FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 2001 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : KERRY FOODS LIMITED (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Mr Duffy Employer Member: Mr Carberry Worker Member: Mr O'Neill |
1. Payment of bonus above Grade 3 level.
BACKGROUND:
2. The Company acquired a food processing plant at Glenealy, Co. Wicklow in 1988. The former owners had various individual rates of pay in place and, after taking over, Kerry Foods introduced a standard rate of pay for new entrants (Grade 3 Basic) and 'red-circled' old rates where these were higher. The claimants in this dispute are workers whose rates have been red-circled.
In 2000, the Company introduced a performance related bonus scheme which yields a maximum of 33.3% of basic rate at 100 BS1. The Company is currently paying bonus as a percentage of the standard basic rate of pay (Grade3) and the Union is seeking that the claimants' bonus should be calculated by reference to their actual basic rate, i.e. their red-circled rates. The Company rejected the claim. 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 November, 2003 in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Court hearing was held on the 9th March, 2004.
UNION'S ARGUMENTS:
3. 1. The Union was not involved in the drafting of the Bonus Scheme. Since its introduction the Union has had to involve its Industrial Engineers where difficulties have been experienced with the scheme. The Union, on receipt of a copy of the details of the scheme, took issue with the bonus earnings of the claimants being capped at Grade 3.
2. There are only a small number of workers who are not receiving their individual entitlements by virtue of the capping arrangement, initially decided upon by Management. They are being treated unfairly.
4. If it is acceptable to the Company to pay rates of pay in excess of Grade 3 to the claimants because of the value of their job, it must surely follow that bonuses to these workers should be based on the same relationship criteria to their basic pay, as is the case with other workers in the same scheme who are on Grade 2 and Grade 3.
5. The scheme was designed to be at least self financing and has provided some real savings to the Company.
6. The Company has full prerogative in determining crewing levels. Workers give full flexibility and incentive rates are adjusted by the amounts of increases under the National Wage Agreements. These elements protect the Company against any cost implications in the operation of the scheme.
COMPANY'S ARGUMENTS:
4. 1. The basic hourly rates of the claimants are red-circled since 1988. When the Bonus Scheme was introduced, it was clearly stated and understood that Grade 3 was the hourly rate of pay that was going to be used in calculating the average bonus paid to red-circled workers. This is what has happened on a weekly basis up to the present time.
2. Concession of the claim would have detrimental consequences for the business. Earnings would be pushed above those of Production Supervisors. Grade 3 employees would be discontented as they see the claimants getting an increase in bonus payments leading to a widening in the gap between fellow workers, without justification. The claim would bring the red-circled claimants' annual wage above the majority of the Management team on site.
3. The claim is cost increasing and precluded under the Sustaining Progress Agreement.
RECOMMENDATION:
Having considered the submissions of the parties the Court is satisfied that it was always intended to use the Grade 3 rates as the reference point for the calculation of bonus. There is no evidence of the scheme having ever operated on any other basis. However, the Court believes that this may not have been fully explained to those employees who carried higher rates on a red-circled basis.
In the circumstances and for the purpose of bringing closure to this dispute the Court recommends that the Company offer and that the Union accepts a once-off ex-gratia payment of €1,000 in full and final settlement of the claim now before the Court in respect of each of the four individuals identified as being on red-circled rates.
Signed on behalf of the Labour Court
Kevin Duffy
16th March, 2004______________________
TOD/MB.Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Tom O'Dea, Court Secretary.