Labour Court Database __________________________________________________________________________________ File Number: CD93347 Case Number: LCR14141 Section / Act: S26(1) Parties: ALLEGRO LIMITED - and - MARINE PORT AND GENERAL WORKERS UNION |
Dispute concerning Company proposals for review of its Transport Operation.
Recommendation:
5. It is clear to the Court that if the present level of direct
employment in the Company is to be protected and maintained then
cost reductions in the operation of transport will have to be
achieved.
The Court notes that as a consequence of changes in work-practices
and loading and unloading procedures, the incentive scheme has not
been operating in a cost-effective manner.
The incentive standards as a consequence of the changes which have
taken place do not reflect the work content of the job and have
resulted in inflated earnings being achieved.
In accordance with the general rules governing incentive schemes
based on work-standards, where changes take place which affect the
work-content of the job, it is not unreasonable for management to
seek to make necessary adjustments to the standards.
It is clear to the Court that the changes in this case will impact
on the earnings level of the workers concerned.
The Court recognises that the workers' standard of living has been
based on these earnings. However it must be stated that the
changes in work-practices and loading and unloading procedures,
and the resultant change in work-content are of recent origin and
the operation of the transport by the Company and the maintenance
of the current employment, it appears to the Court, can only
continue if costs are competitive. It is imperative, therefore,
that the incentive scheme realistically reflects the work-content
of the job.
Given the effect of the implementation of an amended scheme and
recognising that if staff co-operation with the introduction of
the amended scheme is to be forthcoming, the issue of the impact
of the changes on the earnings of the employees will have to be
addressed.
Accordingly the Court recommends:
1. That any issues outstanding regarding the new standards
should be resolved within a period of two weeks;
2. That the amended incentive scheme should be introduced on
the basis of a three month running-in period. The
Company and the Unions should monitor the operation of
the scheme during the running-in period and make such
adjustments to the scheme as may be necessary to ensure
that it achieves the objectives of all concerned;
3. That during the running-in period, subject to standard
performances being achieved, the Company should continue
to pay current average earnings;
4. That the increases due under Phases 2 and 3 of P.E.S.P.
be offset against any reduction in earnings arising
following the running-in period;
5. That in April, 1994, the parties assess the loss of
earnings by the staff when related to the average
earnings of the past five years, and in direct
discussions agree a basis for compensation of the workers
concerned, if that appears necessary and appropriate.
The Court so recommends.
Division: Ms Owens Mr McHenry Mr Walsh
Text of Document__________________________________________________________________
CD93347 RECOMMENDATION NO. LCR14141
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
PARTIES: ALLEGRO LIMITED
(REPRESENTED BY THE IRISH BUSINESS AND EMPLOYERS CONFEDERATION)
and
MARINE PORT AND GENERAL WORKERS UNION
SUBJECT:
1. Dispute concerning Company proposals for review of its
Transport Operation.
BACKGROUND:
2. The Company is located in the Sandyford Industrial Estate,
Dublin and employs approximately 200 workers. It is a major
distributor to the grocery trade and also manufactures,
firelighters, liquid detergent, a range of powder-blended products
and pasta under the Roma Label.
In February, 1993, the Company sought to embark on a cost-cutting
exercise, in order to improve its competitiveness. By contracting
out its transport operations, with the resultant redundancy of 20
drivers, the Company hoped to make savings of #250,000 p.a. In
response to the Union's request for a review of its proposals, the
Company presented an alternative strategy in March, 1993, which
proposed changes to work practices/standards, with no requirement
for redundancies. The introduction of new standards would result
in a projected reduction in drivers' earnings of approximately
22%.
The dispute was referred to the Labour Relations Commission and a
conciliation conference was held at which the Company indicated
that it was prepared to offset phases 2 and 3 of the Programme for
Economic and Social Progress (P.E.S.P.) against the decrease in
earnings. It was also prepared to phase-in the balance of the
reduction in earnings.
The Union rejected any proposed reduction in earnings and
counter-proposed a red-circling arrangement, with future
pay-increases being used to eliminate the red-circling. This
arrangement would take between 5 and 6 years to eliminate the
over-payment to drivers.
Conciliation conferences were held in March , April, and May ,
1993 at which agreement was not reached. The dispute was referred
to the Labour Court on the 4th of June, 1993 in accordance with
Section 26(1) of the Industrial Relations Act, 1990. The Court
investigated the dispute on the 10th of June, 1993.
UNION'S ARGUMENTS:
3. 1. Since the introduction of the One Person Operation
(O.P.O.) Agreement, the workers have taken on considerable
extra work and have co-operated in full in improving the
service to customers. Accordingly they are not prepared to
accept any cut in their current levels of earnings.
