Labour Court Database __________________________________________________________________________________ File Number: CD956 Case Number: LCR14684 Section / Act: S26(1) Parties: IRISH CEMENT LIMITED - and - IRISH CEMENT UNION GROUP |
Claim for additional payments resulting from the amortisation of costs in "Pot".
Recommendation:
The Court has in several recommendations in the recent past
expressed a view that the parties should endeavour to negotiate a
buy-out of "Pot". Whilst still of this view, the Court must take
cognisance of the industrial relations reality pertaining to the
plant.
On this occasion the Union side produced documentation in support
of their claim that it was originally intended, that on review
after 5 years, additional savings achieved would be added to the
"Pot". This they suggest is new evidence which they believe would
have altered the Court's view as expressed in LCR13343.
The Court has examined carefully all the evidence submitted and in
particular the ICTU document REF No. 8305/1147. Much of the
information in this document formed part of the Union's prior
submission which resulted in LCR12206 of 9th January, 1989.
The Court has examined the claim for increasing the "Pot" and does
not find such a claim sustained. Accordingly, if agreement on
"buy-out" cannot be reached, payment of "Pot" at existing level
should continue.
The Court, as stated above, is still of the view that an effort
should be made by the parties to endeavour to negotiate an
acceptable buy-out of "Pot".
Division: Ms Owens Mr Pierce Mr Rorke
Text of Document__________________________________________________________________
CD956 RECOMMENDATION NO. LCR14684
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
PARTIES:
IRISH CEMENT LIMITED
AND
IRISH CEMENT UNION GROUP
SUBJECT:
1. Claim for additional payments resulting from the amortisation
of costs in "Pot".
BACKGROUND:
2. 1. In 1984, the Company launched a major rationalisation
scheme which reduced staffing levels at the Company's
plants at Drogheda, Limerick and Dublin. It was agreed
that the savings, after certain costs had been offset,
would be shared three ways, by customers, workers and
the Company. This arrangement became known as the "Pot"
agreement.
2. Under the agreement, the workers remaining in the
Company would receive a payment of #4.85 per worker
who left under the redundancy scheme. The payment was
linked to the consumer price index (C.P.I.). and was
limited to 210 redundancies. Following a Labour Court
Recommendation in 1989, the payment was extended to a
further 70 jobs lost under the Company's survival plan
(LCR12206 refers).
3. The parties agreed to review the "Pot" agreement in July
1989. The Union submitted a claim for an increase in
the payment of #2.53 per redundant worker. This would
involve an increased bonus payment of just over #700 per
year per worker. The Company rejected the claim.
4. The claim was referred to the Labour Court and on 9th
July, 1991, the Court issued LCR13343 which rejected the
Unions' claim and recommended that the parties meet to
discuss the immediate elimination of the "Pot" payments.
5. In September, 1992, the Court considered a claim for the
implementation of the 3% local bargaining increase from
the PESP and the "Pot" payment. LCR13838 was issued on
9th November, 1992 and it recommended inter-alia
"It is clear to the Court that the issue of the
"Pot" prevented any realistic negotiations taking
place on the implementation of Clause 3 of the
PESP. In order to allow such negotiations the
Court considers that the "Pot" payment issue has to
be addressed in the first instance.
The Court accordingly recommends that both sides
accept that the existing "Pot" payment of #1,700
per annum be retained for the time being under the
conditions presently applicable, the matter to be
reviewed again in 12 months time."
6. The dispute was re-activated and again referred to the
Labour Relations Commission. Conciliation conferences
were held on 16th December, 1994 and 3rd January, 1995.
The basis of the Unions' claim was that the initial
costs involved in the rationalisation plan, such as
redundancy payments and capital investments, have now
been written off and the workers should share in the
resulting benefit by having the "Pot" increased. The
Unions' estimate of the value of this is #700 per annum
per person.
7. In support of its claim the Union produced a letter of
24th July, 1986 from the then Personnel Director to the
Irish Congress of Trade Unions which stated inter-alia
"The balance of the funding required will not be
charged to the savings now, but will be deferred
until the end of the amortisation period of the
scheme, when it will be a first charge on the extra
savings which will then become available."
