LCR16947

SUBJECT:
1. 2% increase under the Programme for Prosperity and Fairness (PPF).


BACKGROUND:

2. In November, 2000, the parties concluded an agreement under the auspices of the Labour Relations Commission. Shortly thereafter, the Social Partners agreed a 2% increase under the amendment to the Programme for Prosperity and Fairness (PPF). The Union's claim on behalf of 150 workers is for payment of the increases due under the amendment to the PPF. The Company rejected the claim stating that the agreement concluded in November, 2000, provided for increases far in excess of the provisions of the PPF. The dispute was referred to the Labour Relations Commission. A conciliation conference was held on the 1st of July, 2001. Agreement was not reached. The dispute was referred to the Labour Court by the Labour Relations Commission on the 27th of July, 2001. A Court hearing was held on the 15th of August, 2001. Subsequent to the hearing both parties submitted additional information which was considered by the Court.


UNION'S ARGUMENTS:

3. 1. The purpose of the amendment to the PPF was to restore the purchasing power of that agreement and prevent its collapse.

2. The deal concluded under Partnership 2000 (P2000) in November, 2000 was independent of the developments in the PPF. While it was clearly the intention of
the parties that no further cost increasing claims should be pursued during the lifetime of the PPF, the amendment is an integral part of the PPF and cannot be separated from the other three phases except where employers plead inability to pay. That clearly does not apply in this case as the Company is very successful.

3. The Company, in terms of a combination of basic pay, service pay and annual bonus is behind its main competitor. The Company's refusal to pay the increase will negate the modest progress made by the Union under P2000.

4. The employees have cooperated fully with any changes sought by the Employer. Their basic pay rates are relatively low. Concession of the 2% increase will not impose a major cost on the Company as labour costs are only a small part of the final cost of the Company's products and 2% of that element is minute. The Company is being unreasonable in quoting Clause 7 of the PPF as a justification for not paying the 2% increase. It is not conceivable that concession of the increase could have any impact on the "economic, commercial and employment circumstances" of the Company.


COMPANY'S ARGUMENTS

4. 1. The agreement concluded in November, 2000, provided for increases in basic pay of 27.42 % for all workers. Improvements were also made to service pay, annual bonus, holiday pay, subsistence and lunch allowances etc. The agreement provided for increases far in excess of the terms of the PPF. It was not intended, under the amendment to the PPF, that companies which had already paid over and above its terms would be required to meet those terms on a second occasion.

2. Regard must be had to the ongoing financial effect of the commitments given by the Company under the November, 2000, LRC agreement. Since its conclusion, total labour costs have increased by a minimum of 11%, when compared to the same reference period in 2000. Pay rates have increased by 19% over the time of the agreement to date. This is already in excess of the cumulative effect of the increases under the PPF. The Company's circumstance fall within the ambit of those envisaged by the "Stability Enhancing Measures" of the PPF (Clause 7) and, therefore, it is not obliged to apply the 2%.

3. Concession of the claim would increase costs and have adverse consequences for competitiveness. The PPF amendment clearly focused on the need for competitiveness and security of employment and it is in this context that the claim for the additional terms of the PPF should be rejected, given the context and effect of the agreement reached in November, 2000.


RECOMMENDATION:

Where companies have paid significantly in excess of the PPF, the terms of the Stability Enhancing Measures of PPF allow such companies to avoid further pay increases where such increases would put employment and competitiveness at risk.

The claim before the Court is for the application of the 2% increase in pay from 1st April, 2001 as agreed under the amended terms of the PPF.

The Court has taken into consideration the oral and written submissions of the parties. The Company relies on the fact that under a Company/Union agreement completed in November, 2000, which provided for increases significantly in excess of the PPF, a clause was included which precluded any further claims for the duration of PPF.

While the Company intended the November agreement to preclude any further increases during the lifetime of the PPF, this was not firmly clarified in the terms of the agreement. The Union equally did not consider that the agreement as written pre-empted any further entitlement under the amended PPF. In the absence of the Company being able to quantify a loss in competitiveness and employment as a result of having to pay the 2%, the Court therefore finds that the Company is liable to pay the additional 2% under the amended PPF.



Signed on behalf of the Labour Court



Caroline Jenkinson
23rd October, 2001______________________
TODDeputy Chairman



NOTE

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