Labour Court Database __________________________________________________________________________________ File Number: CD95150 Case Number: LCR14730 Section / Act: S26(1) Parties: ORMONDE BRICK LIMITED (ROADSTONE PRIVINCES LTD) - and - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION |
Dispute concerning proposals for a new payments structure in the packing area.
Recommendation:
The Court, having considered the written and oral submissions of
the parties, is satisfied that the existing level of performance,
for whatever reason, is at an uncompetitive level.
The Court recommends implementation of the Company proposals but,
conscious of the concerns expressed in relation to earnings, makes
the following further recommendations:
The suggestion made by the Union in its letter of 9th of February,
1995, that the proposed bonus scheme be operated for a trial
period of 12 months, during which the bonus would be calculated
using the existing bonus scheme and the new bonus scheme, be
accepted by the Company subject to the following important
modifications:
During the first month, the full bonus earned under the
existing scheme would be paid. The second month that bonus
less 10% would be paid, the third month it would be reduced
by 20% and so on. When in any one week the proposed bonus
scheme generated more earnings for the employees than the
existing scheme, the higher bonus would be paid.
In the last two months of the twelve month period no bonus
under the existing scheme would be payable but the Court is
satisfied that by then the employees would have had ample
opportunity to adjust to the levels of performance required.
Division: Mr Flood Mr McHenry Mr Rorke
Text of Document__________________________________________________________________
CD95150 RECOMMENDATION NO. LCR14730
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
PARTIES:
ORMONDE BRICK LIMITED
AND
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
SUBJECT:
1. Dispute concerning proposals for a new payments structure in
the packing area.
BACKGROUND:
2. The Company is situated at Castlecomer, Co. Kilkenny and
manufactures fire-clay bricks, primarily for the home market,
with some exports to the U.K. At present there are 63
workers employed by the Company.
Since 1993, the Company has sought to secure agreement on a
new payment system for employees in the packing area, on the
grounds that its costs are out of line with those of its
competitors. The Company claims that productivity (i.e.,
6,000 - 6,500 bricks/packer/day) falls short of industry
figures of 10,000 bricks/packer/day and that packing cost
(#7.33 per 1,000) is above the industry standard of #4-#5 per
1,000. At conciliation conferences in 1992, the Company
concluded that radical change was needed in its payment
structure in order to provide the necessary incentive to
increase productivity and lower costs. However, packing
levels remained at around 6,300. (In 1992, the Company had
brought employee representatives to two plants in England
where packing levels were in the order of 10,000.)
Further conciliation conferences followed, with little or no
progress. It was, however, agreed to have the packing
operation examined by the Irish Productivity Centre (I.P.C.).
The I.P.C. reported, inter alia, that the "throughput for
which current bonus is paid is approximately 63% of standard
performance". Subsequently the I.P.C. was asked to propose a
new payment package at the Company (details provided to the
Court).
At a subsequent conciliation conference, the Company
indicated its intention to proceed with the introduction of
the new bonus scheme. The Union's position on the scheme was
that the proposed cost per 1,000 bricks of #4.58 was
unacceptable, and proposed that #6.50 per 1,000 would be
reasonable. The Union indicated that it would seek a
guarantee that in any new arrangements, earning levels would
be maintained. The Company's position was that the workers
would have to pack more bricks to maintain their earning
levels. The Company would consider some adjustments to the
thresholds regarding the price/1,000 bricks and was prepared
to buy out the current bonus scheme and agree to a lead-in
payment. Central to the Company's position was the
requirement for employees to move to the new
productivity-based payment system. The Union stated that the
workers had agreed to operate the proposed bonus-scheme for 1
year, during which bonus would be calculated using the
existing and new bonus scheme and that in any one week, the
scheme which generated the higher earnings would apply. A
further conciliation conference followed, at which agreement
was not reached. The dispute was referred to the Labour
Court, on the 27th of February, 1995, in accordance with
Section 26(1) of the Industrial Relations Act, 1990. The
Court investigated the dispute on the 20th of March, 1995.
UNION'S ARGUMENTS:
3. 1. The Union is prepared to negotiate with the Company on a
price (per 1,000 bricks packed) that would be acceptable
given current competitive costs. However, a price per
1,000 bricks which is 16.5% below the price for the
nearest competitor, and which would require an increase
of 45% in production in order for workers to maintain
earnings, is unacceptable.
2. It is contended that it is the intention of the Company
to reduce unit cost, rather than its stated aim of
increasing productivity.
3. If the Company proposals were to be implemented then,
for the same level of production as before, the Company
would reduce its costs from #7.08 to #4.59/1,000; the
workers, meantime, would be required to exist on basic
earnings of #169.31/week, without any bonus being paid
whatsoever. The workers would actually have to increase
their productivity by 19% before any bonus would be
required to be paid.
COMPANY'S ARGUMENTS:
4. 1. The packing productivity and costs are significantly out
of line with those of the Company's competitors. These
facts were clearly witnessed by workers on their visits
to two factories in the U.K.
2. The current bonus-payments are essentially based on
historical developments. Despite the implementation of
improved lay-out and ergonomics in the packing
department there is still no improvement in packing
productivity. Progress has been made in other areas of
the operation, but not in the packing department.
3. The market is extremely competitive. U.K. producers
have significant advantages relative to the Company.
Production is generally in modern, large-scale, highly
automated plants, benefiting from economics of scale.
Arising from this competition, prices have dropped by
15% in recent years. However, labour costs will
continue to rise. To survive, the Company must be
competitive in every aspect of the business.
4. The I.P.C. report states that packing at the Company is
at 60%, approximately, of standard performance. The
situation where bonus-payments are paid, based on 60% of
standard is untenable. They should relate to
performance and productivity.
RECOMMENDATION:
The Court, having considered the written and oral submissions of
the parties, is satisfied that the existing level of performance,
for whatever reason, is at an uncompetitive level.
The Court recommends implementation of the Company proposals but,
conscious of the concerns expressed in relation to earnings, makes
the following further recommendations:
The suggestion made by the Union in its letter of 9th of February,
1995, that the proposed bonus scheme be operated for a trial
period of 12 months, during which the bonus would be calculated
using the existing bonus scheme and the new bonus scheme, be
accepted by the Company subject to the following important
modifications:
During the first month, the full bonus earned under the
existing scheme would be paid. The second month that bonus
less 10% would be paid, the third month it would be reduced
by 20% and so on. When in any one week the proposed bonus
scheme generated more earnings for the employees than the
existing scheme, the higher bonus would be paid.
In the last two months of the twelve month period no bonus
under the existing scheme would be payable but the Court is
satisfied that by then the employees would have had ample
opportunity to adjust to the levels of performance required.
~
Signed on behalf of the Labour Court
12th April, 1995 Finbarr Flood
M.K./M.M. _______________
Deputy Chairman
Note
Enquiries concerning this Recommendation should be addressed to
Mr. Michael Keegan, Court Secretary.