LCR15433

SUBJECT:
1. Grading structure.


BACKGROUND:

2. In 1994, the Company entered into a review of its grading structure, with the Union, which represents general operatives in Irish Sugar, Erin Foods and Glenstone Quarries. The operations involved employ a workforce of approximately 400, plus seasonal workers. The review was carried out by the Irish Productivity Centre (IPC) which recommended a 5-grade structure in place of the existing 8-grade structure. In the new structure, 4 of the grades would be occupied with Grade 5 remaining unoccupied, to allow for future developments and changes. The parties agreed in relation to the IPC recommendation, but failed to agree on the placing of values on the different grades. The Union sought a top rate at an increased value and the retention of a relationship of 84% between the bottom and the top grades. The Company sought to retain the lower grades at present values and to provide increases for the higher grades.

The dispute was the subject of conciliation conferences under the auspices of the Labour Relations Commission, at which agreement was not reached. The dispute was referred to the Labour Court, on the 8th of October, 1996, in accordance with Section 26(1) of the Industrial Relations Act, 1990.


A Court hearing, which took place on the 25th of October, 1996, was adjourned following a dispute which arose concerning whether or not common rates would apply for the revised grades in each of the 3 Companies. The Union's position was that, in line with the "Privatisation Agreement" of March, 1991, uniform terms and conditions should apply. Agreement was reached between the parties, subsequently, that this would be the case and the Court hearing was resumed on the 10th of December, 1996.


COMPANY'S ARGUMENTS:

3. 1. The Union is seeking an across-the-board increase for all workers and its claim has nothing to do with grading. Should an employee at the top of the scale undergo a significant job change, the Union is seeking that a colleague at the bottom of the scale should receive 84% of the increased top of scale rate, even though his job has not changed.

2. Any claim for an across-the-board increase is a cost-increasing claim and is, therefore, contrary to the terms of Clause 6 of the Programme for Competitiveness and Work (PCW).

3. To date, the Company has honoured all its commitments under the PESP and PCW.

4. The Company acknowledges that there have been reductions in employee numbers. These reductions were, however, across all employee categories, and were obtained on a voluntary basis, and with the agreement of the Unions, including SIPTU, at a substantial cost to the Company.

5. As a result of the reduction in manning-levels in the categories represented by SIPTU, a large proportion of the remaining staff have benefited by way of upgrades, or lump sums, or both.

6. The Company has indicated its desire to commence discussions on a new method of payment incorporating an annualised hours system, as part of an overall Company/Union Agreement giving all employees an annual salary and other benefits including stability of earnings both year to year and campaign to off-season, with higher pensionable earnings, and more leisure time.

7. A grading review in Erin Foods cannot be justified on grounds similar to Irish Sugar but could be considered in the context of an "Improvement Programme" to secure the future of Erin Foods.

8. Erin Foods must be allowed the opportunity to complete the grading review and then negotiate and agree rates for the grades appropriate to the Erin Foods business requirements, including the "Improvement Programme".

9. The current regrading was initiated for specific circumstances at Irish Sugar, particularly for those claiming to be constrained at top of grades. No similar circumstances obtain at Glenstone Quarries where no such changes, or manpower reductions/productivity gains were attained. Glenstone Quarries had no proposals, or need, to conduct a grading review. While the grading structure can be changed, no cost increases can be sustained by Glenstone. Any overall increase in rates of pay could put the business, and jobs, at risk.




10. The Union contention that the Privatisation Agreement requires the automatic extension of changes in rates of pay and conditions from one company to another, is rejected. It does not take cognisance of the commercial requirements of each company to ensure that its cost base/competitive position is capable of ensuring its long-term competitiveness or survival.

11. In its definition of "the Company", the Union has sought to suggest that a single entity exists when, in reality, there are three separate and distinct companies operating in three distinct markets with totally different influencing factors. No other justification for a pay increase in Erin Foods and Glenstone Quarries has been put forward by the Unions. There has been no claim that difficulties exist in the grading structure in Erin Foods and Glenstone Quarries and, therefore, no justification for a pay increase exists.

