Labour Court Database __________________________________________________________________________________ File Number: CD95377 Case Number: LCR14826 Section / Act: S26(1) Parties: EUROPLAST TEO. (THE IRISH BUSINESS AND EMPLOYERS CONFEDERATION) - and - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION |
Survival plan.
Recommendation:
The Court has fully considered all of the views expressed by the
parties in their oral and written submissions and can identify
with the scepticism expressed by the employees given the lack of
success of the previous programmes put in place.
However, given the current financial circumstances and the lack of
further resources it is the view of the Court that a package of
measures need to be put in place at an early date if the Company
is the have any chance of surviving and the employment to be
continued.
Accordingly given all of the circumstances the Court recommends
the following:-
1. That a pay cut of #30.00 per week be implemented.
Reinstatement of pay rates to be phased from a date to
be agreed in 1996.
2. That the "red-circled" rates of pay be eliminated.
3. That shift patterns as proposed by the Company be
implemented.
4. That compensation at 2 times the yearly loss be paid to
those affected under 2 and 3 above payment of the
compensation to be made on a weekly basis with effect
from 31st March, 1996.
5. That the parties agree to give effect to the required
lay-offs in such manner as will protect the maximum
number of jobs.
6. In the event of any disagreement with regard to the
implementation of the above package or if it has not
been put into effect by 31st July, 1995 the parties to
request a definitive recommendation from the Court.
7. The employees should be kept informed of the progress of
the survival of the Company from the date of
implementation of the package. A review of the
situation to be held on or before 31st March, 1996 when
agreement should be reached on a date for the
reinstatement of the pay cut.
Division: Mr McGrath Mr Keogh Mr Walsh
Text of Document__________________________________________________________________
CD95377 RECOMMENDATION NO. LCR14826
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
PARTIES:
EUROPLAST TEO.
(REPRESENTED BY THE IRISH BUSINESS AND EMPLOYERS CONFEDERATION)
AND
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
SUBJECT:
1. Survival plan.
BACKGROUND:
2. The Company is involved in the manufacturing of plastic bags
and film for distribution to retailers and wholesalers in
Ireland and the U.K.. It is a wholly owned subsidiary of
Udaras na Gaeltachta. The Company is located at Derrybeg,
Co. Donegal and employs 65 workers. Management has
implemented a number of restructuring programmes in recent
years, the most recent of which was effected in 1994 and
included a pay-freeze which was the subject of a Labour Court
hearing. The Court endorsed the pay-freeze and recommended a
review in February, 1996 (LCR14700 refers). Because of
increasing costs and severe competition in the marketplace
the Company now proposes a further, more stringent, survival
plan on the grounds that the previous plan has not been
effective and the Company continues to experience substantial
losses. Details of the Company's proposed survival plan are
as follows:-
1. 25 lay-offs in various departments.
2. Any department where workers are `red-circled' will
now revert to the appropriate rate for the job.
3. A #50 per week pay cut per employee.
4. The extrusion department to operate on a 5 day
basis as opposed to 7 days with corresponding drop
in shift premium.
5. Christmas bonus of #300 will be reduced to #150 for
1995 only.
The proposals were rejected by the Union. The dispute was
referred to the Labour Relations Commission and a
conciliation conference was held on the 21st June, 1995.
Agreement was not possible and the dispute was referred to
the Labour Court by the Labour Relations Commission on the
23rd June, 1995. A Court hearing was held on the 27th June,
1995.
UNION'S ARGUMENTS:
3. 1. The Union accepted the 1994 survival plan which involved
reductions in annual leave, bonus, sick pay shift
premium.
2. The Company's present survival proposals are totally
unacceptable and in some cases workers would be better
off financially unemployed.
3. Workers must be compensated immediately for loss of
shift premium in order that they may use the payments to
off-set debts and enable them maintain standards of
living.
4. Workers placed on long term lay off should be given the
option of a redundancy package not later than 3 months
after lay off in the event that there is no guarantee of
a return to work.
5. The Company's decision to cut workers' pay rates by 20%
is unreasonable and other means to reduce costs must be
found. Workers have already accepted substantial
reductions together with a pay-freeze until 1996. Any
further erosion of their pay would make it uneconomic
for them to work.
6. The workers are totally committed to the survival of the
Company. The Union feels however that the Company's
operation should be reviewed by consultants in
conjunction with workers and management so that whatever
survival plan is put forward on this occasion will be
effective and provide reasonably paid secure jobs for
the workers.
COMPANY'S ARGUMENTS:
4. 1. The Company's previous survival plan was not successful
because of the impact of the huge increase in raw
materials costs (64%), low volume order levels from
major supermarkets, and the loss of a major customer.
2. The Company has sustained substantial losses in recent
years (details supplied to the Court). There are no
reserves of cash to sustain the Company without
significant changes in work practices. Acceptance of
the Company's proposals by the workers is crucial if the
Company is to remain viable.
3. Management accepts that the workforce has made a
substantial contribution to the Company over the years.
Further concessions are essential. The workers concerned
have traditionally been paid higher wages than other
workers in the Derrybeg Industrial Estate. Even with
the weekly proposed pay reduction the workers will
maintain equity with other employees in the industrial
estate.
4. Management must effect savings from within the Company
in the ways outlined in the survival plan. There is no
possibility of a capital injection from outside sources.
5. The Company's position is critical. Rejection of the
current survival plan could mean an immediate wind down
of operations and liquidation.
RECOMMENDATION:
The Court has fully considered all of the views expressed by the
parties in their oral and written submissions and can identify
with the scepticism expressed by the employees given the lack of
success of the previous programmes put in place.
However, given the current financial circumstances and the lack of
further resources it is the view of the Court that a package of
measures need to be put in place at an early date if the Company
is the have any chance of surviving and the employment to be
continued.
Accordingly given all of the circumstances the Court recommends
the following:-
1. That a pay cut of #30.00 per week be implemented.
Reinstatement of pay rates to be phased from a date to
be agreed in 1996.
2. That the "red-circled" rates of pay be eliminated.
3. That shift patterns as proposed by the Company be
implemented.
4. That compensation at 2 times the yearly loss be paid to
those affected under 2 and 3 above payment of the
compensation to be made on a weekly basis with effect
from 31st March, 1996.
5. That the parties agree to give effect to the required
lay-offs in such manner as will protect the maximum
number of jobs.
6. In the event of any disagreement with regard to the
implementation of the above package or if it has not
been put into effect by 31st July, 1995 the parties to
request a definitive recommendation from the Court.
7. The employees should be kept informed of the progress of
the survival of the Company from the date of
implementation of the package. A review of the
situation to be held on or before 31st March, 1996 when
agreement should be reached on a date for the
reinstatement of the pay cut.
~
Signed on behalf of the Labour Court
13th July, 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.