Labour Court Database __________________________________________________________________________________ File Number: CD95387 Case Number: LCR14830 Section / Act: S26(1) Parties: IRISH COUNTRY MEATS (THE IRISH BUSINESS AND EMPLOYERS CONFEDERATION) - and - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION (S.I.P.T.U. |
Cost restructuring plan
Recommendation:
The matter before the Court has been the subject of numerous
Company/Union meetings and at least seven meetings at the Labour
Relations Commission.
The situation is now at the very serious stage of staff in the
Carrig Plant being on protective notice, and the Company
indicating to the Court that failure to reach agreement on the
required cost savings will result in Plant closure.
Over the past few months a number of issues have been added to the
original list, due to changing requirements and trading patterns.
Given the complexity and range of issues before the Court and the
requirement for an immediate recommendation, the Court believes
that it should make Recommendations in relation to the two issues
outlined by the Company as critical to reducing and controlling
costs, the Bonus system and Absence payments.
Obviously the other issues require resolution but given the stated
positions of the parties on the bonus issue, failure to reach
agreement on this matter makes agreement on the other issues
irrelevant. The Court, accordingly, recommends on the two issues
of bonus and absence as follows:-
BONUS
The system of production to constitute pay plus one third bonus
based on standards to be put forward by the Company. An
average adjustment of 1.8 - 2.0% on present standards to apply.
ABSENCE
The Company's proposals in relation to absentee control to be
introduced with immediate effect, subject to payment on the third
day of the sick pay scheme.
Finally, the Court would urge the parties to negotiate
meaningfully on the outstanding issues so that the employment of
the workers can be assured in a very difficult market sector. In
this context, the Court believes that a successful conclusion of
the negotiations would merit the Company increasing its overall
compensation package.
Division: Mr Flood Mr Keogh Mr Walsh
Text of Document__________________________________________________________________
CD95387 RECOMMENDATION NO. LCR14830
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
PARTIES: IRISH COUNTRY MEATS
(REPRESENTED BY THE IRISH BUSINESS AND EMPLOYERS CONFEDERATION)
AND
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION (S.I.P.T.U.)
SUBJECT:
1. Cost restructuring plan
BACKGROUND:
2. The Company has been operating in Roscrea for almost 100
years. The Company had serious financial difficulties some
years ago and, threatened with closure, was taken over by
Avonmore plc. in 1987. The Roscrea operation employs 465
workers in two plants - Carrig plant (Irish Country Meats)
and Parkmore plant (Roscrea Fresh Foods). The Carrig plant
employs 235 workers.
The dispute concerns a proposal by the Company to implement a
nine point rationalisation programme which it maintains is
necessary to save the Carrig plant from closure. There are a
number of issues involved in the dispute but the main item is
the current bonus payment system. The Company maintains that
the normal bonus system in the meat industry at 100 British
Standard Institute (BSI) performance is 33.3% of basic rate.
Bonus payment in the Company ranges from 33.3% to 51% of
basic rate because of the bonus system introduced in 1980.
The average bonus yield in the Company is 46% and in Roscrea
Fresh Foods it is 36%.
The Company proposed the introduction of a piece rate system
to replace the current bonus system. Piece rates would be
established by dividing the standard earnings rate (basic
wage plus a third) by the standard output rate (100 BSI).
The Union objected to the introduction of the piece rate
system, claiming that workers would lose approximately #20
per week on average, with some workers losing considerably
more.
In June, 1994, the Company informed the Union that it could
not afford to pay the final phase (3.75%) of the Programme
for Economic and Social Progress (P.E.S.P.). However,
following a conciliation conference in December, 1994, the
Company agreed to pay the 3.75% increase, retrospective to
July, 1994, on the understanding that discussions on the
Company's nine point plan took place immediately. One of the
other main issues in dispute was the high level of
absenteeism, which the Company claims is a major contribution
to high production costs. The Company also sought payment of
overtime after completion of a 39 hour week rather than after
working eight hours per day. It also sought that double time
would only be paid on Saturdays after 1.00 p.m. and on
Sundays. (Details of other lesser issues were supplied to
the Court).
At a meeting on 7th January, 1995, the Company's proposals
were rejected by the workers. Following the rejection,
management placed the workers in the Carrig and Parkmore
plants on a three day working week. Workers in the Parkmore
plant have returned to five day working. Workers in the
Carrig plant are still on three day working.
A number of meetings had taken place at local level without
agreement being reached. On 24th January, 1995, the parties
attended a conciliation conference. Seven conciliation
conference took place up to the 28th June, 1995, without
agreement being reached. At the final conciliation
conference the Union proposed a five point plan as follows:
1. Each Member was prepared to work an additional 20
minutes per day for an 18 month period only.