12. The Companies have, reluctantly, agreed to common rates. In the context of both the key issue of competitiveness and the application of common rates, the Company offer, which is made without any percentage linkage between the grade rates, of £5.00 per hour(Grade 1), £5.20(Grade 11), £5.55(Grade 111), £6.05(Grade IV), is both fair and reasonable.


UNION'S ARGUMENTS:

4. 1. The key grade by which other grade rates are established, through agreement, is the top grade, formerly Grade 8, and under the proposed new structure the top occupied grade ,i.e, Grade 4. Over the years, the Company has used the grading structure, effectively, to keep pay rates depressed, despite the massive changes which have occurred in terms of technology, rationalisation, productivity and job-losses (details supplied to the Court). These productivity increases have been achieved at the same time that the workforce has dropped from around 1,600 to the current levels.

2. The profitability of the Company has shown corresponding improvements. Profit before tax increased from £23,381,000 in 1991 to £47,029,000 in 1995.

3. The workforce has not benefited from these improvements, receiving only their entitlements under the various National Plans - the PNR, the PESP and the PCW.
Meanwhile, the top management of the Company has benefited very considerably in terms of their remuneration (details supplied to the Court). The same management, however, has rejected the Union's claim for a basic annual wage which would equate to only three weeks' wages for some members of management.

4. The Union has always been conscious of the generally poor levels of pay of its members when compared to other employments which are similar in terms of the processes involved and the levels of skill, knowledge, use of technology, etc., which they demand (details supplied).




5. While the Union was not particularly surprised at the Company offer on the grade rates, being accustomed to its minimalist approach, what was astonishing was the feigned shock of the Company at the Union's presumption that changes at the top of the grade scale would have a knock-on effect on the lower grades. This issue had not arisen during the discussions leading up to the regrading exercise, and was not raised by the Union as the question of relativities between the grades was covered by an agreement reached subsequent to, and quite separate from, the 1979 Grading Scheme. This agreement provided for fixed relativities between the grades, with a provision that Grade 1 be not less than 84% of Grade 8. It should be pointed out that this agreement was arrived at in order to accommodate the Company's requirements at the time, and was at all subsequent times recognised as an absolutely fundamental element in the pay structure.

6. There was never any question of the relativity principle being compromised in the course of the Review Exercise. This issue is now being raised in a very cynical way by the Company, the main consideration being the impact of new grade pay in Erin Foods and Glenstone Quarries. There is no equivocation involved on the Union side. The minimum relationship between the grades is a mechanism to preserve reasonable equity within the reward system.

7. The Union believes its claim to be well-based, justified and affordable. Over the years, when the Sugar Company operated in the context of a wider social remit, with the creation and maintenance of jobs being a primary concern, the pegging of pay at quite low levels was tolerated. In the new culture of corporate greed where the new private owners are benefiting from the investment of Irish taxpayers and the sacrifices of the Sugar Company employees over the years, workers are no longer prepared to accept the existing levels of pay and are insisting on fair treatment.


RECOMMENDATION:

The Court considered carefully the written and oral submissions made by the parties at the Court Hearings.

It is clear that a number of issues on both sides are preventing realistic negotiations taking place between the parties.

Examples of these issues are:

(a) the Union claim for common grading rates across the three Companies and fixed percentage relativities between the grades

(b) the Company requirement for competitiveness in each Company and its wish to negotiate the introduction of annualised hours.

It is difficult for the Court to identify an appropriate rate for the grades proposed without the benefit of a detailed study.

However, the Court is satisfied that the offer on the table currently is not sufficient given the background to the regrading. The Court is equally conscious of the Company concerns and constraints arising from having to pay the same figures in all 3 companies regardless of the business consequences.

Taking into account all the issues involved, the Court recommends the following as a basis of resolving this impasse:

(1) The Company to review its offer and to make a new proposal.

(2) The Union, in return, to agree to enter into discussions on the Company's proposal for a new payment system including annualised hours.

(3) If the parties fail to reach agreement the Court will, taking into account all the issues above, make a Recommendation on the rate of pay per grade.





Signed on behalf of the Labour Court



Finbarr Flood
16th of January, 1997______________________
M.K./S.G.Deputy Chairman



NOTE

Enquiries concerning this Recommendation should be addressed to Michael Keegan, Court Secretary.