Labour Court Database __________________________________________________________________________________ File Number: CD955 Case Number: LCR14700 Section / Act: S26(1) Parties: EUROPLAST TEO (THE IRISH BUSINESS AND EMPLOYERS CONFEDERATION) - and - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION |
Pay freeze.
Recommendation:
The Court in the light of the current trading and financial
constraints considers pursuit of the claim at this time is
inopportune.
The Court recommends the current arrangements should remain in
force and should be reviewed in February, 1996.
Division: Mr McGrath Mr Keogh Mr Walsh
Text of Document__________________________________________________________________
CD955 RECOMMENDATION NO. LCR14700
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. Pay freeze.
BACKGROUND:
2. The Company manufactures plastic bags for the retail and
wholesale markets in Ireland and the U.K. It is a wholly
owned subsidiary of Udaras na Gaeltachta and is located in
Derrybeg, County Donegal. It employs 65 workers.
In late 1993, early 1994, a major restructuring /
rationalisation programme was introduced and agreed. As part
of this programme the Company proposed a pay freeze until the
end of 1996, but the Union reserved the right to process
claims under the terms of the Programme for Competitiveness
and Work (PCW) through procedures.
The first phase of the PCW was due on 1st August, 1993 and
the second phase was due on 1st August, 1994. Local level
discussions took place but no agreement was reached and the
matter was referred to the Labour Relations Commission. A
conciliation conference took place on 14th October, 1994. As
no agreement was reached the dispute was referred to the
Labour Court under Section 26(1) of the Industrial Relations
Act, 1990. A Labour Court hearing took place in Donegal on
15th February, 1995.
UNION'S ARGUMENTS:
3. 1. Since 1981, the workers concerned have agreed four cost
reduction programmes which have reduced the workforce by
half, while substantially increasing productivity.
2. The pay increases agreed nationally under the terms of
the PCW are modest and take full account of the
requirement of employers to remain competitive.
3. The workers have made a considerable contribution to the
Company under the terms of the restructuring /
rationalisation programme (details supplied to the
Court). In the circumstances the Company's proposal of
a pay freeze is unreasonable and unacceptable to the
workers concerned.
COMPANY'S ARGUMENTS:
4. 1. Concession of the Union's claim would inhibit the
Company's ability to become profitable. The
rationalisation implemented in 1994, has failed, so far,
to significantly improve the Company's position.
2. The Company has not made a profit during the last four
years and losses have increased significantly. 1995 is
a critical year for the Company. Progress must be made
to ensure the survival of jobs. The Company cannot
entertain a wage increase before assessing its position
following the restructuring.
3. The trading situation of the Company is serious. From
February, 1995, it is losing two major customers. These
accounts valued at #1.5m p.a. or 35% of the business are
a devastating loss to the Company and are unlikely to be
replaced.
4. Imports from the Far East are damaging the Company's
share of the market. Raw materials costs have increased
dramatically in the last 12 months. The price of high
density and low density plastic has increased by 60%.
This increase cannot be recovered by a corresponding
sales price increase. To offset the increased costs in
sales prices would price Europlast products out of the
market.
5. The Company is looking at the possibility of
manufacturing new products at its Bunbeg plant. This is
currently at an experimental stage. A Joint venture
business project is also being sought. Negotiations are
ongoing but so far this option has not been successful.
6. Under the terms of Clause 3 of the PCW, annual increases
shall be negotiated "with due regard being had to the
economic and commercial circumstances of the particular
firm, employment or industry". In the current
commercial circumstances a pay freeze is essential to
assist the Company's survival in a highly competitive
environment.
RECOMMENDATION:
The Court in the light of the current trading and financial
constraints considers pursuit of the claim at this time is
inopportune.
The Court recommends the current arrangements should remain in
force and should be reviewed in February, 1996.
~
Signed on behalf of the Labour Court
7th March, 1995 Tom McGrath
F.B./D.T. _______________
Deputy Chairman
Note
Enquiries concerning this Recommendation should be addressed to
Mr. Fran Brennan, Court Secretary.