2. To defer the first phase of P.C.W. for a 12 month
period and to devise a formula to ensure that the 2%
would be paid, 1% in addition to the second Phase and
1% in addition to the third phase of the P.C.W.
3. Agree to piece rate if requested by the Company after a
100% performance. One hour maximum per Member in the
Boning Hall per day. A similar arrangement was worked
previously by agreement with the Company.
4. All new Entrants on basic rate plus 33 1/3% only
provided that agreement would be reached on the
following formula on the 3% Local Bargaining Clause of
P.E.S.P.
(a) When 25% of the workforce in both Carrick and
Parkmore Plants are on basic plus 1/3, 1% to be
paid.
(b) When 50% of the workforce are time and one third,
2% would be paid.
(c) When 75% of the workforce are on time and one third
the full 3% would be paid. This in fact would take
years to achieve.
5. A method of scale to reduce the yield element of the
Bonus System on par with bonus payment if 100%
performance is not reached."
The dispute was referred to the Labour Court on 30th June,
1995, under Section 26(1), Industrial Relations Act, 1990. A
Labour Court hearing took place on 10th July, 1995.
UNION'S ARGUMENTS:
3. 1. Avonmore plc. introduced a major rationalisation plan
when it took over the Company in 1987. This involved
improved work standards, an increase in productivity and
a reduction in break times. It also introduced the
absenteeism and lateness demerit procedure which meant
that a worker who reached 120 penalty points in a 12
month period could have their employment terminated.
The Company now wants to introduce a second
rationalisation plan.
2. Avonmore plc. is a very profitable organisation. The
meat division in the Company has returned profits of
#2.8 million in the first six months of 1994.
3. The workers in the Company have given long service and
have been responsible for much of the Company's profit.
In the past, they have agreed to a 12 month pay freeze
and are presently 5% behind on basic wage of workers in
the Rooskey plant.
4. The Union's five point plan, if implemented, would save
#6,000 per week which is approximately what the Company
maintains is needed to save the plant.
COMPANY'S ARGUMENTS:
4. 1. The Roscrea plant carries the highest labour cost
structure within the Company's pig meat division. If
the Company is to be competitive, it will have to
significantly reduce labour costs. This can be achieved
by the implementation of the Company's nine point
rationalisation programme.
2. The pig meat industry has changed considerably in the
last number of years. New free trade regulations have
resulted in the introduction of imported products from
mainland Europe and has increased competitiveness in the
pig meat industry.
3. The main cause of the high labour costs is the current
bonus payment system. While the system was viable when
introduced in 1980, its present operation means that as
productivity falls, the actual yield element of the
bonus increases. Unit costs rise to over 30% in excess
of standard costs.
4. The Company's proposal for a piece rate system (basic
pay plus one third for 100 BSI performance), would allow
many workers to protect existing earnings. Where there
is insufficient work available to allow workers to earn
their basic weekly wage, the Company will pay the basic
weekly wage. The future of the plant is at risk if the
Company's proposals are not accepted.
RECOMMENDATION:
The matter before the Court has been the subject of numerous
Company/Union meetings and at least seven meetings at the Labour
Relations Commission.
The situation is now at the very serious stage of staff in the
Carrig Plant being on protective notice, and the Company
indicating to the Court that failure to reach agreement on the
required cost savings will result in Plant closure.
Over the past few months a number of issues have been added to the
original list, due to changing requirements and trading patterns.
Given the complexity and range of issues before the Court and the
requirement for an immediate recommendation, the Court believes
that it should make Recommendations in relation to the two issues
outlined by the Company as critical to reducing and controlling
costs, the Bonus system and Absence payments.
Obviously the other issues require resolution but given the stated
positions of the parties on the bonus issue, failure to reach
agreement on this matter makes agreement on the other issues
irrelevant. The Court, accordingly, recommends on the two issues
of bonus and absence as follows:-
BONUS
The system of production to constitute pay plus one third bonus
based on standards to be put forward by the Company. An
average adjustment of 1.8 - 2.0% on present standards to apply.
ABSENCE
The Company's proposals in relation to absentee control to be
introduced with immediate effect, subject to payment on the third
day of the sick pay scheme.
Finally, the Court would urge the parties to negotiate
meaningfully on the outstanding issues so that the employment of
the workers can be assured in a very difficult market sector. In
this context, the Court believes that a successful conclusion of
the negotiations would merit the Company increasing its overall
compensation package.
~
Signed on behalf of the Labour Court
28th July, 1995 Finbarr Flood
C.O.N./A.K. ----------------
Deputy Chairman
Note
Enquiries concerning this Recommendation should be addressed to
Mr. Ciaran O'Neill, Court Secretary.