to 10% allowance
Following two weeks up to 5% allowance
10. RETIREMENT AGE/PENSION
Arising from the extension of the retirement age (Clause 2.10),
the Court recommends that the actuarial reduction from pensions
which would apply to workers taking early retirement should be
limited as follows for those within five years of the present
retirement age:-
Years to present N.P.D. % of Actuarial reduction to apply
1 Nil
2 10%
3 20%
4 40%
5 60%
The Court notes the Company's undertaking that the review of the
pension age in January, 1995, as provided for in ARB 190 will take
place on schedule.
11. VOTING PROCEDURES (Clause 3.3)
The Court considers that the method of voting by workers on
proposals, other than as statutorily provided for, is a matter
solely for the Trade Union. This prerogative of the Union is
circumscribed only by its own rules and by the requirements of
natural justice that each eligible member be adequately advised of
such votes and be afforded unhindered opportunity to freely cast
his/her vote. Accordingly the Court recommends the deletion of
the final paragraph of Clause 3.3.
12. INDUSTRIAL PEACE (Clause 3.3)
Having regard to the critical position of the business, the extent
of the present proposals which almost constitute a green-field
situation and the inevitability of some teething difficulties, the
Court considers the undertaking from both Management and Union, as
provided for in Clause 3.3, not to implement any form of
industrial action as both reasonable and prudent. The Court
recommends that the parties should give such an undertaking but
that its duration should be for a period of 3 years.
Because of the range and complexity of the total proposals now
being put to staff, the Court recommends that issues which arise
from their interpretation or implementation and are not resolved
through procedures at local level, should be referred to the Court
for final resolution.
RECOMMENDATION:
This Recommendation is contained in the full Document only.
~
Signed on behalf of the Labour Court
Kevin Heffernan
--------------
4th January, 1993. Chairman.
J.F./J.C.
Note
Enquiries concerning this Recommendation should be addressed to
Mr. Jerome Forde, Court Secretary.