Labour Court Database __________________________________________________________________________________ File Number: CD95574 Case Number: LCR14980 Section / Act: S26(1) Parties: GAELTEX (Represented by THE IRISH BUSINESS AND EMPLOYERS CONFEDERATION) - and - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION |
Dispute concerning a bonus scheme.
Recommendation:
The Court considered all of the views of the parties as expressed
in their oral and written submissions and in subsequent
correspondence and finds that each week there are few employees
requiring an earnings "make up". However, the Court in analysing
the details given finds that there is great fluctuation in
earnings notwithstanding the scheme being described as a group
scheme. Further the Court finds that losses in the period in
question affected a range of employees.
It is also noted that the employees who incurred losses were
generally among those with the highest rate per minute under the
old scheme. It is the view of the Court that the incentive scheme
should provide the average representative worker with the
opportunity to obtain a reasonably consistent performance and
level of earnings.
If the scheme is to be accepted and full co-operation to be
forthcoming there is a need to monitor the scheme, identify the
cause of the fluctuations which are occurring and address them.
The Court notwithstanding the above recommends the scheme be
operated and the "make up earnings" be discontinued as follows:-
80% of the difference to apply for the first month following
issue of this Recommendation.
This difference to be reduced by 10% each month thereafter until
it is eliminated. Over this period the parties should keep the
scheme under review and address any difficulties which may arise.
At the end of this period the parties should review the operation
of the scheme.
Division: Mr McGrath Mr Pierce Ms Ni Mhurchu
Text of Document__________________________________________________________________
CD95574 RECOMMENDATION NO. LCR14980
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
PARTIES:
GAELTEX
(REPRESENTED BY THE IRISH BUSINESS AND EMPLOYERS CONFEDERATION)
AND
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
SUBJECT:
1. Dispute concerning a bonus scheme.
BACKGROUND:
2. The Company is involved in the manufacturing of children's
clothing mainly for the Irish and UK markets. It employs 85
workers. In January 1994 management changed the working
operation from a piece rate to a modular or group system.
Following negotiations with the Union the Company agreed to
pay the workers their historical averages from the piece rate
system for an agreed period in order to protect earnings. In
November, 1994 the Company proposed to phase out the average
payments commencing January, 1995. The Union rejected the
Company's proposal on the grounds that the workers could not
achieve targets and their earnings would be considerably
reduced. The dispute was referred to the Labour Relations
Commission and a conciliation conference was held on the 28th
September, 1995. Agreement was not possible and the dispute
was referred to the Labour Court on the 3rd October, 1995.
The Court investigated the dispute on the 12th October, 1995.
Subsequent to the hearing both parties submitted additional
information which was considered by the Court.
UNION'S ARGUMENTS:
3. 1. The workers accepted the new system on the clear
understanding that their earnings would be protected.
Agreement was reached that individual workers would be
paid their individual 'average' until such time as the
group performance exceeded the average. It was on this
basis that workers accepted the modular system and it is
only on this basis that it can continue. Rather than
gradually introduce the modular system the Company
placed all production on the modular system immediately.
Normal practice is to start with one unit on a
probationary basis and when problems are sorted out move
onto other units on an accelerated basis.
2. The workforce have made major sacrifices and accepted
substantial cuts in rates over the past five years.
They cannot be expected to accept further reductions and
will not do so.
3. The Union is agreeable to replacing the existing payment
system or the removal of 'averages' provided that they
are replaced by a fair and equitable system which does
not reduce workers' earnings.
4. The Company's arguments are difficult to understand.
Management states that the proposed changes are
essential to the future of the Company and in their
absence serious financial repercussions will follow.
They claim that only five/six workers' wages will be
reduced, making a total saving of £90 per week to the
Company. The Union cannot accept that £90 per week can
save the Company from closure.
5. The Company has made no serious effort to address the
problems that its proposals contain for the workers.
The Company must enter into meaningful discussions with
the Union if the problems are to be resolved.
COMPANY'S ARGUMENTS:
4. 1. The Company's trading position is precarious. It has
sustained substantial losses in recent years and these
continue to the present time. These must be addressed.
2. The order situation is healthy for the near future.
The Company cannot however continue a situation where a
handful of workers are paid more for production than
they actually achieve. This small number is preventing
the Company making progress.
3. There can be no reversion to a piece rate system.
Modular manufacturing is an accepted method of working
and it is the way forward for industry. Management
cannot now abandon this system after nearly two years of
hard work and considerable expense because a handful of
operators enjoy an unrealistic high average.
4. The Company's production targets are realistic.
Management rejects the claim that high numbers of
workers will suffer a loss of earnings. The Company is
prepared to offer compensation to the five/six workers
who stand to lose money under the new system. For
workers not involved in the modular system they will be
paid the piece-rate system without the need for
averages. The Company will consider allowances for
these workers where there is a manufacturing problem.
5. The Company rejects the need for a financial payment to
workers in the form of a buy-out. The workers have
experienced a form of buy-out for the past twenty
months.
6. Management is committed to securing the future of the
Plant and continued employment of the workers. They
must recognise the need for change and work accordingly.
The Company has tried over a long period of time to
withdraw the concept of historical averages. It is now
time to do so.
RECOMMENDATION:
The Court considered all of the views of the parties as expressed
in their oral and written submissions and in subsequent
correspondence and finds that each week there are few employees
requiring an earnings "make up". However, the Court in analysing
the details given finds that there is great fluctuation in
earnings notwithstanding the scheme being described as a group
scheme. Further the Court finds that losses in the period in
question affected a range of employees.
It is also noted that the employees who incurred losses were
generally among those with the highest rate per minute under the
old scheme. It is the view of the Court that the incentive scheme
should provide the average representative worker with the
opportunity to obtain a reasonably consistent performance and
level of earnings.
If the scheme is to be accepted and full co-operation to be
forthcoming there is a need to monitor the scheme, identify the
cause of the fluctuations which are occurring and address them.
The Court notwithstanding the above recommends the scheme be
operated and the "make up earnings" be discontinued as follows:-
80% of the difference to apply for the first month following
issue of this Recommendation.
This difference to be reduced by 10% each month thereafter until
it is eliminated. Over this period the parties should keep the
scheme under review and address any difficulties which may arise.
At the end of this period the parties should review the operation
of the scheme.
~
Signed on behalf of the Labour Court
28th November, 1995 Tom McGrath
T.O'D./D.T. _______________
Deputy Chairman
Note
Enquiries concerning this Recommendation should be addressed to
Mr. Tom O'Dea, Court Secretary.