FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : CAHILL MAY ROBERTS LIMITED - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Mr Flood Employer Member: Mr Pierce Worker Member: Mr O'Neill |
1. (1) Basic rate (2) compensation for loss of earnings (3) redundancy terms (4) self drive (5) early retirement (6) pension.
BACKGROUND:
2. Cahill May Roberts is a wholly owned company of the German based GEHE Group. It operates out of 6 branches nationwide ( Dublin, Carlow, Cork, Limerick, Sligo, and Cavan). During the past 12 months negotiations have taken place in relation to the Company's rationalisation/restructuring proposals. As part of the plan the Company is seeking a reduction in the number of branches from 6 to 3 with a loss of approximately 72 jobs and changes in work practices in the branches which remain open. The branches to close would be Carlow, Cavan and either Cork or Limerick. The issues before the Court are:-
(1) basic rate;
(2) compensation for loss of earnings;
(3) redundancy terms;
(4) self drive;
(5) early retirement;
(6) pension.
Some of the issues in dispute are common to all branches while others are particular to the Dublin branch. The issues which relate to the Dublin branch were the subject of a separate Labour Court hearing on the 16th of October, 1997.
Currently the employees work 38.75 hours per week and are paid a basic rate of £4.69 per hour. In addition to this various bonus arrangements are in place which increases the rate to approximately £7 per hour. The Company's position in relation to the items in dispute are as follows:
(1) Basic Rate:
Basic rate of £6.13 per hour (post the 2.25% increase under the last Partnership 2000 increase), for full time employees and £4.80 for part time employees.
(2) Compensation for Loss of Earnings:
18 months loss subject to a maximum of £10,000.
(3) Self Drive:
Under the self drive scheme employees who would become redundant under the plan are offered the opportunity of taking contracts for distribution.
Given that the workers are offered a generous future income under the self drive contract, the offer of 4 weeks pay per year of service plus statutory entitlements with a maximum cost to the Company of £20,000 is put forward in an effort to help employees choose this option.
The standard redundancy package is available to employees who do not wish to avail of the offer of self drive contracts.
(4) Redundancy Terms:
The agreed redundancy package paid in the past by the Company was 4 weeks per year of service plus statutory entitlements subject to a maximum cost to the Company of £28,000.
The current offer increases this maximum by 14.3% to £32,000 for wages staff. The Company agreed in conciliation to increase the salaried staff maximum by the same percentage.
The Company recognises that there was a separate agreement in Chapelizod which was agreed in 1994 but has never been paid.
(5) Retirement Scheme:
Due to the individual circumstances it is not possible to present to the Court a single proposal which covers all the employees affected.
Listed below are the criteria which would be applied and the Company offers individual advice for those employees wishing to consider this option:
- Scheme will be beneficial for most people over 57.
- A lump sum will be made on departure.
- That lump sum to be no greater than either -
net earnings from departure to normal retirement date or
any lump sum which would be payable under a redundancy situation.
- Social Welfare is taken into account in the determination of "net earnings".
- If an offer of other "part time" work within the Company is made, it will be taken into account in the determination of "net earnings".
- The Company will maintain a pension based on years service up and
including normal retirement age.
- The pensionable pay will be based on pay at the time of departure.
- The Company will provide an expert in this area to explain the calculations and benefits to affected individuals.
(6) Pension:
The Company operates a defined benefit non-contributory pension scheme for permanent employees.
The pension that applies to full time warehouse and distribution staff is currently different in many of the locations. Under the terms of this offer regarding pay rates, pension will increase for all current full time employees, substantially for some.
The pension will be based on pay of £12,351 (£6.13 per hour), giving rise to a pension of £4,334, an increase of almost 20% in some cases for full time warehouse and distribution employees. The pension for all other employees remains the same.
The new pension will be applied to all full time employees to cover their full pensionable service. This is of greater benefit to those closer to retirement but is a benefit to all.
Qualification rules to the pension scheme will remain unchanged.
The matter was referred to the Labour Relations Commission. A conciliation conference took place on the 13th of October, 1997. As agreement could not be reached the dispute was referred to the Labour Court on the 30th of October, 1997 under Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 21st of November, 1997.
UNION'S ARGUMENTS:
3. 1. The Company is seeking to rationalise and re-organise at the expense of the workers concerned. It proposes to do away with the bonus scheme and overtime working, introduce a new lower rate of pay and at the same time expects the workers to take on extra responsibilities. In the circumstances the Union is seeking £8. per hour.
2. Incidental overtime is worked by the majority of the employees at all locations. There is no limit on the amount of overtime worked and therefore there should be no cap on the amount of compensation paid. The Union's claim is for compensation for the total loss of overtime with no cap, the period for compensation to be 104 weeks.
3. The redundancy terms on offer of 4 weeks pay per year of service with a cap of £32,000 is unacceptable. There is an agreement in Chapelizod which yields 5 weeks pay per year of service with a cap of £40,000. plus statutory entitlement . The Union is seeking 8 weeks pay per year of service plus statutory entitlement and no cap.
4. The Company's offer in relation to self drive is not realistic since the terms and conditions do not stand up to examination. Some of the workers concerned had these terms examined by experts in this area who found the terms to be unreasonable.
5. All employees, irrespective of grade, location, and other job offers must receive the same redundancy terms.
6. There has been no genuine effort on the part of the Company to encourage or attract employees to opt for early retirement. Workers availing of early retirement must receive the same redundancy terms as everyone else.
7. Cahill May Roberts is a highly profitable Company. Its parent Company is a German based multi-million pharmaceutical group. The Company's plan is designed to increase its profits substantially at the expense of jobs and the rates of pay and conditions of employment of the workers.
COMPANY'S ARGUMENTS:
4. 1. The Company must return to a competitive position which has been eroded by the changes in the retail market, the restrictive practices of the workforce and the more favourable labour costs enjoyed by the competitive companies within the industry.
2. The total investment of £5 million is considerable in an industry which survives on a net margin of 1.5%. In addition the payback period is a minimum of 5 years and the Company therefore cannot proceed without the full agreement and commitment to the plan by all of its employees.
3. The rates of pay on offer will be the highest in the industry and the offer of compensation is greatly in excess of any compensation paid in the pharmaceutical wholesale industry.
4. The Company has allowed an extended period of time for these discussions as detailed. However the Company must now implement its plan to redress its competitive position and provide a platform from which Cahill May Roberts may once again provide a return to its shareholder.
RECOMMENDATION:
The Court having considered the written and oral submissions of the parties recommends as follows on the issues in dispute:
(1)Basic Rate:
The proposed basic rate of £6.13 per hour to be increased to £6.30 per hour.
(2)Compensation for Loss of Earnings:
The Company's offer of 18 months loss with maximum of £10,000 to be increased to 21 months and £15,000 maximum.
(3)Redundancy Terms:
Redundancy terms to be 5 weeks pay per year of service plus Statutory Entitlement subject to a maximum of £40,000.
(4)Self Drive:
Terms and Conditions to be as outlined in the Company's submission (appendix 10) to the Court but the 4 weeks pay per year of service to be increased to 5 weeks with maximum remaining at £20,000.
(5)Early Retirement and Pension:
The Court does not recommend any change to the Company's proposals in these areas.
In return for the above mentioned packages the employees to accept the Company's proposals, including agreement on a new Labour Agreement, discussions on this to be finalised over the next four weeks.
Signed on behalf of the Labour Court
Finbarr Flood
22nd December, 1997______________________
F.B./S.G.Deputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Fran Brennan, Court Secretary.