FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 2004 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : STRYKER ORTHOPAEDICS (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Ms Jenkinson Employer Member: Mr Grier Worker Member: Mr Nash |
1. Outsourcing.
BACKGROUND:
2. Stryker Orthopaedics Limerick is a subsidiary of the Orthopaedics Division Corporation, a US based Medical Device company. The Company was established in Limerick in 1972 and employs about 680 employees. The Company is involved in manufacturing of medical appliances and devices. The Company wish to outsource three maintenance jobs to outside contractors and have offered the three existing jobholders a move back in to the manufacturing operation. The three workers are not craft or skilled maintenance personnel. The Union contends that the Agreement the Company are relying on in this instance goes back to a 1997 Partnership Agreement concluded between the Union and the Company. Clause 5.1 of this agreement refers to non value added activities and allows for the use of contractors for cost savings reasons where the workload of these activities can not be carried out by the existing workforce. This clause was further clarified in 1998 through the Labour Relations Commission to ensure that any such contracting out of work would be for cost reduction reasons and would not impact on the number of over-all employees.
The Company have offered the three workers concerned the same pay, terms and conditions as they currently hold if they move into alternative and suitable manufacturing positions with full training and support given. The three workers have 33, 32 and 33 years service with the Company and have been carrying out maintenance duties for 20, 12 and 11 years respectively. The workers concerned wish to continue in their present positions.
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 16th January, 2006 in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 20th October, 2006.
UNION'S ARGUMENTS:
3.1 The workers will find moving back into production very problematic as the workers have not worked in production for between 13 and 22 years.
2. The justification of cost argument is not disputed, the only issue in dispute is whether or not the company have justifiable cost reasons for contracting out the work of the 3 remaining employees in the maintenance department. The Union argue that they do not.
3. Originally the Company employed as many as 16 people in this department. The Company's policy of non replacement of employees in this area has seen a gradual reduction in these numbers employed.
4 The Union are arguing very strongly that they are not reneging on previous agreements but merely seeking to have the terms of these agreements met by the Company, i.e.the Company must be made to demonstrate that any cost savings are to be achieved by outsourcing are such that they are meaningful and actually make a difference to the business imperative and environment.
COMPANY'S ARGUMENTS:
4.1Given the cost increasing pressures facing the Company, any savings made has to be welcomed. This can be done without negatively impacting on employees. The Limerick operation has an excellent cost reduction record to date but as the market demands even great cost reduction, this is becoming harder and harder to achieve.
2. While the Union has not disputed the savings arising from outsourcing all remaining janitorial and related duties, it has questioned their significance. However the Company takes the view that all cost savings of this magnitude are significant and will become even more significant as cost-reduction becomes harder in the future.
3. While the workers concerned have nearly 100 years service between them with the Company they have spent some time in production, they are not being asked to take a step into the unknown. They have been in production and are familiar with the work. There is a wide variety of jobs available and there will be no difficulty finding work that matches their capabilities.
4. The three will be moving back into production with no loss of earnings or benefits. All duties performed by them will be included in existing Cleaning Waste Management and Site Management contracts with external contractors.
RECOMMENDATION:
The dispute before the Court concerns the Company’s intention to outsource the maintenance function. While the Union accept that an agreement exists which gives Management this right to outsource the maintenance function, it maintains that the criteria outlined in that agreement has not been met in this case.
The agreement signed in 1997, refers to non-value added activities and allows for the use of contractors for cost saving reasons where the workload of these activities cannot be carried out by the existing workforce. This was clarified in 1998 to ensure that any such contracting out of work would be for cost reduction reasons and would not impact on the overall number of employees. Both parties submitted details of the cost saving associated with the Company’s proposal.
Having examined the details and considered the views of the parties expressed in their oral and written submissions, the Court is satisfied that based on the level of savings put forward by the Company, that there are significant savings to be made by the outsourcing of the maintenance function in the Company. The Court finds that the 1997 Agreement as clarified has been upheld by the Company’s proposal and recommends that the parties should now enter into discussions with the three individual employees to ensure a smooth transition from their current positions in the maintenance department to the production department. The Company gave assurances at the hearing that every effort would be made to ensure that retraining and reintegration would be facilitated in every way possible.
The Court so recommends.
Signed on behalf of the Labour Court
Caroline Jenkinson
20th November, 2006______________________
JBDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Jackie Byrne, Court Secretary.