FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : IRISH CASINGS LIMITED (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Mr Duffy Employer Member: Mr McHenry Worker Member: Ms Ni Mhurchu |
1. Dispute concerning:
1. Company discretion in paying bonus.
2. Inclusion of bonus in holiday pay.
3. Change in measurement of work-effects on bonus.
4. Formula for bonus.
BACKGROUND:
2. The Company is involved in the meat rendering industry and employs 40 workers
Claim 1
Bonus earnings represent 50% to 70% of workers' basic pay. The Company has decided to remove bonus payments from workers at its own discretion. The Union claims that if workers earn bonuses they should be paid accordingly.
Claim 2.
The Union seeks to have bonus earnings included in holiday pay and claims that the present method used by the Company could not be justified and is in contravention of current legislation. The Management claims that the Union has agreed to this in the context of a restructuring arrangement in 1993.
Claim 3
The Union claims that there was unilateral change in the measurement of work which has resulted in loss of bonus earnings. Rate of bonus related to the size of bundles that an operator is required to complete. The size has been changed in one area of operation form 91 metres to 88 metres., The rate of bonus has been reduced accordingly on the basis that the Company expects its operators to complete more of the 88 metre size than the longer 91 metre bundle. The Union claims that the same amount of work is involved and that this decision by the Company has reduced bonus earnings by 3.3% (approx. £3.00 per week). The Company does not accept that workers have suffered reduced bonus earnings.
Claim 4
In a dispute over the payment of increases under the Programme for Competitiveness and Work (P.C.W.) an agreement was reached between the parties whereby basic rate would be increased in accordance with the National Agreement but these increases would not be applied to the piece rate used for calculation of bonus. The Union claim that this agreement was for the duration of the P.C.W. and that subsequent to the expiry of that agreement the piece rate should have been adjusted to take account of the increases forgone. The Company claims that the piece rate was to be capped for the duration of the P.C.W. and increases under subsequent national agreements could be applied. The arrangement was to have effect on a permanent basis.
The claims were the subject of local level discussions at which agreement was not reached. The dispute was referred to the Labour Relations Commission. Conciliation conferences were held in November, 1997, June 1998 and July, 1998. Agreement was not reached. The dispute was referred to the Labour Court by the Labour Relations Commission on the 20th of November, 1998. A Court hearing was held on the 31st of March, 1999.
CLAIM 1
UNION'S ARGUMENTS:
1. The workers concerned have a very low basic rate of pay. Because bonus earnings could average between 50% to 75% additional to basic any interference by the Company in an arbitrary action significantly reduces workers' earnings. The use of discretionary bonus removal as a justification for supporting low absenteeism is totally unjustified.
2. Assuming the employee has worked 4 days (32 hours) and has earned bonus to the value of £60. If for whatever reason that person fails to show up on Friday their bonus earned can and has been removed at the discretion of local management. This is compounded by a historical quirk which has the effect of removing an additional £10 from workers' wages.
COMPANY'S ARGUMENTS:
1. A bonus scheme (piece rate) is in operation which is based on employees working a full week. A full week is made up of 39 ½ hours as follows:
Monday - Thursday: 8.00am to 5.00pm = 34.00 hours
Friday: 8.00am to 1.30pm = 5 ½- including clean up
When introduced the piece rate system recognised the fact that employees may start work before the official start-up time and work their breaks to build up hours for the week. A problem could arise where an employee, once having reached target, does not report for work for the remainder of the week or does not report for work on Monday and could make up this loss by working harder over the remainder of the week. Neither above practices would be viewed favourably as they would encourage absenteeism to an unacceptable high level.
To counteract the above the bonus scheme was introduced on a "full week" basis. The withholding of the bonus is at the discretion of management, however, the company realises that in certain circumstances, where it considers an employee is justifiably absent from work and there is not deemed to have been an abuse of the system the bonus is not withheld. Only in cases where it is deemed to have been an abuse of the system are bonuses withheld.
It should be noted that there are "floating days" which, when applied for, would not result in a loss of bonus.
2. It is a condition of employment that the bonus system be accepted in its present form and all new employees must sign up for this on commencement of employment.
3. The weekly bonus earned depends very much on the dexterity of the employee, experience in the job, the product, the job type etc., however, it is not uncommon for employees to earn in excess of £100 in a week.
4. The amounts involved, in cases where bonus has been withheld, are generally very small. From week-ending 29th of September, 1998 to week-ending 14th of March, 1999, (6 months) the total amount of bonus withheld was £39.62 from 7 employees as follows:
Compared to the overall bonus for this period of £25,130, this is very small.
5. The Company has offered to have monthly/fortnightly meetings to review each case and allow workers to have an input into the decision making process. This has been rejected. The system is equitable and benefits all workers. It has been an accepted condition of employment for many years. The Company has always been fair in applying the criteria for withholding the bonus. The removal of the Company's discretion in paying this bonus could lead to serious absence and late attendance problems.
CLAIM 2
UNION'S ARGUMENTS:
1. The inclusion of bonus in holiday pay should be restored to more adequately reflect actual wages. In the situation of short time working scenarios, the Company under the Programme For Economic and Social Progress (P.E.S.P), sought and were given concessions whereby 2% under the Agreement was paid on a yearly basis, i.e. £180 approximately. Subsidised canteen facilities were also forfeited. The workers were satisfied that the concession only applied for the duration of the P.E.S.P. but it was never restored.
