FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : NESTLE IRELAND LIMITED - AND - MARINE, PORT AND GENERAL WORKERS' UNION DIVISION : Chairman: Mr Duffy Employer Member: Mr McHenry Worker Member: Ms Ni Mhurchu |
1. Operational and related changes for salesmen/merchandisers.
BACKGROUND:
2. Nestle Ireland Limited is engaged in the manufacture and distribution of a range of grocery and confectionery product lines in Ireland. It is in the process of restructuring its sales activities to make it more competitive and responsive to market demands.
The dispute before the Court concerns the Company's proposals regarding its sales personnel. It is proposing to re-arrange its sales team by broadening the scope of the activities of salesmen and merchandisers and to introduce a new wage structure incorporating incremental movements based on performance. The Union is agreeable to co-operate with the proposed changes but has rejected the Company's monetary offer (details supplied to the Court).
Local level discussions failed to resolve the issue and the matter was referred to the Labour Relations Commission. A conciliation conference took place on the 20th of May, 1998. As agreement could not be reached the dispute was referred to the Labour Court on the 2nd of June, 1998 under Section 26(1) of the Industrial Relations Act, 1990. Labour Court hearings took place on the 8th of June, 1998 and the 10th of August, 1998.
UNION'S ARGUMENTS:
3. 1. The Union is prepared to co-operate with the implementation of the changes required to ensure the Company's competitiveness and growth in the future. In return it insists on its right to protect the salary structures of the workers concerned and to negotiate in a fair and meaningful way an appropriate increase in pay in return for the increased productivity which would result from the workers acceptance of the Company's proposals.
2. The Company has failed to address the position of salesmen at the top of the existing salary scale. The Company's proposal involves an increase in their workload and responsibilities without any increase in remuneration. This position is unacceptable to the Union.
COMPANY'S ARGUMENTS:
4. 1. The current salary scale system has been in place for many years and was in need of review in terms of its appropriateness. It is based only on service with the Company and it is felt that a greater recognition of individual commitment and effort is needed and that a more appropriate system of compensation should be devised.
2. The new system is based on the introduction of a salary range designed to recognise performance at individual level and to allow the flexibility to reward consistently high performance. The introduction of the red circling concept was designed to ensure that current employees did not lose out financially. It is clear that by amalgamating the sales representatives and merchandisers jobs into a hybrid territory representative that the Company will continue to have a worthwhile instore presence. Experience in the UK demonstrates that the retailers there have reduced or eliminated the requirement for sales representatives and have put more emphasis on customer relations and merchandising of product. The new structure is designed to recognise this and to introduce a higher level of Company flexibility at instore level.
3. The Company has benchmarked itself against other companies in the consumer trade, in general, and commissioned compensation consultants to advise it on an appropriate salary level for the job description of territory representative. Having conducted its research the Company has presented a salary range with a standard lower and upper limit. For current employees this represents a potential improvement in their current earning potential up to the limit based on assessment of performance.
4. The Company has incurred significant costs in terms of an automatic salary increment in the new structure for the merchandising group and for training and development. Given the age profile of the salesforce, it is unlikely that new personnel will be introduced to the structure over the next five years so that there is no payback period in terms of cost reduction on sales effort. The Company's proposals meet the best interests of both business and employee needs. The new salary range is competitive and balanced in terms of the potential to reward effort and sets the tone for the future business needs.
5. The Company has incurred significant overhead costs in terms of the overall compensation package and despite appeals from the Union to look imaginatively at the top of the range for longer service employees the Company's cost structure precludes it from doing so. Other divisions, particularly the confectionery group, have similar structures in place and concession of a higher salary range would have ramifications in this group.
RECOMMENDATION:
The Court recommends that the final offer put forward by the Company and communicated in the IRO's letter of the 26th of June, 1998, be accepted subject to the following modifications in the case of sales representatives:-
1. A lead-in lump-sum payment of £500 should be paid in the first year in which
the new arrangements are in place and a further £500 in the second year.
2. At the end of the first year a merit assessment should be carried out and if
satisfactory an increase (subject to the maximum of £26,000 in current terms)
be applied.
3. At the end of two years the merit assessment system should be jointly
reviewed by the parties.
Signed on behalf of the Labour Court
Kevin Duffy
26th August, 1998______________________
F.B./D.T.Deputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Fran Brennan, Court Secretary.