FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 2001 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : UNIFI TEXTURED YARNS EUROPE - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION TECHNICAL, ENGINEERING AND ELECTRICAL UNION AMICUS/AMALGAMATED ENGINEERING AND ELECTRICAL UNION DIVISION : Chairman: Mr Flood Employer Member: Mr Pierce Worker Member: Mr O'Neill |
1. (A) Redundancy Package (B) Selection Criteria (C) Compensation (D) Long-Term Absentees (E) Pay Freeze.
BACKGROUND:
2. The Company is part of a US multinational group. It employs approximately 680 workers and manufactures textured yarn at a plant in Letterkenny. Due to continuing losses in the Irish operation over the past four years the Company has put forward a restructuring programme which requires approximately 250 redundancies amounting to 40% of the workforce. The Company is offering a redundancy package of 3 weeks pay per year of service including statutory entitlements and pension enhancement which would allow for full pension at the age of 60 with a supplement paid between age 60 and 65. Workers leaving the Company also receive the pension enhancement either in a deferred pension or transfer of benefit. The Company also propose that the selection for redundancy criteria would be based on retention of essential skills and avoidance of excessive retraining. The package would not be available to long term absentees. Workers who transfer to a lower paid job or who lose shift allowance to avoid redundancy would not receive compensation. The Company also proposed a 12 month pay freeze from 1st May, 2003. The Unions accept the principle of redundancy but claim a redundancy compensation package of 5 weeks pay per year of service plus statutory entitlements. In relation to selection criteria the Unions believe it is covered by Clause 27 of the plant agreement. The Unions understanding is that only a very small number of jobs would be designated as key ones. The Unions claim it is unfair to exclude workers who are on genuine sick leave from the package. In relation to the pay freeze the Unions are not prepared to accept it. The dispute was referred to the Labour Relations Commission. A conciliation conference was held but agreement was not reached. On the 16th May, 2003 the dispute was referred to the Labour Court by the Labour Relations Commission in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Court hearing was held in Sligo on the 22nd May, 2003.
UNIONS' ARGUMENTS:
3. 1.Redundancy.The Company must improve its offer in order to secure the substantial number of redundancies required . Concession of the Unions' claim is the minimum required to achieve this. A large proportion of redundancies could be achieved on a voluntary basis and then many of the other issues would fall into place.
Many employments have matched or exceeded the amount claimed by the Unions. The Company's offer is low compared to national and local redundancy settlements.
The Unions are taking into account the enhanced pension entitlements on offer which is why, in part, the Unions reduced their original claim from 6 to 5 weeks plus statutory entitlements.
2.Selection Criteria.If the redundancy package is acceptable the selection issue may not be a major one. However it is covered by Clause 27 of the Company Union agreement. The retention of key employees would be the exception rather than the rule. The Company appears to be focused on the cost of retraining which is not mentioned in Clause 27.
In relation to craftworkers they agreed training levels with the Company in previous agreements to upgrade skills of craft workers to technician level. The Company did not invest in a full training programme to achieve this.The result is that those craft workers now being made redundant do not have transferable skills. This can be rectified, as the Northwestern cluster of the National Skillnet was launched in May, 2003.It is possible to fast track training through the Skillnet and certification awarded. The Craft Unions are seeking that this be introduced. The cost of the training will be 50% subsidised by the Skillnet.
3.Lower grade jobs/Lower shift premium compensationThere is an existing agreement with the Company providing that any worker involuntarily moved to a lower grade job or shift will continue to be paid at the same rate(hours, shift premium/and or grade) for a period of three years from the date of transfer. This agreement must continue to apply. Under the Company's proposals compensation is not payable. This would result in substantial reductions in pay for workers ranging from 16.66% for some and 33.33% for others. This is not acceptable.
4.Long-term Absentees.The number involved is small and it should not be an issue. These workers are continuing employees in the Company with all the rights of existing employees. The are entitled to be treated in the same manner in equity and fairness.
5.Pay pause.The Company proposal is not appropriate to the issues under negotiation and there is no question of workers agreeing to it. If the Company wishes to pursue this issue it should be done under the relevant clause of the Sustaining Progress Agreement.
In relation to craft workers the Unions entered a three year agreement with the Company whereby the final phase of PPF (4%) would be paid on 1st May, 2003. The craft unions agreed to cost effective measures which greatly improved the efficiency within the maintenance department. The Company must now honour the last phase of that agreement and pay the 4% increase from 1st May, 2003.
COMPANY'S ARGUMENTS:
4. 1.Redundancy.The Company's offer compares very favourably with those in the clothing and textile sector in 2001/2002. Any increase in the cost of the package offered by the Company could seriously damage the implementation of the survival plan. The pension enhancement offer has a very significant beneficial affect on the benefits package of all employees who will leave the Company. The cost of the pension enhancement will greatly increase the Company's liability to the Scheme going forward.
