LCR16573

BACKGROUND:

2. The Company was established in Killarney in 1958. It is engaged in the construction and installation of container and harbour cranes, and employs 500 workers.

Claim 1-WageRates: In the years 1988 - 1993 the Company experienced substantial difficulties with its cost structure and trading conditions. In 1994 following lengthy negotiations and the issue of a Labour Court Recommendation (LCR14529) the parties reached agreement on a pay structure for new employees. Existing employees in the Company had their pay red circled. The Union claims that while the agreement was accepted at the time it has been a very contentions and problematic issue since, and needs to be addressed by the harmonisation of pay rates for all workers. The Company will not agree to this.

Claim2- ProfitShare: The Union seeks the introduction of a Profit Share Scheme as provided for in Chapter 9 of Partnership 2000. The Company states that its financial position precludes the introduction of such a scheme.

The dispute was referred to the Labour Relations Commission. A conciliation conference was held on the 16th of February, 2000 at which no agreement was reached. The dispute was referred to the Labour Court by the Labour Relations Commission on the 15th of May, 2000. A Court hearing was held in Tralee on the 12th of July, 2000.



Claim 1 - Wage Rates:

UNION'S ARGUMENTS:

3. 1. At the time of the 1994 Agreement, there were 36 new employees in the Company. The numbers now in that category have increased to 237 and they insist on the pursuance of equal rates of pay with their senior colleagues. These employees now constitute the majority of the workforce in the employment.

2. The drastic measures which the Union agreed to in the early 1990's were necessary for the preservation of jobs. It is only fair that, in the current economic climate, wages are restored and the Company has an obligation to respond positively to the Union's claim.

3. The issue of gross pay should not be a consideration. A fair comparison to be used is basic pay plus bonus with basic pay plus bonus, since overtime earnings are not constant in the long term.

COMPANY'S ARGUMENTS:

4. 1. The 1994 Agreement was crucial to the survival of the Company. It has provided for excellent rates of pay and conditions of service and they are above average in both local and general industry. (Details supplied to the Court).

2. Payments as per the pre-1994 agreement are entirely excessive and in advance of higher quality earnings applied elsewhere and at other unionised companies.

3. The Company has, in the recent past agreed to a major and costly concession in support of pension entitlements.

4. The Company cannot ignore business realities and revert to the non-viable previous scenarios. With a workforce now approaching 500, the costs of any such concession would be huge and would turn the Company's small profit margin into a considerable loss.

5. Contracts of employment have been amended since 1994, to fully include new rates on which job offers were to be made and accepted. SIPTU's legitimate aspiration at the time (1994), recorded in writing, was to protect the conditions of existing employees while accepting that change was inevitable and necessary. The 1994 agreement was intended to apply into the future and provide the basic rate to be augmented by either National Wage Determination or CPI/local agreement. There was no clause inserted to the effect that the entire agreement would be re-negotiated the first year the Company "turned the corner". Had the Company foreseen this claim in 1994, then perhaps the Company would not have agreed to the extent of red-circling contained in the 1994 agreement.

6. SIPTU was fully aware of the ramifications of having two separate pay agreements when it signed the agreement in 1994. The Union could not but have been aware that, in seeking to protect existing non-viable pay rates, this stance inevitably created the two-tier pay system. SIPTU cannot prove or substantiate, that the new pay arrangements are not in advance of pay rates applied throughout the region.

7. The effect of SIPTU's claim would return the Company in a few years to a situation, where the entire workforce are paid at the top of a totally exorbitant, unsustainable pay scale.

Claim 2 - Profit Share

UNION'S ARGUMENTS:

5. 1. Partnership 2000 provided for very modest wage increases and the only option to secure extra payments has been through either a Profit Share or Gain Share Scheme. Management, however, has rejected all efforts to negotiate.

2. In relation to the once off lump sum payment made by to workers in 1998 and 1999 this was done by the Company without direct communication with the Union, and is, therefore, unacceptable. Various attempts at more formal negotiations were rejected.

3. Whilst the Union appreciates that Chapter 9 is a voluntary part of Partnership 2000 nevertheless there must be some obligation on companies, who are successful, to pay over and above what was a very low level of wage increase.





COMPANY'S ARGUMENTS:

6. 1. The Company, after many years in a loss making situation, made a very small profit in the past few years (details supplied to the Court). It is not in a position to discuss a profit share scheme due to its financial situation of which the Union has been appraised.

2. The Company has made significant lump sum payments to workers in 1998 and 1999 and ex-gratia payments to workers on the 40th and 50th Company Anniversaries. Its pay rates and other conditions of service are excellent.

RECOMMENDATION:

The Court has given serious consideration to the written and oral presentation made by both sides.

Harmonisation of Wage Rates
The Court is satisfied that an agreement was entered into in 1994, as a means of protecting the viability and the competitiveness of the Company at the time. This agreement set up a new payment structure for all new employees employed after October 1994. The agreement made no reference to a review of the situation in future years.

However, the Court acknowledges the ongoing problem where two dissimilar wages are paid to workers working side by side with one another, for the same employer. The Court recommends that over a period of time with the help of a facilitator and taking into account the competitiveness of the Company, that by discussion and agreement, there should ultimately be harmonisation of earnings.

Profit Sharing
The Company has paid a lump sum of £300 in 1998 and again in 1999, in response to a claim by the Union for a profit sharing scheme under Clause 9 of Partnership 2000. Considering that this Company has since 1994 come back from the brink, it is the view of the Court, that this payment is a genuine response to that claim.

However, the Court is of the view that the process of granting this payment was flawed, was not conducive to good industrial relations and should have been discussed in the spirit of Clause 9 of Partnership 2000.

The Court recommends that in return for such payments a partnership process should be developed between the parties which would support the continued competitiveness of the Company into the future.

Signed on behalf of the Labour Court



Caroline Jenkinson
27th July, 2000______________________
TOD/CCDeputy Chairman



NOTE

Enquiries concerning this Recommendation should be addressed to Tom O'Dea, Court Secretary.