FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : TEDCASTLE AVIATION FUELS LIMITED (REPRESENTED BY THE IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Ms Owens Employer Member: Mr Keogh Worker Member: Mr Rorke |
1. Cost Reductions.
BACKGROUND:
2. The Company is located in Shannon Airport and has been operating a re-fuelling service on behalf of S.A.F. (Aer Rianta) since 1979. It employs 20 workers of whom 17 are engaged in re-fuelling and maintenance of equipment. Seven of these workers are permanently employed, with the remaining 10 on temporary contracts.
The dispute concerns a Company offer which would result in the 7 permanent workers accepting a £6,000 per year reduction in wages and benefits for a once-off payment of £26,000. In 1995, a similiar deal saw the workers (at that time 9) accept a reduction of £4,000 per year for payments ranging from £18,960 to £27,380. The Company advised the Union in 1996 that the reason for its decision was that Aer Rianta was insisting on lower contract costs.
In January, 1995, Aer Rianta re-negotiated terms with the Company for a 4-year period. The terms agreed were based upon an expectation of annual throughput of 52 million US gallons for the Company. The Company was forced to rationalise its cost structure and part of this rationalisation was the reduction of £4,000 per year for the 9 permanent workers and the subsequent early retirement of 2 workers. The Company, which had formerly operated 3 eight-hour shifts, now operats 2 twelve-hour shifts. In October, 1996, Aer Rianta appointed Hoyer Limited to fuel aircrafts in Shannon, thus creating competition for the Company. The Company's position is that it must implement a further cost-reduction plan similiar to the one in 1995.
The dispute was referred to the Labour Relations Commission and a conciliation conference took place on 10th June, 1997. As the parties did not reach agreement the dispute was referred to the Labour Court on 24th June, 1997, in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on 31st July, 1997, in Limerick.
UNION'S ARGUMENTS:
3. 1. The Company's buy-down of wages and benefits in 1995 should have been sufficient for the Company to remain profitable in Shannon. Almost as soon as the buy-down had been agreed, the Company announced that it had secured the largest re-fuelling contract at the airport i.e. Aer Lingus. The Company is now claiming again that it has to reduce wages and benefits. The fact that the Company has refused to disclose any financial details of its operations has created an atmosphere of distrust.
2. While workers at the Company are paid more than those at Hoyer Limited, they provide a greater service. They operate a 24 hour service every day including all public holidays whereas Hoyer workers operate a day shift service from 08.00 - 18.00 hours. Company workers are responsible for maintenance of all re-fuelling infrastructure, i.e. tank , re-fuelling lines, valves and vehicles. They also carry out quality checks and sampling of fuel. Hoyer workers are involved only in re-fuelling.
3. While the Union accepts that volume has reduced over the last 12 months it believes that the Company has exaggerated the situation in an effort to force the workers into accepting a second "buydown".
COMPANY'S ARGUMENTS:
4. 1. The Company expects to achieve throughput volume of 45 million US gallons for the years 1997 - 1999. This represents a drop of 25% per annum in volume as against previous years. Aer Rianta will only allocate the volumes if it is satisfied that the Company has implemented specific cost reductions totalling £180,000. The Company is seeking to achieve £42,000 savings through its present proposals on wage reductions.
2. If the Company's proposals are accepted it would mean a reduction in wages for permanent workers from £38,420 to £32,420 per annum. This reduced figure is still £7,000 greater than wages for Hoyer operatives. The Company's proposal of £26,000 compensation is over 4 times the loss and is very generous, given the Company's economic circumstances. The Company is also agreeable to put an amount per gallon into a bonus pool for gallons in excess of 45 million gallons throughput.
3. The Company is facing severe financial difficulties as a result of the ongoing drop in volume throughput and competition from a low-cost operation like Hoyer. There has been a reduction in long-haul flights at Shannon which has further reduced profitability. The Company is involved in a highly competitive business and it must reduce its wage structure if it is to remain viable.
RECOMMENDATION:
In the first instance, the Court wishes to record its concern that the Company held the view that it could not disclose financial information to the Union. This failure has led to understandable mistrust on the Union side. The information was, however, forwarded to the Court on a confidential basis. Whilst the Company's position is not unique, the Court considers that within the context of "Partnership" approach which has been embraced by all sides involved in industrial relations, parties to this type of dispute should explore ways and means of answering legitimate enquiries for relevant information.
Having examined all the evidence in the case, the Court recommends that the Union accepts the Company's proposals, subject to an increase in compensation to £28,000.
Signed on behalf of the Labour Court
Evelyn Owens
26th August, 1997______________________
C.O'N./S.G.Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Ciaran O'Neill, Court Secretary.