Labour Court Database __________________________________________________________________________________ File Number: CD95301 Case Number: LCR14856 Section / Act: S26(1) Parties: WOODCHESTER CREDIT LYONNAIS BANK (THE IRISH BUSINESS AND EMPLOYERS CONFEDERATION) - and - IRISH BANK OFFICIALS' ASSOCIATION |
Disputes concerning (1) Merit increase, 1994. (2) Downgrading of supervisor positions. (3) Co-operation payment.
Recommendation:
5. 1. (1) Merit increase, 1994 -
The Court finds that the decision of the Board
regarding the merit award payment (clause 3 Briefing
Note for Managers, 1st November, 1994) was explicit and
allows of no other construction than that the payment
was to apply to all non-managerial staff who were
members of the permanent staff on 1st January, 1994.
The Court gave full consideration to the view expressed
by the Company that the memo was a briefing note and
was referred to an audience which did not include the
majority of those employees who had left the Company,
either through voluntary or compulsory severance and,
therefore, did not apply to those employees.
2. Given the explicit terms of Clause 3 of the Briefing
note and the attendance at the briefing of certain
employees (albeit a small number) who would be leaving
the Company, the Court finds that this interpretation
is unsustainable.
3. Further, the Court finds that in Industrial Relations
terms it is not unusual for Companies and employees to
complete their termination procedures while certain
issues still remain to be resolved.
4. The Court finds in this case that the employees, during
the redundancy procedures, were aware that the issue of
the 1994 merit award was in dispute.
5. The Court considers that it was consequently not
unreasonable for these employees, notwithstanding their
completing the termination procedures, to expect that
the outcome of deliberations on the issue would apply
to them.
6. Accordingly, the Court recommends that the merit award
should apply to all non-managerial employees in
permanent employment on 1st January, 1994.
(2) Downgrading of supervisor positions -
7. The Court finds that in the new structure there is no
provision for a supervisor and, accordingly, it should
be accepted that these posts have been eliminated.
8. With regard however to the salary of the occupant of
the eliminated position in Limerick there was an
expectation that the maximum salary level could be
achieved over a period of time.
9. Accordingly, the Court recommends for this person only
that, using the normal procedures and criteria for
assessing salary awards the job holder should be
permitted to advance to the maximum of the grade
previously held (#22,025).
10. In making this recommendation, the Court recognises
that this will take a number of years and also that the
job holder may attain promotion in the meantime.
(3) Claim for co-operation payments -
11. The Court does not consider that there are grounds for
concession of this claim and, accordingly, recommends
that it be rejected.
Division: Mr McGrath Mr Pierce Ms Ni Mhurchu
Text of Document__________________________________________________________________
CD95301 RECOMMENDATION NO. LCR14856
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
PARTIES:
WOODCHESTER CREDIT LYONNAIS BANK
(REPRESENTED BY THE IRISH BUSINESS AND EMPLOYERS CONFEDERATION)
AND
IRISH BANK OFFICIALS' ASSOCIATION
SUBJECT:
1. Disputes concerning (1) Merit increase, 1994.
(2) Downgrading of supervisor positions.
(3) Co-operation payment.
BACKGROUND:
2. 1. The Bank is the main Irish subsidiary of Woodchester
Investments plc. Its main activity is the provision of
small unit lease and investment finance products as well
as corporate lending and treasury activities. In 1994,
the Bank instituted a restructuring and rationalisation
programme which resulted in a commercial refocusing of
the business and an 18% reduction in employment numbers.
The Bank now employs 334 workers. Following the
implementation of the rationalisation programme, the
following disputes remained to be resolved by the
parties.
2. (1) Merit Increase, 1994
In addition to the National pay rounds, an annual merit
increase has applied in the Company since 1990. The
Company claimed inability to pay in 1994 and commited to
review the position when the half-yearly results were
known. The increase would normally apply from 1st
January. In November, the Company applied a 3.50% merit
pay increase to all workers then employed and not under
notice. The increase was backdated to 1st January,
1994.
The Union reluctantly accepted this, but contended that
the increase should have been applied to those who had
left between January and November (when the award was
finally paid) as part of, or supplementary to, their
redundancy packages.
(2) Downgrading of supervisor positions
Following the rationalisation programme, the structure
in large branches was changed leading to the elimination
of the supervisor position. In Cork and Limerick, two
supervisors whose positions were eliminated chose not to
take voluntary redundancy. There is no loss of salary
involved but there is a loss of grade (grade 4 to 3).
The Union is seeking compensation for the workers' loss
of grade.
(3) Co-operation payments
The Union is seeking a payment for the workers who
remained with the Company following the implementation
of the rationalisation programme. The claim is for a
recognition of the workers' "loyalty to the Company
through a difficult period and the exceptional demands
made of them in making the restructuring programme a
success". The Bank rejected the claim.
3. The claims were referred to the Labour Relations
Commission and a conciliation conference was held on
24th April, 1995. No progress was possible and the
claims were referred to the Labour Court under the terms
of Section 26(1) of the Industrial Relations Act, 1990
on 11th May, 1995. The Court investigated the dispute
on 11th July, 1995 ( the earliest date suitable to both
parties).
ASSOCIATION'S ARGUMENTS:
3. 1. (1) Merit increase, 1994
Since 1990 the Bank has applied the terms of the
National Programmes in addition to a merit increase.
The non-payment of a merit increase on 1st January, 1994
represented an abuse of an agreed salary structure. The
increase was eventually paid in November, 1994.
