FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 2001 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : ROCHES STORES (HENRY STREET) (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - MANDATE DIVISION : Chairman: Mr Duffy Employer Member: Mr Grier Worker Member: Mr. Somers |
1. Non application in full of 1% lump sum due under the revised terms of the Programme for Prosperity and Fairness(PPF).
BACKGROUND:
2. The Union claims that the Company calculated the 1% lump sum on gross basic earnings earned in the 12 months ending the 31st March, 2002. This had the effect that workers with less than 12 months service on the 31st March, 2002 received an amount proportionally less than a 1% lump sum equivalent to 1% of annual basic pay on the 1st April, 2002.The Union states that the National Implementation Board (NIB) issued a clarification on the 6th March,2002 regarding the application of the 1% lump sum.
The Union also claims that the Company, when calculating the 1% lump sum, did not apply the 1% to the commission earnings of sales staff. The Union states that the Company, like similar type department stores, operate two pay scales:
- (a) Non commission pay scale for non-sales staff and back room staff e.g. clerical staff, porters, head office, function staff.
(b) Commission pay scale for front line sales assistants.
The Union claims that the 1% calculation should have been applied to the average gross
earnings of sales staff. The average commission is also used by the Company in the
calculation of lump sums under the Redundancy Payments Acts and for the purposes of
holiday pay based on a 13 week average. The Union also raised the issue of plus payments
for display staff and claims that the 1% should also apply to these payments.
Management rejected the Union's claim.
As agreement could not be reached between the parties the dispute was referred to the
Conciliation Service of the Labour Relations Commission. A conciliation conference
failed to resolve the dispute.The dispute was referred to the Labour Court on the 20th
January, 2003, in accordance with Section 26 (1) of the Industrial Relations Act,
1990. The Court investigated the dispute on the 2nd May, 2003, the earliest date suitable
to the parties.
3. 1. In Labour Court Recommendation LCR17414, the Court recommended that the correct basis for determining the calculation of the 1% was to establish the weekly basic wage and multiply it by 52 and the 1% applied to the result.2. The method of calculation applied by the Company is at variance with the above clarification and the union asks the Court to find accordingly.3. The National Implementation Board issued a clarification on the 6th March, 2002 outlining how the 1% should be applied.4. It is unfair that sales staff should have received a lump sum of less value than their non-sales colleagues simply because they earn commission.5. The Union holds that the 1% calculation should have been applied to the average gross earnings of sales staff as is the case in calculating holiday pay.COMPANY'S ARGUMENTS:
4. 1. The Social Partners agreed in early December, 2000 to add two additional phases to the PPF, in light of the prevailing economic circumstances. A 2% increase on basic pay and a lump sum of 1% were agreed.
2.The terms of the PPF provide that" the parties shall also negotiate a once-off lump sum payment equal to 1% of basic pay, as it applies in each employment or industry, to be implemented on 1st April, 2002.
3. The terms of the Programme for Prosperity and Fairness expressly state "1% of basic pay". It is clear therefore, that only basic pay is reckonable when calculating the lump-sum.
4. The Union's claim is that the 1% should be calculated on earnings which is contrary to the provisions of the PPF.
5. A significant number of companies operating in a similar environment to Roches Stores applied the 1% to basic pay only.
6. The statement of the National Implementation Body is silent on the issue of how the 1% is to apply to those with less than a full year's service.
RECOMMENDATION:
The matters before the Court relate to the interpretation of the statement issued by the National Implementation Body on 6th March, 2002 concerning the application of the 1% lump sum provided for by the PPF as amended.
The statement is as follows:
" The National Implementation Body wishes to confirm that the implementation of the agreement to pay 1% lump sum effective on 1st April, 2002, agreed in December, 2000, is to be interpreted as applying to annual basic pay on 1st April, 2002, as it has been determined in each employment orindustry, especially in the context of implementation of the standard terms of national agreements, including PPF. Implementation is subject to the other terms of PPF, as amended".
In the Court's view this statement can only be interpreted as meaning that the 1% should be applied to the annualised value of basic pay as it applies on 1st April, 2002. Furthermore, basic pay is to be taken as the rate to which percentage increases arising under national agreements, including PPF, have been applied. Applying that interpretation to the issues before it, the Court recommends as follows:
1. Basic pay does not include commission or overtime
2. The basic weekly rate of pay applicable in each case on 1st April, 2002 should be multiplied by 52 and the 1% applied to the result.
Signed on behalf of the Labour Court
Kevin Duffy
12th May, 2003______________________
LW/LWDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Larry Wisely, Court Secretary.