FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : PENN RACQUET SPORTS (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. Wage increase; Improvements to pension scheme.
BACKGROUND:
2. The Company is located in Mullingar. It employs 160 workers and manufactures tennis balls for export. Details of the Union's claim are as follows:-
1. Increase in basic wages.
The Union's claim is for an increase of 12% over and above the terms of the Programme for Prosperity and Fairness on the basis of substantial increases in productivity (36%) and that one third of this should be passed on to workers by way of a pay increase. Discussions on a gain sharing scheme were not successful and the Company's proposals on profit sharing were rejected by the Union. The Company rejected the claim for an increase in basic pay.
3. Pension Scheme.
The scheme is based on 1/60th of service multiplied by basic salary including shift premium where applicable, less 1.5 times the State Pension. The Union's claim is that this deduction element be reduced to one times the State Pension. It is also seeking the introduction of an income continuance plan similar to that available to office staff. The Company rejected the claim.
The dispute was referred to the Labour Relations Commission. A conciliation conference was held on the 24th October, 2000 but agreement was not reached. The dispute was referred to the Labour Court by the Labour Relations Commission on the 14th November, 2000. A Court hearing was held in Mullingar on the 6th March, 2001.
Claim 1. UNION'S ARGUMENTS
4. 1. The Company is seeking to increase productivity in the edge dip area It has also introduced a new stamping system, which is semi-automated and has led to savings in labour. As the Company has refused to introduce a gain sharing scheme, the workers should be compensated by an increase in wages.
2. The Company also propose to automate the cover line which will reduce the manning in this area by 34 workers, this in conjunction with the reduced manning levels in the other areas will mean a saving of 36% in labour costs.
3. The workers wage rates are low by comparison with the industrial average.
COMPANY'S ARGUMENTS:
5. 1. The claim is cost-increasing and precluded under the terms of the PPF. The claim represents a significant and unacceptable increase in costs. Labour represents a high and growing portion of the Company's cost structure. In view of the additional 2% PPF increase announced in December, 2000 and a further 5.5% as from August, 2001 with increasing competitive pressures international.
Management asked the Union for agreement on additional changes to fund these increases and other labour costs. The Union rejected the request.
2. The Union in discussions with the Company inferred that its 12% claim was based on an assessment of its share in savings achieved as a result of automation. The Company rejects this claim because automation requires substantial capital outlay and research which it must recover by reducing labour costs. The introduction of automation will help secure jobs.
3. The Company's pay rates are extremely competitive within the local area and within the tennis ball industry.
Claim 2; UNION'S ARGUMENTS
6. 1. The pension scheme was introduced in 1980 and since then, with increases in the state pension the real benefits of the scheme have fallen relative to where they stood when the scheme was first introduced. In order to ensure that workers when retiring get the maximum benefit from the scheme it is necessary to reduce the integration factors to a single state pension rather than its present level of 1.5 times state pension.
2. As the scheme has had a surplus for a number of years this should be used for the benefit of members by introducing improvements to the scheme.
3. Of the four defined benefit pension schemes operating in the private sector in the area two have recently introduced improvements (details to the Court).
4. As the Company operates an income continuance plan in its staff pension scheme it should treat all workers equally and introduce a similar plan for the claimants.
COMPANY'S ARGUMENTS
7. 1. The Company recognises that under the PPF unions are not precluded from making claims for improvements in pension schemes where the existing scheme is substantially out of line with appropriate standards in comparable
employments. In making the claim the Union has consistently failed to provide Management with examples of companies against which Penn scheme is out of line.
2. The Company scheme also has a generous death-in -service benefit package of 4 times salary. Spouses' and dependants pension on death in service is also provided. If the Company were in a greenfield site the continued costs of providing the benefits under this scheme would be 13.4%. Under the current pension plan employees contribute 4.7% with the Company contribution and investments meeting the remainder required. Additional Voluntary Contributions are also allowable under a separate scheme.
RECOMMENDATION:
Having considered the submissions of the parties the Court recommends as follows in relation to the Union's claims:-
Pay Increase
The Court believes that the Union's claim, as presented, for an increase in basic pay is not sustainable within the terms of the pay agreement associated with the Programme for Prosperity and Fairness.
It is noted that the parties have previously agreed to the introduction of a new reward system. On foot of that agreement the Union sought the introduction of a gain sharing scheme. While the Company was not prepared to introduce such a scheme it did offer to put in place a profit sharing scheme. This offer was rejected by the Union.
The Court notes that paragraph 19 of Framework 1 of the PPF lists both gain sharing and profit sharing as appropriate forms of partnership activity in which employers and unions may engage on a voluntary basis.
In the context of this provision of the PPF, the Court considers that a profit sharing scheme could be designed to meet the Union's aspiration of providing employees with a share of the benefits accruing from improved efficiency and profitability at the Mullingar plant. The Court recommends that the parties should have further discussions, on the Company's offer, with a view to agreeing a profit sharing arrangement which would meet that objective.
Pension/ Income Continuance.
On the information provided the Court cannot accept the Company pension scheme, as currently constituted, is substantially out of line with appropriate standards in comparable employments. In these circumstances the claim does not come within the scope of Clause 8 of the PPF Agreement and the Court cannot recommend its concession.
Signed on behalf of the Labour Court
Kevin Duffy
21st March, 2001______________________
TODDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Tom O'Dea, Court Secretary.