FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 2001 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : IRISH FERRIES - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Mr Duffy Employer Member: Mr Carberry Worker Member: Mr O'Neill |
1. Benchmarking proposals - ratings
BACKGROUND:
2. The issue concerns a proposal by the Company to alter certain aspects of its operation in order to bring its costs into line with its “next nearest competitor”. The Company has benchmarked its operation against that operator and argues that its costs are €5.3m per annum greater than theirs.
- The Company proposes to change the crewing ratio for ratings from 2.4 to 2.17 to bring it into line. The Company state that of the €5.3m per annum savings being sought, €2m is accounted for by crewing ratios. The Company proposes a broad range of other changes designed to reduce costs i.e. sick leave arrangements for new staff etc. The Union rejects any change to crewing ratios.
The dispute could not be resolved at local level and was the subject of a conciliation conference under the auspices of the Labour Relations Commission. As agreement was not reached the dispute was referred to the Labour Court on the 26th November, 2003 in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 9th January, 2004.
UNION'S ARGUMENTS:
3.1 The Company are deliberately exaggerating the cost difference and making assumptions about the industrial process in another company.
2. The Union do not accept the benchmarking exercise is a scientific or an empirical analysis of the two Companies as both Companies operate different type of vessels and different requirements in manning.
3. The current ratios are the minimum that will be accepted by members who make a substantial contribution towards the profit of the Company.
4. The Union do not accept that the proposals tabled by Management on the 12th June 2003 are all necessary for the future viability of the Company.
5. The Union maintains that the only basis for securing change as set out in the 12th June, 2003 document, outside leave and pay elements is to conduct discussions jointly with both Unions representing non-officer grades.
COMPANY'S ARGUMENTS:
4.1 The financial data shows the Company to be currently disadvantaged by €5.3m per annum or 32% versus its competitor and that this "GAP" will widen to €6.5m per annum or 37% by January, 2006.
2. Business trends indicate that the profitability of the Company is likely to continue to suffer pressure through the combination of maritime and air sea transport competition. This will encourage further price cutting by competitors in order to retain volumes of business.
3. Ongoing reductions in profitability will affect the ability of the Company to adequately market its services or properly renew its assets. The Company will suffer a confidence loss from investors and could result in a services reduction and/or schedules reduction.
4. The Company's proposals are geared to renewing competitiveness with minimal adverse effect on jobs, services, wages/salaries, whilst allowing for non wage/salary costs reductions and the introduction of more flexible operation of practices and agreements.
5. Gaining and retaining customers, cars and freight is increasingly the determining factor of price/cost, all other things being equal or set aside.
RECOMMENDATION:
This dispute came before the Court from against the background of a benchmarking exercise undertaken by the Company which indicates that its wage costs are significantly out of line with those of its competitors. On this basis the Company argues that, whilst it is now trading profitably, the situation identified must be addressed as a matter of urgency if the Company is to remain competitive.
The Company put forward proposals aimed at retaining its competitiveness in June 2003. The Unions broadly accept the need for corrective action but for a variety of reasons, principally the unacceptability of the Company's proposal to adjust ratios of crew to jobs, no real or serious negotiations have taken place. In these circumstances the Court does not consider it appropriate to make recommendations on the substantive issues in dispute at this time. Rather, the Court believes that it should now set down the basis upon which real and meaningful negotiations should take place and the timescale within which they should be completed. The Court, therefore, recommends as follows:
- All parties should recognise that there is an urgency in commencing these negotiations and in bringing them to finality. The parties should return to the Labour Relations Commission and seek its assistance in engaging in an intensive round of negotiations extending over not more than two weeks. Those negotiations should commence as soon as is practicable after the date of this recommendation.
- The negotiations should take place without precondition on either side. The object of the negotiations should be to achieve savings broadly in line with those proposed by the Company. The means by which savings are to be achieved should be open to discussion. If viable alternatives having the potential to achieve similar results to the Company's proposals are identified, they should be considered. If conditions of employment of existing staff are detrimentally affected appropriate compensation should be negotiated.
- The negotiations should be conducted jointly by both Unions representing non-officer grades. The Court is fully aware of the historical reasons as to why joint negotiations have not previously taken place. However, it is perfectly clear to the Court that no progress can take place within fragmented negotiation structures. The Court recommends that the Unions should request the Irish Congress of Trade Unions to provide advice and practical assistance in putting in place a unified negotiating structure.
Signed on behalf of the Labour Court
Kevin Duffy
14th January, 2004______________________
JB/Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Jackie Byrne, Court Secretary.