2. At a previous Labour Court investigation, the Bank
argued that it would not use the merit pay system to
reduce costs but rather to reward effort. This was
accepted by the Court. The payment of the merit award
is a condition of employment for workers in the Bank.
All workers employed by the Bank on 1st January, 1994
were entitled to the increase. This has already been
accepted by the Bank in its briefing note for managers
(details supplied).
3. (2) Downgrading of supervisor positions
The Bank did not state that the restructuring programme
would involve the downgrading of supervisors. There is a
significant difference in salary terms between the
supervisors' old grade of 4 and new grade of 3.
Although there is no immediate monetary loss, one of the
claimants' salary expectations has been severely
diminished (details supplied).
4. The workers attained the level of supervisor through
effort, commitment and performance. It is demotivating
to have the grade arbitrarily removed. The Association
is seeking for the positions to be red-circled on a
personal to holder basis.
5. (3) Co-operation payment
The Bank has already accepted the enormous contribution
made by its workers to the rationalisation programme and
the resultant increase in profitability. The programme
put great pressures on the remaining staff as a result
of staff turnover, introduction of new technology,
branch closure, product changes and the deferral of
merit payments.
6. The Bank is part of a very large and profitable group.
The workers are entitled to a similar payment to that
paid to similar workers in other financial organisations
following rationalisation.
BANK'S ARGUMENTS:
4. 1. (1) Merit increase, 1994
On 1st January, 1994, the Bank paid the first phase of
the Programme for Competitiveness and Work (PCW). It
was not in a position to pay a merit increase because of
a substantial overheads burden. The Bank undertook to
review its position on the publication of the half year
results and progress in respect of its costbase. On
28th November, 1994, the Bank paid an increase of 3.50% to
all its staff. The payment was made against a difficult
financial background on the basis that workers remaining
with the business on a long term basis should be given
the salary increase which they had expected.
2. The workers who left the Bank under the Voluntary
Severance Programme had no expectation of an increase
arising from the payment of a merit award. The terms of
severance were generous and accepted in full and final
settlement of all claims.
3. (2) Downgrading of supervisor positions
The re-organisation of the branch structure led to the
elimination of the supervisors' positions in Cork and
Limerick. At the time that the voluntary redundancy
package was offered, each of the job holders was aware
of the ultimate structure which was proposed for the
Cork and Limerick branches.
4. There is now no position at supervisory level in either
Cork or Limerick. There is no loss of income involved
for either worker. The Cork supervisor's salary is in
excess of the top of the supervisor salary scale. In
Limerick, the supervisor will take at least 5 years to
reach the maximum point of the scale in which her new
job is placed. She will be able to apply for higher
grade positions thus preserving her earnings potential.
5. (3) Co-operation payment
It is insensitive to suggest that additional payments
should be made to staff who retained their jobs when
almost 20% of their colleagues were made redundant.
This was part of a process to return the Bank to an
acceptable level of profitability.
6. Throughout its history the Bank has gone through
significant change. Staff within the Bank see change as
a normal part of their work. The changes required of
workers remaining in the business were no greater in
1994 than in many other years.
RECOMMENDATION:
5. 1. (1) Merit increase, 1994 -
The Court finds that the decision of the Board
regarding the merit award payment (clause 3 Briefing
Note for Managers, 1st November, 1994) was explicit and
allows of no other construction than that the payment
was to apply to all non-managerial staff who were
members of the permanent staff on 1st January, 1994.
The Court gave full consideration to the view expressed
by the Company that the memo was a briefing note and
was referred to an audience which did not include the
majority of those employees who had left the Company,
either through voluntary or compulsory severance and,
therefore, did not apply to those employees.
2. Given the explicit terms of Clause 3 of the Briefing
note and the attendance at the briefing of certain
employees (albeit a small number) who would be leaving
the Company, the Court finds that this interpretation
is unsustainable.
3. Further, the Court finds that in Industrial Relations
terms it is not unusual for Companies and employees to
complete their termination procedures while certain
issues still remain to be resolved.
4. The Court finds in this case that the employees, during
the redundancy procedures, were aware that the issue of
the 1994 merit award was in dispute.
5. The Court considers that it was consequently not
unreasonable for these employees, notwithstanding their
completing the termination procedures, to expect that
the outcome of deliberations on the issue would apply
to them.
6. Accordingly, the Court recommends that the merit award
should apply to all non-managerial employees in
permanent employment on 1st January, 1994.
(2) Downgrading of supervisor positions -
7. The Court finds that in the new structure there is no
provision for a supervisor and, accordingly, it should
be accepted that these posts have been eliminated.
8. With regard however to the salary of the occupant of
the eliminated position in Limerick there was an
expectation that the maximum salary level could be
achieved over a period of time.
9. Accordingly, the Court recommends for this person only
that, using the normal procedures and criteria for
assessing salary awards the job holder should be
permitted to advance to the maximum of the grade
previously held (#22,025).
10. In making this recommendation, the Court recognises
that this will take a number of years and also that the
job holder may attain promotion in the meantime.
(3) Claim for co-operation payments -
11. The Court does not consider that there are grounds for
concession of this claim and, accordingly, recommends
that it be rejected.
~
Signed on behalf of the Labour Court
3RD AUGUST, 1995 Tom McGrath
J.F./D.T. -------------
Deputy Chairman
Note
Enquiries concerning this Recommendation should be addressed to
Mr. Jerome Forde, Court Secretary.