FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : TARKETT LIMITED (REPRESENTED BY THE IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Mr Duffy Employer Member: Mr Keogh Worker Member: Ms Ni Mhurchu |
1. Dispute concerning the Company's rationalisation plan.
BACKGROUND:
2. The Company manufactures floor coverings at its plant in Mullingar. It employs 181 workers. The dispute concerns 104 production and ancillary workers. The Company is part of a multinational Group with plants in Germany and Luxembourg. Because the plant in Mullingar is the least cost effective one in the Group, and also because of an overcapicty in the market, the Company proposed a major cost-reduction plan in February, 1998 which involved 39 redundancies, the closure of the canteen, elimination of full time contractors, the elimination of in lieu days for the 39 hour week, a change from Sunday night start-ups to Monday morning start-ups. The Company also sought significant flexibility in working time and work methods. Agreement was reached on a number of issues. However, the Company's offer on redundancy (4 week’s pay per year of service, including statutory plus pay in lieu of notice) was rejected by the Union which claimed 5 weeks pay per year of service plus statutory (with a week’s pay to include average overtime and average gainshare). The Union also sought a pay increase of 5% on basic, the retention of three service men (one per shift) from amongst those being made redundant.
- Management rejected the Union's claim. The dispute was referred to the Labour Relations Commission and a conciliation conference was held on the 5th of March, 1998. Agreement was not possible. The dispute was referred to the Labour Court by the Labour Relations Commission on the 13th of March, 1998. A Court hearing was held on the 25th of March, 1998. A letter recommendation was issued on the 27th of March, 1998.
UNION'S ARGUMENTS:
3. 1. The Company’s plan will not work if nine operatives (one per shift) are taken off the main lines. This was tried in 1996 and lines could not operate on full potential. Quality and quantity will be adversely affected. At present there is a shift manager and technologist on each of the three shifts. When one is absent the other provides cover. There is no need for a manager per shift as workers are self-supervising. If supervision is needed the Company could; (1) upgrade the technologist, (2) appoint a working supervisor from the workforce. This would achieve savings on a par with the savings achieved by eliminating an operator.
2. In relation to the severance package, all statutory entitlements should be excluded and the package should include average overtime, gainshare bonus and shift premium. The Company paid six week’s pay per year of service using the above formula, or a minimum of £2,000 per year of service excluding statutory when supervisors were made redundant. Management should use this formula, otherwise there will be great difficulty attracting volunteers. The Union will not accept compulsory redundancy. The present offer is out of line with settlements in comparable employment’s (details supplied to the Court).
3. The workers remaining in the employment should receive a 5% increase in basic pay in respect of increased productivity. The increase will not be cost-increasing and the Company will still make savings. The Company has conceded such a claim in the past.
4. The Union sees no reason to change the 39 hour banked system presently in operation. It does not cost the Company to operate such a system. In the event that the Court recommends such a change, workers should be allowed continue working a 40 hour week and that all shifts be rostered off for six Friday night shifts per year. All workers should have an additional four hours floating.
5. Security rosters should continue to be discussed at local level and in the event of disagreement normal procedures would apply. New rosters would have an adverse affect on workers’ earnings. In the event of loss of earnings they should be allowed pursue a claim for compensation.
6. The Union is also claiming that the £800 per annum VHI contribution in respect of clerical workers be included as part of the compensation package for those workers.
COMPANY'S ARGUMENTS:
4. 1. The rationalisation plan introduced by Management in 1998 is essential for the Company’s survival. It needs to be put in place as soon as possible in order to secure the necessary investments.
2. The Company’s severance package is reasonable in the circumstances. A week’s pay is defined as basic plus shift plus average bonus excluding average overtime and average gainshare.
3. The Company cannot accept the Union’s claim for a 5% increase for workers remaining in the employment, nor can it consider the retention of the three service men from amongst the number being declared redundant. The Company has minimised the redundancies in so far as is possible. While the Union claimed that the plant could not run efficiently with the numbers proposed in the plan, Management has demonstrated that, effectively, because of the system for taking breaks which presently exist, the plant is already running for most of the time at the proposed Company level. An essential part of the Company’s proposal is that workers adhere to break rosters, etc..
4. The Company seeks the elimination of lieu days for the 39 hour week and the taking of the 39 hour week as a 39 hour week.
5. It is essential to change from inefficient Sunday night start-up to Monday mornings start-ups.
6. The Company retains only the requirement in security to reduce overtime and an approach to the Working Time Act, wherein the parties would agree to maximise flexibilties. Security is required to take responsibility for reception duties.
7. The Company cannot concede the claim in respect of six clerical workers for the inclusion of the VHI contribution in the settlement terms.
8. The Company is currently involved in a survival exercise in the face of very difficult competition both internally within the group and externally. Given the level of investment required in plant and equipment, its redundancy offer is very reasonable. The other changes sought are essential for the Company’s continued viability.
RECOMMENDATION:
It is clear to the Court that the Mullingar plant is seriously uncompetitive relative to other locations operated by its parent group. If this issue is not decisively addressed the continued viability of the plant will be endangered with inevitable consequences for all of the jobs which it now maintains. The Court notes that the Union accepts the need for a cost reduction programme while disputing the terms put forward by the Company by which it is to be implemented.
Having considered the submissions of both parties, the Court recommends that in the interests of achieving the orderly introduction of effective cost reductions, the Company modify its final proposals as follows and that the amended offer by accepted:-
1.Redundancy Terms
4 weeks pay per year of service, plus statutory entitlement and pay in lieu of notice should be offered. Selection should be voluntary and only in the event of there being insufficient volunteers should LIFO be used.
2.Calculation of Weeks Pay
The weekly rate for the purpose of the non-statutory element of the package referred to at 1 above should be calculated on the same basis as holiday pay i.e. to include average overtime, average gainshare, average bonus and shift premium. Where the Company pays voluntary health insurance premiums, whether in whole or in part, the employers contribution should also be included in the calculation.
3.Staffing Levels
The Court can see no real practical alternative to the new staffing levels proposed by the Company following the implementation of the redundancy programme. They should be accepted by the Union subject to a review of their operation not later than 12 months following their introduction.
4.Increase in Basic Pay
In consideration of their co-operation with the new working arrangements, those remaining should receive an increase in basic pay of 2.5%.
5.Other Matters
All other aspects of the Company's final proposals should remain unchanged.
Signed on behalf of the Labour Court
Kevin Duffy
31st March, 1998______________________
T.O'D./D.T.Deputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Tom O'Dea, Court Secretary.