FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : ALLEGRO (REPRESENTED BY THE IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - MARINE, PORT AND GENERAL WORKERS' UNION DIVISION : Chairman: Mr McGrath Employer Member: Mr McHenry Worker Member: Ms Ni Mhurchu |
1. Cost reduction measures; new work practices.
BACKGROUND:
2. The Company is the largest distributor in the ambient grocery sector serving the retail and wholesale market. It employs approximately 300 workers. The dispute relates to the Company's proposals for major cost reductions and changes in work practices which are set out in a draft new Operating Staff Agreement (details to the Court). The main features of the agreement are the introduction of annualised hours, shift working and significant flexibility. The implications for workers are loss of earnings, new attendance patterns and the liability to be assigned to any job on a daily basis. All existing Company/Union agreements would be superseded by the new agreement. The Company maintains that the changes set out in the new agreement are essential to remain viable and competitive. The Union rejected the proposals. The dispute was referred to the Labour Relations Commission and a conciliation conference was held on the 1st of September, 1997. Agreement was not reached and the dispute was referred to the Labour Court by the Labour Relations Commission on the 4th of September, 1997. A Court hearing was held on the 22nd of September, 1997. A letter recommendation was issued on the 24th of September, 1997.
UNION'S ARGUMENTS:
3. 1. In February, 1997, the Company and Union negotiated an agreement entitled "Allegro - The Future". Management stated it was a revolutionary agreement which would allow the Company pursue its business in a flexible way in future. Following the acquisition of Quinnsworth by Tesco the Company informed the Union that it would be necessary to review the agreement in light of the changed market. The new agreement presented to the Union was rejected in its entirety in July, 1997. The document proposed fundamental contractual changes in total contrast to the agreement in February, 1997. It would undermine contracts and decrease ability to earn by an average of approximately 30%.
2. The Company has been unable to confirm that any arrangements have been made between itself and its principals or, itself and Tesco. Yet the Union is asked to concede major areas of workers' contracts based on ill-defined hypothesis. The Company has been viable in its operations over the years and made a large capital investment in its plant. It has secured a dominant positioning in the logistics industry business with the assistance of workers’ flexibility.
3. The concept of annualised hours as proposed is unacceptable, and undermines workers' contracts. The agreement of February, 1997 allows the Company to service its business in conjunction with whatever requirements are made upon it by its principals and the trade generally.
4. The Company proposals indicate the level of wage reduction required, no references are made to increases in productivity, flexibility and co-operation over the period. The Company has introduced new performance standards in the absence of a work study which would decrease those standards by 7% and consequently decrease earning power by in excess of 7%. The Company also proposes that the final phase of the Programme for Competitiveness and Work and the initial phase of Partnership 2000 will not be paid, and debar any discussion under the Local Bargaining Clause of Partnership 2000, Phase 2. This is not acceptable to the Union.
5. A number of issues in both documents are acceptable to the Union (details supplied to the Court). The Union contends that the agreement negotiated in February, 1997 should remain intact.
COMPANY'S ARGUMENTS:
4. 1. A major portion of the Company's business is with Quinnsworth. Tesco which has taken over Quinnsowrth is now examining all its sources and methods of supply. Among the options it has are to continue the present arrangement with Allegro, open its own central warehousing facility and by-pass distributors, or arrange supplies direct from manufacturers. The Company has been asked by Tesco to supply costings and is convinced that if it was to quote business on the basis of current costs and work practices it would not be competitive and would have no hope of retaining the business. The Tesco developments also have broader implications in that other companies in the business will react to Tesco's approach.
2. The options facing the Company are to get costs and work practices in order and to be competitive or stay as it is and go out of business. The Company is determined to take the first option. The introduction of a new and comprehensive Operating Staff Agreement is essential to introduce a cost base, closer to market rates, and make the Company competitive in maintaining existing business and attracting new business. The competitors in the future will be UK logistics companies who have been, or are in the process of, setting up greenfield operations in Dublin which will have flexible operating practices and a very competitive cost base. Without the implementation of this agreement, the Company would not be able to compete in the distribution sector and would gradually lose its current business. The demands of the market place are such that these fundamental changes must be implemented immediately.
RECOMMENDATION:
The Court has considered all of the issues raised by the parties in their oral and written submissions, together with the Company proposals and the amendments suggested as a consequence of conciliation conferences.
It is clear to the Court that as a consequence of the rapidly changing situation in the industry urgent changes must be effected to the method of operation of the Company to enable it to deliver its service in the most effective and cost efficient manner so that the future of the Company and its employees may be protected.
The Court having examined the documentation presented and taken account of the issues raised by both parties makes the following recommendations:
That the proposals as clarified (9th September, 1997) and as amended by the final offer made by the Company (letter 16th September, 1997) be accepted subject to the following amendments:-
1. That a formula for loss of earnings arising from a move to annualised hours be paid as follows:
"......... 18 months compensation based on the difference in nett earnings between the hours worked and the performance reached in the tax year 1995/1996 [These earnings to be enhanced by any increase paid in the period up to the date of the implementation of this agreement] and the earnings achieved under the revised pay structure for similar hours and performance."
The Court recommends that £500 be paid to each employee on account, on the implementation of this recommendation. The balance, if any, to be paid on the anniversary of the implementation date.
2. That salaries continue to be paid weekly unless otherwise agreed between the parties.
3. That the Company doctor be continued.
4. That the Company arrange for the forklift standards to be studied and the revised standards implemented in accordance with the proposals of the Company. The current standards to be used in the interim. That the assembly standards be introduced on a trial basis, and revised where necessary in accordance with normal procedures. Where it is found necessary to revise standards performances should be calculated retrospectively to the date of introduction of the original standards.
5. That the payment of the final phase of PCW and 1st phase of Partnership 2000 be deferred pending the review referred to below.
Given the nature and extent of the changes required it is the view of the Court that following implementation the new arrangements should be monitored. Arrangements should be put in place to ensure that any difficulties arising should be rectified without delay.
Successful implementation of the new working arrangements will require the co-operation of all concerned in a spirit of goodwill.
The objectives of these changes are to improve the competitiveness and efficiency of the Company whilst at the same time securing the employment of the workers concerned.
To ensure these objectives are achieved and the climate of industrial relations improved the Court recommends that the situation be reviewed twelve months after implementation. This review to include the operation of the changes, the benefits accruing to the employees, including the payment of the deferred elements of the PCW and Partnership 2000.
Signed on behalf of the Labour Court
Tom McGrath
6th October, 1997______________________
T.O'D./D.T.Deputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Tom O'Dea, Court Secretary.