COMPANY'S ARGUMENTS:
1. Following extensive local level negotiations between the dates February, 1993 and June, 1993, agreement was reached between the Company and the Union concerning a number of issues, including the inclusion of bonus in holiday pay.
At a meeting between the Company and Union on 29th of June 1993, the Union offered to waive the method of calculating the pay for annual leave as laid down in the Holidays (Employee) Act, 1973 and 1991 and in return for the Company not pursuing its demand concerning the clawing back of the 3% local bargaining clause under the P.E.S.P. This was accepted by the Company having expressed its concern about the legality of doing so and on condition that legal advice was sought on the matter. This agreement was implemented on the 1st of July, 1993.
2. The treatment of "bonus in holiday pay" cannot be treated in isolation from the other issues agreed at this time - there can be no cherry picking. Throughout this dispute the Company offered to renegotiate the whole agreement, however, the Union was not prepared to do this and was only concerned with the one issue.
CLAIM 3
UNION'S ARGUMENTS:
1. For thirteen years measurement and selecting of sheep was 88-31 metres bundles. All payments were made on 91 metres. Eighteen months ago the Company decided that they wanted between 87-90 metres and pay for 88 metres only whilst still accepting 91 metres. Although the Company still accepts 88-91 metres they only pay for 88 metres. The effect for each selector of this is that for every 30 bundles selected or measured workers actually only get paid for 29 bundles. This is an arbitrary change. The Union's request for independent assessment by its Industrial Engineering Department has been refused by the Company. The loss for each operator is approximately $4 to £5 per week on this issue.
COMPANY'S ARGUMENTS:
1. The length of casings "measured" into bundles or hanks varies according to the requirement of the customer. However, there are international norms used in the industry and to which all lengths relate back to (and used, along with the calibre, to determine the weight of stuffed casing prior to cooking).
The lengths are as follows: Beef - 18 metre bundle
Sheep - 91 metre hank
Hog - 91 metre hank
2. Customers demand different lengths which must be supplied as ordered. This has always been the case as copy invoices illustrate. The Company has to produce the product in these lengths in order to sell. The "piece rate" system in operation was introduced using the above lengths as being the norm to which everything is converted back to for target/bonus purposes.
3. The Company finds it difficult to understand why the introduction of an 88 metre hank has caused problems as everything is converted back to a 91 metre hank (details of examples and calculations supplied to the Court).
CLAIM 4
UNION'S ARGUMENTS:
1. Workers agreed to a formula as a job saving measure during short time working under Programme for Competitiveness and Work, i.e. increases for that duration would apply to basic only and not bonus. Prior to this arrangement bonus increased commensurate with basic pay. The original loss was approximately £3. Currently workers' basic is approximately £150 and if no bonus is earned workers are paid basic. However, if any bonus is earned basic reverts back to £130 for the purpose of calculation. The nature of this calculation is not clear to the Union. It was never agreed to go on ad infinitum. The Union is most anxious that this deduction from wages ceases forthwith when bonus is earned.
COMPANY'S ARGUMENTS:
1. In 1994 agreement was reached between the parties on a number of issues including the formula for working out the calculation of bonus piece rate payments. Up to this point in time the basic rate of pay and the piece rate were one and the same thing. The basic rate was the basic rate per week/hour. The piece rate was the basic rate of pay divided by the weekly target. It was agreed that increases under the P.C.W. were to be applied to the basic pay only and the "pieces rates" were to remain capped at their existing level for the duration of the P.C.W. In effect this meant that as the % increases due under the P.C.W. were applied to the basic rate of pay the piece rate remained static. The reason for conceding the increases on basic pay was to assist the lowest paid and "indirects" who did not earn bonus. Capping the piece rate has the same effect as increasing the targets albeit across the board rather than on selective targets. The agreement was implemented in January, 1995.
2. At the termination of the P.C.W. the piece rates were increased in line with Partnership 2000, as was basic pay. However, due to the capping of the piece rate during the Programme for Competitiveness and Work, there is a disparity between the two rates as agreed during the above negotiations. This disparity remains, as do all other aspects of this agreement, post P.C.W. including amendments to service pay and targets. The issue of the piece rate cannot be treated in isolation from other issues agreed at this time.
RECOMMENDATION:
At the Court hearing it emerged that both parties believe that the current dispute could be resolved in the context of renegotiating existing agreements covering the pay and conditions of employment of the workers concerned. The Court finds it extraordinary that the consensus on this point did not emerge in earlier negotiations. The Court considers it equally extraordinary that the parties appear to have fundamentally different understandings of the basic facts surrounding the issues in dispute.
The Court recommends that the parties should commence negotiations on a comprehensive agreement, covering pay and conditions of employment, which reflects the current needs of the Company and its employees. In these negotiations the parties should also take full account of the requirements of current legislation.
If either party considers it necessary to engage the services of expert advisors in relation to any aspect of these negotiations they should be facilitated in so doing.
Finally, the Court believes that these negotiations should commence as soon as it is practicable and the parties should agree a time-scale for their conclusion to which they should adhere.
The Court so recommends.
Signed on behalf of the Labour Court
Kevin Duffy
12th April, 1999.______________________
TOD/BCDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Tom O'Dea, Court Secretary.