FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : MAGNA DONNELLY ELECTRONICS NAAS LIMITED (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Mr McGee Employer Member: Mr Doherty Worker Member: Ms Ni Mhurchu |
1. 1. Redundancy Terms. 2. Bonus Scheme.
BACKGROUND:
2. The Company is part of a multinational corporation Magna International. It employs 465 workers and manufactures mirrors for the automotive industry at Naas Co. Kildare. In May 2005 the Company announced 245 redundancies due to the restructuring of its operations and the relocation of some of its products in the U.S.A. and Spain.
Redundancy.
The Company has offered a voluntary package of 4.5 weeks pay per year of service, inclusive of statutory entitlements, subject to a cap of two years pay and a week's pay being based on basic pay and shift rate. The Union rejected the offer. Its claim is outlined as follows:
1. The removal of the cap.
2. 8 weeks pay plus statutory entitlements plus pay in lieu of notice. Calculation of a week's pay should include shift allowance, bonus,overtime, BIK, service days and medicare. Floor payment for workers with short service.
3. There will be no less favourable terms in relation to a severance package in the future.
4. Two year continuation of VHI payments with further extensions for workers who have contracted a work related illness or sustained a work related injury.
5. Extension of access to the company doctor for a period of time post redundancy, i.e ten visits excluding work related injuries or illness
6. Company to continue to fund educational courses already committed to.
Management rejected the Union's claim.
Bonus Scheme.
The Union is seeking a straightforward bonus scheme with payments commencing at 75% BSI and yielding a maximum bonus at 100%BSI. Management claims that the bonus scheme is still under discussion and should be treated as a separate issue.
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 on the 19th July, 2005 in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Court hearing was held on the 2nd August, 2005.
UNION'S ARGUMENTS:
3.Redundancy.1. The Company is part of a multinational corporation which is very profitable and can afford to concede the redundancy terms sought by the Union. The Company will achieve enormous cost savings in implementing the redundancies.
2. Many of the claimants have long service and will find it extremely difficult to get suitable alternative employment, in fact many of them may not obtain employment at all. The Company's paltry offer does not reflect the loyalty and service which the claimants have given. Given the Company's strong balance sheet, it should sufficiently compensate workers for their long and loyal service.
3.Bonus.In December, 2004 the Court, in LCR 18048, detailed clear criteria for the bonus i.e. "fair, accurate and achievable." Since April, 2004 the Union has engaged with the Company in a meaningful way and suggested a formula for the bonus which supported the Court's criteria. The Company has set unrealistic, unachievable production targets All inhouse studies carried out by the Industrial Engineer have shown performance levels averaging 92% BSI. Such a performance is in excess of 'Normal' (75% BSI) as per International Labour Office Recommendations. This level of performance would indicate that workers are overdue bonus payments.
COMPANY'S ARGUMENTS:
4.Redundancy.1. By implementing the proposed restructuring the Company seeks to secure the future of the plant in Naas and hence the 235 remaining jobs. The Company has put forward an attractive package in the context of Sustaining Progress, and the fact that it is a voluntary programme.
2. The Automotive component industry is one of the most competitive of all, with car manufacturers demanding price reductions year-on -year when they issue contracts to supply. Unless significant productivity improvements are achieved it is impossible to remain competitive.
3. The Company is in a difficult and critical financial position and due to the delay in reaching agreement on restructuring it is incurring significant additional costs per week.
4.Bonus.The issue of the implementation of the bonus scheme has been fully addressed in LCR 18048. The Company is currently engaged in discussions with the Union on the mechanics, structure and implementation of the bonus scheme. Extensive work has been done regarding the work standards on which bonus scheme would be based. Management and Union agreed to use an independent consultant to examine the work standards, on the 13 th and 14th July, a Union industrial engineer attended the plant to further examine work standards. Discussions on the bonus scheme are ongoing and have not broken down. If these talks do not succeed the Company will agree that the outstanding issues will be referred back to the Court under LCR 18048.
RECOMMENDATION:
Bonus.
The parties should renew engagement on this issue, as per LCR 18048. These discussions should be concluded no later than 15th September,2005.
If the matters in dispute are not concluded by that date, the parties should revert to the Court for a definitive recommendation.
Severence Terms.
The Company's last offer on Severance should be improved as follows:-
- Severance payment of 5 weeks' pay at average earnings in addition to statutory redundancy entitlement plus pay in lieu of notice (where applicable)
- Payments should be capped at 156 weeks' pay
- there should be a minimum severance settlement of 3 months' pay.
The Court so recommends.
Signed on behalf of the Labour Court
Raymond McGee
10th August, 2005______________________
todDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Tom O'Dea, Court Secretary.