FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 2001 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : CHILTON ELECTRIC (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Ms Jenkinson Employer Member: Mr Grier Worker Member: Mr. Somers |
1. Incentive bonus scheme.
BACKGROUND:
2. The Company is a subsidiary of Glen Dimplex. It manufactures fan heaters and employs 225 workers at its plant in Dunleer. The dispute before the Court relates to the Company bonus incentive scheme and Management's proposal to introduce a line based bonus scheme to replace the previous scheme which was based on an overall factory output. The changes in the proposed scheme relate to the following:
Guaranteed bonus payment.
Targets.
New recruits.
Mould shop/Indirects etc.,
Bonus ceiling.
Local discussions on these issues were not successful and the dispute was referred to the Labour Relations Commission. A conciliation conference was held but agreement was not reached. The dispute was referred to the Labour Court in August, 2003 in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Court hearing was held on the 19th November, 2003.
UNION'S ARGUMENTS:
3. 1. In relation to the value of the bonus scheme, workers do not accept that the payment of the scheme up to a maximum of €63.50 per week represents fair value for their efforts. The scheme should be brought in line with industry generally. It should be amended to take account of the P.P.F. and S.P. phases(not applied to the bonus scheme) and going forward, should be linked to future pay awards.
2. The scheme being capped at 107% performance paying at 110% places an unnecessary cap on workers' earning potential. The scheme should be adjusted to allow for production up to 125%, as is the norm for schemes conforming to the B.S.I. standard.
3. The guaranteed minimum payment or the paying of the Indirects on the average of the top 75% producing lines should be withdrawn in the short-term.
4. There are groups of workers whose bonus is paid on an equal sharing of quality yield and on an average of what is produced across the assembly lines. They have no significant opportunity to influence their bonus potential. If the company is intent on leaving the bonus payments as is for these workers, the maximum pay-out should be paid for a quality yield level of around 96% so as they receive a reasonable pay-out for their efforts.
5. Where targets are set for a product and employees on the line are working to achieve the target and are being paid their bonus based on performance, there should be no unilateral changes imposed by the Company without recourse to normal procedures.
6. There has been a long understanding that new recruits are not paid bonus for their first four weeks of employment. Part of the current agreement was that their timings would not be included either, thereby not affecting the bonus paid to the workers already on the line. The Company proposal is to phase in the timing over a four week period. This will negatively affect their earnings potential whilst they are brought up to speed with their colleagues on the line. The Union seeks that the current practice should remain and the timing of the new recruits should not be factored in until after four weeks.
COMPANY'S ARGUMENTS:
4. 1. The competitive position of the Company has been severely eroded through high inflation and high wage costs. The Company faces significant competition from China. Glen Dimplex is closing its plant in Bangor shortly. Falling demand for the current year will result in a three day week commencing at Chilton Electric in January, 2004. The Company must source other business to survive and hopes to design new products. This would only be possible if it is cost effective.
2. The Company has communicated to all employees how competitiveness has been eroded and the requirements needed before the Company could be considered for the manufacture of the new product mentioned.
3. No further cost increasing claims can be considered. Claims, including that in respect of bonus increases, must be withdrawn for a three year period and no further claims introduced during this period. This is a requirement to enable the Company grow the new business to a level where it would fill a reasonable portion of the void arising from falling fan heater volumes.
4. The prevailing circumstances do not lend themselves towards discussion on the incentive bonus scheme. The emphasis instead should be on doing everything possible to encourage continuing manufacturing at the Dunleer plant.
RECOMMENDATION:
The claim for an improvement in the Company's bonus scheme, which the union put to the Court, has been in dispute since 2000.
At the hearing, the Company indicated that it was taking "an unorthodox approach" to the claim. This was due to the Company's current difficulties and its attempt to avert a possible closure.
Due to falling demand in company products there will be three-day working week in early January, 2004, with the possibility of an ensuing lay off period to follow. The parent company will close the Bangor plant in three weeks time. The Company must become more cost effective if it is to survive.
The Company pointed out to the Court that there is a definite possibility of sourcing another business, however, it will depend on the Company becoming cost effective. To this end the Company put forward a proposal to the workforce which would entailinter aliadropping the claim for an improvement in the bonus scheme for a period of three years, an increase in bonus by 2% from 1st October, 2003 with further increases in line with wage increases in future, and all lines to work to 107% performance ceiling whenever possible. This proposal was rejected by the workforce.
Faced with these realities the Union put forward their own proposal to management which offeredinter aliato defer this claim pending the outcome of the company's bid to secure the new product and to review the claim at a later date. This was rejected by management.
The Court is of the view that the bonus scheme is out of line with normal standards and should be improved. However, taking account of the Company's current difficulties and the Union's willingness to await the outcome of the Company's bid to secure the manufacture of an alternative product, the Court recommends that the claim should be deferred for a period up to September, 2004, when the issue may be referred back to the Court if not resolved between the parties in the meantime.
The offer to increase the bonus by 2% should be implemented with immediate effect.
Signed on behalf of the Labour Court
Caroline Jenkinson
4th December, 2003______________________
TODDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Tom O'Dea, Court Secretary.