FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 13(9), INDUSTRIAL RELATIONS ACT, 1969 PARTIES : FRUIT OF THE LOOM (REPRESENTED BY THE IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Ms Owens Employer Member: Mr McHenry Worker Member: Mr Rorke |
1. Appeal against Rights Commissioner's Recommendation No. DC164/96 concerning claim for compensation for loss of earnings.
BACKGROUND:
2. The Company manufactures and distributes T-shirts and sweatshirts to the European market. It employs 2,600 workers at four locations in County Donegal. The two workers concerned are employed by the Company as machinists on sweatshirt production.
In late 1995 following a method change in relation to the manufacture of sweatshirts, the job previously performed by the two workers concerned 'Join Shoulders' was replaced by a new combined operation of 'Join Shoulders and attach neck'. The two workers transferred to the new operation.
The workers were afforded the normal allowance for major method changes of five weeks at average earnings followed by a run-in allowance of a further five weeks on a graduated downward basis, following which they were paid on the basis of performance on the new rate.
As a result of the changeover the workers suffered average losses of £107.14 and £144.45 per week respectively The workers sought a transfer on a number of occasions in an effort to alleviate their problem. Due to an embargo on recruitment the Company was not in a position to transfer the workers until January, 1997.
The Union referred a claim for compensation for loss of earnings to a Rights Commissioner for investigation and recommendation. The Rights Commissioner's findings and recommendation are as follows:-
"I find this claim by the Union, to be totally contradictory to their declared acceptance of the cushioning arrangements in force, in relation to the maintenance of average earnings when a change in a production pattern is introduced. Furthermore, the Company responded positively to a request from the Union for an extension of those arrangements, in favour of the claimants, but it is also significant that the Union's Industrial Engineering Officer, in pursuing such a course, clearly acknowledged that the Company's standards were acceptable.
On that basis I am satisfied that there are no substantive grounds for these claims by the workers, and I therefore recommend that they fail."
The workers were named in the Rights Commissioner's Recommendation.
The Rights Commissioner's Recommendation was appealed by the Union to the Labour Court on 16th of May, 1997 under Section 13(9) of the Industrial Relations Act, 1969. The Labour Court heard the appeal on the 3rd of September, 1997.
UNION'S ARGUMENTS:
3. 1. Losses in earnings of approximately £107 and £144 per week experienced by the two workers are massive by any standards, representing a virtual halving of their wages. This is unprecedented both in Fruit of the Loom and elsewhere.
2. During the Rights Commissioner's hearing the Company argued that earnings in the clothing trade were based on performance level and incentive bonus payment, and that earnings fluctuated up and down all the time. Workers do accept some fluctuation in wages based on performances. However, neither the Company nor the Rights Commissioner took sufficient account of the fact that the losses in this case were not caused by fluctuations in performances, but by decisions made by the Company and were thus outside the control of the workers.
3. The Company acknowledge that during the period in question many internal transfers took place. Vacancies were available and the option to transfer was open to the Company.
4. Much was made by the Company during the Rights Commissioner's hearing of the fact that the workers had received, through the use of the running in period, more than ample time to achieve the targets set by the Company. In accepting this argument the Rights Commissioner did not take sufficient account of the fact that the payment of averages for five weeks, followed by a further five week running in allowance, is an acceptance by the Company (and the industry generally since these payments are almost universal) that the level of earnings which applied before the changeover should continue to be achievable.
5. No worker should be expected to sustain the levels of losses as outlined in this case because of changes in work methods introduced by his/her employer. It is a reasonable expectation on the part of employees that their level of income will be maintained and workers naturally plan their lives and their finances on that basis. Such a change as happened in this instance is grossly unfair.
6. The Company and the Rights Commissioner also laid great emphasis upon the fact that the Union's Industrial Engineering Officer had assessed the standards in this case and found them acceptable. An Industrial Engineer assesses standards with a view to ascertaining whether or not the average qualified worker, operating under incentive conditions and with due allowances, can reach standard performance. It takes no account of the standards applying to the previous job or the level of earnings achieved before the changeover.
7. It also fails to take sufficient account of the fact that the introduction by the Company of much tighter rates in one area may well reflect the fact that management felt that the old rates were too loose. However the old rates were applied by management and not by employees. Therefore the levels of earnings achieved under those rates, and upon which the workers planned their finances should have been maintained.
8. There is a serious precedent involved for the Union in this case. Had it accepted the Rights Commissioner's Recommendation it may be expected to accept massive cuts in members earnings whenever the Company introduces a method change. This is something it cannot accept.
9. There are ample precedents for compensation for loss of earnings both within the Labour Court and elsewhere where such losses are caused by change implemented by the employer. In the circumstances the Union is seeking compensation of £4,928.44 and £6,016.90 respectively to the two workers concerned.
COMPANY'S ARGUMENTS:
4. 1. Given the nature and scale of the Company's employment, concession of the claim on behalf of both claimants would have a serious knock-on effect within the Company and would seriously restrict the Company in the manner in which it adopts method changes or style changes. This would be anti-competitive and do nothing to improve the position of the Irish operations in the eyes of its parent given the scale of competition from low cost producers in the Far East, Pacific Rim, Eastern Europe and North Africa.
2. Given the nature of employment in the industry earnings fluctuate considerably having regard to the methods and styles used, and in addition but no less importantly, to the motivation of individuals and their own effort. It is important to note that at the end of 1995 when both claimants were moved on to the 'Join Shoulders and attach neck', no other work was available for them.
3. During the course of their assignment to the operation in 1996 both claimants' performances were consistently below that of their colleagues within the unit performing the same operation. Apart from that unit only one other unit in the Company's Raphoe Plant had the same style and operation where performances of 110/111% have been recorded by employees after a short number of weeks.
4. In facilitating the transfer to the combined operation the Company afforded normal arrangements regarding payment of average to both claimants. The rate was checked, verified and accepted by the Union's Industrial Engineering Department and the Company implemented the Union's recommendation for the extension of those arrangements.
5. The underperformance of the claimants was largely driven by their dislike for the job which of itself was a disincentive to perform. This was compounded given their request for a job change which took some months to resolve. It would hardly have seemed credible to persist with the request if at the same time job performance had been improving. The Company did everything which could be reasonably expected of it to assist the claimants' performance. At no stage has any impediment to job performance been cited to the Company by the claimants.
DECISION:
Having considered the submissions from the parties, the Court has concluded that the Rights Commissioner's Recommendation is not unreasonable in the circumstances and accordingly should be upheld.
The Court according rejects the appeal and so decides.
Signed on behalf of the Labour Court
Evelyn Owens
1st October, 1997______________________
F.B./D.T.Chairman
NOTE
Enquiries concerning this Decision should be addressed to Fran Brennan, Court Secretary.