The Unions claim that had the Court been aware that
there was a commitment to a share of extra savings, it
would not have recommended the abolition of the "Pot"
payments in the manner in which it did. The Company
wishes to eliminate "Pot" by negotiating terms to buy it
out.
8. The parties could not agree a basis for the resolution
of the dispute and under the terms of Section 26 (1) of
the Industrial Relations Act, 1990, the Commission
referred the dispute to the Labour Court on 5th January,
1995. The Labour Court investigated the dispute on 6th
February, 1995.
UNIONS' ARGUMENTS:
3. 1. The claim for additional payments arises from an
increase in the pool of savings following the end of the
amortisation of the Rationalisation Scheme. The claim
was the subject of an earlier investigation by the Court
following which LCR13343 issued. Important new evidence
(details supplied) has emerged which, had it been
available to the Court in 1991, would most likely have
led to a different recommendation. Having regard to the
facts now available, the Unions are requesting the Court
to examine the merits of the Unions' claim "de novo".
2. The claim concerns an interpretation of an agreement
made in 1986. This was before the PNR, the PESP or the
PCW. If the Court finds in the Unions' favour, it will
be confirming the arrangements previously agreed to
between the parties in respect of the self-financing
productivity scheme.
3. In respect of amortisation, the relevant correspondence
is that dated 24th July, 1986 which was a letter
recording understandings arrived at, through
negotiations, and which confirmed that extra savings
would become available at the end of the amortisation
period. It is clear that the Company's understanding at
the time of the agreement is in line with the Unions'
present case.
4. The "Pot" arrangements allowed substantial savings for
the Company. Since 1991, the Company's profitability
has improved and both of its plants are working at full
capacity with no increase in its labour force. The
Unions believe that LCR13343 failed to address the core
issue i.e. whether or not the agreement allowed for the
"Pot" to be increased subsequent to the end of the
amortisation period.
COMPANY'S ARGUMENTS:
4. 1. The Unions' claim is significantly cost-increasing and
if conceded will add substantial costs to the Company
(details supplied). The claim is in breach of the terms
of the PCW and the PESP. Any concession of the claim
would have repercussions for the group as a whole. The
Company's position was spelt out clearly in its letter
of 5th December, 1985 in which it stated inter-alia
"No commitment can be entered into at this time as
to what changes, if any, might be warranted at the
end of the 5 year amortisation period."
2. The Unions' claim is without merit and has been already
been adjudicated upon by the Labour Court. It is
unreasonable of the Unions to submit a cost-increasing
claim at a time when the Company has received only 3
price increases since 1984. During the same period,
wages have increased dramatically. In an increasingly
competitive market, the Company's labour costs are out
of line with its competitors (details supplied).
3. The Unions should consider the offers tabled by the
Company (details supplied) which will enhance the
Company's position and the workers' earnings.
RECOMMENDATION:
The Court has in several recommendations in the recent past
expressed a view that the parties should endeavour to negotiate a
buy-out of "Pot". Whilst still of this view, the Court must take
cognisance of the industrial relations reality pertaining to the
plant.
On this occasion the Union side produced documentation in support
of their claim that it was originally intended, that on review
after 5 years, additional savings achieved would be added to the
"Pot". This they suggest is new evidence which they believe would
have altered the Court's view as expressed in LCR13343.
The Court has examined carefully all the evidence submitted and in
particular the ICTU document REF No. 8305/1147. Much of the
information in this document formed part of the Union's prior
submission which resulted in LCR12206 of 9th January, 1989.
The Court has examined the claim for increasing the "Pot" and does
not find such a claim sustained. Accordingly, if agreement on
"buy-out" cannot be reached, payment of "Pot" at existing level
should continue.
The Court, as stated above, is still of the view that an effort
should be made by the parties to endeavour to negotiate an
acceptable buy-out of "Pot".
~
Signed on behalf of the Labour Court
21st February, 1995 Evelyn Owens
J.F./D.T. ____________
Chairman
Note
Enquiries concerning this Recommendation should be addressed to
Mr. Jerome Forde, Court Secretary.