2. The introduction of O.P.O. and the replacement of 28'
Units with 40' Units has meant that drivers now carry 33% more
product, have accepted a major increase in their workload and
have increased their efficiency and flexibility, all of which
benefit the Company. The proposal would reduce earnings to
below 1990 levels, when 2-man crewing was in operation,
(details supplied to the Court), and would have the effect of
eliminating the benefit of
(i) the #5 O.P.O. allowance (L.C.R. 13435),
(ii) the 2.50% 39-hour week claim (L.C.R. 13435),
(iii) the 4% Programme for Economic and Social Progress
(P.E.S.P.) phase 1 increase from April, 1992 and
(iv) the 3rd phase of the Programme for National
Recovery (P.N.R.) from April, 1991.
The proposals would also eliminate potential for increased
earnings for drivers of the bigger articulated Units.
3. The Company's position that should there be no agreement
reached on the dispute that only #250,000 would be made
available to cover all aspects of compensation is totally
unacceptable.
COMPANY'S ARGUMENTS:
4. 1. The Company has two essential requirements in its
transport area, (i) to reduce its operating costs to a
competitive level and (ii) to provide a flexible responsible
dependable service to satisfy the changing requirement of
principals and customers.
2. The above could be achieved by the contracting-out of its
transport operation, resulting in a saving of #250,000 p.a.
Following the Union's request, the Company has made a very
serious attempt to construct a package which would serve as an
alternative to the contracting-out of the transport operation.
These proposals involved the revision of transport standards.
Naturally there is a cost associated with this for transport
employees, given the large increases in their earnings over
the past three years (details supplied to the Court).
3. The work-study presented on the 17th of May, 1993 showed
that a 22% drop in overall standard values was necessary. The
Industrial Relations Officer proposed that "the loss of
earnings arising from the introduction of correct standards be
treated in the following manner:
(a) That the increases due under Phases 2 and 3 of
P.E.S.P. be offset against the reduction i.e. that
the Company carry the cost of Phase 3 of the
P.E.S.P. from the date of the introduction of the
standards.
(b) That the remaining reduction be dealt with by the
phased application of standards to yield:
1/3 of the reduction in 6 weeks
1/3 of the reduction in October, 1993
1/3 of the reduction in January, 1994".
The proposal was drawn up "in the interest of securing maximum
levels of employment in the Company".
RECOMMENDATION:
5. It is clear to the Court that if the present level of direct
employment in the Company is to be protected and maintained then
cost reductions in the operation of transport will have to be
achieved.
The Court notes that as a consequence of changes in work-practices
and loading and unloading procedures, the incentive scheme has not
been operating in a cost-effective manner.
The incentive standards as a consequence of the changes which have
taken place do not reflect the work content of the job and have
resulted in inflated earnings being achieved.
In accordance with the general rules governing incentive schemes
based on work-standards, where changes take place which affect the
work-content of the job, it is not unreasonable for management to
seek to make necessary adjustments to the standards.
It is clear to the Court that the changes in this case will impact
on the earnings level of the workers concerned.
The Court recognises that the workers' standard of living has been
based on these earnings. However it must be stated that the
changes in work-practices and loading and unloading procedures,
and the resultant change in work-content are of recent origin and
the operation of the transport by the Company and the maintenance
of the current employment, it appears to the Court, can only
continue if costs are competitive. It is imperative, therefore,
that the incentive scheme realistically reflects the work-content
of the job.
Given the effect of the implementation of an amended scheme and
recognising that if staff co-operation with the introduction of
the amended scheme is to be forthcoming, the issue of the impact
of the changes on the earnings of the employees will have to be
addressed.
Accordingly the Court recommends:
1. That any issues outstanding regarding the new standards
should be resolved within a period of two weeks;
2. That the amended incentive scheme should be introduced on
the basis of a three month running-in period. The
Company and the Unions should monitor the operation of
the scheme during the running-in period and make such
adjustments to the scheme as may be necessary to ensure
that it achieves the objectives of all concerned;
3. That during the running-in period, subject to standard
performances being achieved, the Company should continue
to pay current average earnings;
4. That the increases due under Phases 2 and 3 of P.E.S.P.
be offset against any reduction in earnings arising
following the running-in period;
5. That in April, 1994, the parties assess the loss of
earnings by the staff when related to the average
earnings of the past five years, and in direct
discussions agree a basis for compensation of the workers
concerned, if that appears necessary and appropriate.
The Court so recommends.
~
Signed on behalf of the Labour Court
Tom McGrath
_____________________
22nd July, 1993. Deputy Chairman.
M.K./J.C.
Note
Enquiries concerning this Recommendation should be addressed to
Mr. Michael Keegan, Court Secretary.