2.Selection Criteria.The Company's proposal is fair, equitable, and reflects the spirit and intent of the Agreement. The proposal exposes the Company to the possibility of having to train/retrain approximately 28% of the workforce. This will cause a significant expense and disruption as the Company transitions from the old to the new structure. While the Company will make every effort to accommodate voluntary applications for redundancy it is not automatic that all volunteers will necessarily be accepted.
3.Lower grade jobs /lower shift premium compensation.Employees whose jobs are being eliminated are being given the opportunity of accepting redundancy or moving to any other suitable jobs that become available as part of the restructuring. The acceptance of a move to another job is the employee's decision and it will be at the rate and the shift premium for that job. If employees are not satisfied with the rate of pay or the shift premium for the new job they have the option of accepting the redundancy package.
4.Long-termabsentees.Employees on maternity or authorised leave of absence are free to apply for the package but long term absentees, some of whom have been off in excess of three years, are excluded. It is a normal aspect of redundancy packages to exclude long term absentees as there is a continuous turnover in this grouping, with employees returning to work and others going off sick .
5.Pay Pause.The implementation of a 12 month pay freeze is essential to enable the Company to improve and consolidate its position in the marketplace. The pay freeze will apply to all employees, excepting those taking up higher grade positions which have been created as part of the restructuring -Team Leaders(SIPTU) and Shift Leaders(Staff). The Company is pleading inability to pay any wage increase during the next twelve months. It is then willing to implement the final 4% PPF increase for the Craft Unions on 1st May, 2004 followed by the terms of Sustaining Progress which would commence for SIPTU on the 1st May, 2004.
RECOMMENDATION:
The Company has outlined to the Court that following a review of its Irish operations it must restructure manufacturing operations in order to restore the Company to profitability.
The Union while accepting the need for redundancies disagrees with a number of the proposals put forward in the Company plan.
The Unions argue that there are agreements in position in relation to redeploying people and that compensation must be paid in such situations. They also argue that the proposed redundancy payments compare unfavourably with other Company payments and that the Company can afford to pay more.
Further complications arise in the Crafts Group, as they are due 4% as the final payment in a 3-year agreement that expires this year. In addition the Company has indicated that particular crafts and particular jobs will be declared redundant and that no opportunity will be given for redeployment.
In order to address the immediate problems facing the Company and its employees the Court makes the following recommendations on the issues in dispute.
1.Redundancy Terms:Taking into account the current Company position the Court recommends that the Company proposals be accepted, but that the benefit of the extra statutory rebate arising from the changed statutory redundancy arrangements be paid to individuals, in addition to the proposals already on the table.
2.Selection Criteria:
The Company proposals on selection appear to be based on a concern about the cost of retraining staff across the Company who might opt to be redeployed.
The Union argue that there is an agreement on selection in place, and that because an employees' post is redundant, he should not have to leave the Company.
The Company claims that its proposal exposes the Company to retraining 28% of the workforce and that the training period is 14 weeks. The Unions are adamant that significantly less time could be agreed.
Given this situation, the Court recommends that employees be allowed redeploy if others want to take up the voluntary retirement packages, but that this would be subject to the Unions agreeing new training periods, within the cost already allowed for by the Company.
This would mean that an employee would not necessarily be forced out of the Company if his job was declared redundant, but equally there would be no increase cost to the Company for retraining.
Obviously if there are particular skill requirements to operate the plant these should be discussed between the parties.
3.Long Term Absentees:The Court fails to see why the Company has such strong views in relation to this issue particularly given the small numbers involved. However, the Court accepts that this forms part of the Companies overall proposals to be competitive. The Court therefore recommends that if agreement is reached on all other items, then this particular proposal should be discussed again by the parties, with a view to trying to reach acceptable agreement on the issue.4.Compensation:The Company has proposed that there will be no compensation to staff who choose to redeploy should their jobs be declared redundant. Given the proposals that the Court has made in three above, the Court believes that it is inappropriate that staff should receive no compensation. The Court, while accepting that these circumstances are different to the normal redeployment, proposes that staff who transfer as part of this selection/redeployment policy should hold their grade rate for one year, and should be then compensated for loss of shift at 18 months loss of earnings.5.Pay Freeze:
The Company is seeking a 12-month pay freeze, and pleading inability to pay the 4% due on the last phase of the craft agreement. The Craft Unions are due the last phase of a 3 year agreement from 1st May 2003 and the Court recommends that the Company pay this phase.
The Sustaining Progress agreement deals with situations where Companies plead inability to pay increases. The Court recommends that the Company progress its proposal for a pay freeze under the relevant clauses of the agreement.
The Court in making the above recommendations stresses that they relate to the current dispute and must not be used as a precedent or in any future negotiations.
Signed on behalf of the Labour Court
Finbarr Flood
9th June, 2003______________________
TOD/BRChairman
NOTE
Enquiries concerning this Recommendation should be addressed to Tom O'Dea, Court Secretary.