FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : CANTRELL & COCHRANE (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION AMALGAMATED TRANSPORT AND GENERAL WORKERS' UNION TECHNICAL, ENGINEERING AND ELECTRICAL UNION MANUFACTURING, SCIENCE, FINANCE SALES, MARKETING AND ADMINISTRATIVE UNION OF IRELAND AMALGAMATED ENGINEERING AND ELECTRICAL UNION DIVISION : Chairman: Ms Jenkinson Employer Member: Mr Keogh Worker Member: Mr O'Neill |
1. 1. Profit Sharing
2. Share Of Company For Employees Pre-Flotation
BACKGROUND:
2. For over 30 years, until January 1999, the Company was controlled by Allied Domecq, which owned 100% of the equity following Guinness’s disposal of its stake, in 1998. Allied Domecq, subsequently, planned to exit by flotation on the Dublin/London Stock markets but did not do so due to adverse changes in market conditions. In January, 1999, Allied Domecq disposed of its entire stake to "BC Partners" a syndicate of some 32 banks and financial institutions.
The dispute relates to a Union claim for profit-sharing and a share of the Company in advance of any flotation. The issue was the subject of a number of conciliation conferences at which agreement was not reached. During conciliation, two presentations were made to the Union by consultants (KPMG and Price Waterhouse Coopers) engaged by the Company to examine the issue surrounding employee share option schemes. The presentations, essentially, formed the Company's case in response to the Union claim and are summarised as follows:
- Prior to the sale in January, 1999, Allied Domecq took all the value out of the C&C Group of Companies.
- Any value from January, 1999 to the flotation date is already accounted for.
- Management is not in a position to offer the employees a share of the Group pre-flotation and the only opportunity for the employees is a share participation scheme following flotation.
The Union position is that the workforce should be given a share of the Company now so that the benefits would be gained when flotation took place. Regarding profit-sharing, the Union side want this introduced immediately regardless of what management might have already earmarked for it.
Agreement was not reached and the dispute was referred to the Labour Court, on the 22nd of December, 1999, in accordance with Section 26 (1) of Industrial Relations Act, 1990. The Court carried out its investigation on the 12th of April, 2000.
UNION GROUP'S ARGUMENTS
3. 1. In the current climate, with a more inclusive agenda, and with the whole emphasis on partnership, as enshrined in the centralised bargaining process, one could reasonably have expected management to act differently than they did in this particular case. It would not be unreasonable to expect that the owners of a business which was to be sold and which would be expected to make a huge capital gain would offer even a small proportion of that gain to the employees who had contributed to the added value. The attitude adopted by C&C Group compares poorly with that adopted by Tayto (since purchased by C&C Group for £70m), where the former owners of Tayto left a sum of one million dollars to be distributed among the employees.
2. Management had the opportunity to be considerate towards the workforce in the run up to the sale of the business but chose to ignore their interests and ignore representations on their behalf. The only reasonable response to that situation by the workforce is to insist that they be allocated a definitive stake in the Group, post-plc and, in the interim, that they be offered the opportunity to participate in a profit-sharing arrangement with an approved share participation dimension. Management should by now realise that there is absolute determination on the part of the workers to adopt whatever action is needed to secure its objective.
Accordingly, they should be conceded a definitive shareholding in the Group, to be allocated to staff now, but not to be effective until post-plc and the immediate introduction of a Profit Share Scheme that would be interfaced with an approved Share Participation Scheme.
COMPANY'S ARGUMENTS
4. 1. The Company is one of the highest financially leveraged companies in the country with debts of over £650 million.
2. The demand for the introduction of profit share and share participation schemes is an attempt by unions to compensate for the missed opportunity in securing a goodwill payment from the Company's former owners.
3. Owing to the financial position of the Company, it is not in a position to take on the additional costs of profit-sharing schemes and share participation schemes at this time.
4. Recent competitive pressures in the sector have further impacted profit margins.
5. Terms and Conditions for employees were preserved following transfer of ownership.
6. The Union's demand for a Company-wide Profit Share Scheme represents a cost-increasing claim under P2000 and the new PPF is not relevant as all claims for Employee Share Option Schemes are covered by voluntary arrangement only.
7. The Company plans to honour the commitments made on February 9th, 1999, to the trade unions, that, in the event of floatation, provisions for an Employee Share Option Scheme will be made.
8. As agreed at conciliation, a joint working party has been established to progress this issue.
RECOMMENDATION:
Having considered all aspects of this case, the Court is of the view that, given the servicing of the debt that the Company has, it is not in a position to enter into any schemes pre flotation of the Company. Therefore, the Court does not recommend concession of the claims for a profit sharing scheme or for the introduction of an approved share participation scheme pre-flotation.
In its submission to the Court and again at the Court hearing, the Company clearly stated that it plans to honour commitments made to the trade unions on February, 9th, 1999 that, in the event of flotation, provisions for an Employee Share Option Scheme will be made. The Court recommends that the Unions should accept this commitment and work towards progressing this issue via the establishment of the joint working party, as agreed at conciliation on 13th of December, 1999.
Signed on behalf of the Labour Court
Caroline Jenkinson
9th May, 2000.______________________
MK/BCDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Michael Keegan, Court Secretary.