FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 2004 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : BORD NA MONA - AND - AMICUS DIVISION : Chairman: Ms Jenkinson Employer Member: Mr Doherty Worker Member: Ms Ni Mhurchu |
1. Claim in respect of change of work practices and responsibilities.
BACKGROUND:
2. The claim concerns 25 foremen who play a first line management role in the planning, cooperation and control of the bog, transport and maintenance activities of Bord na Mona Energy Ltd. They are paid by way of a basic salary with a performance related bonus of 15% of salary as well as an overscale allowance amounting to approximately 8% of salary. This allowance and the bonus are non-pensionable. Management and the Union have recently been negotiating on changes in the role of the foremen and progress has been made in these talks on the type of change Management is seeking. The Union has agreed to extend cooperation on an interim basis for twelve months in return for the payment of a once-off lump sum payment of €2,500 which would be offset against the terms of any future comprehensive agreement that would be backdated to 1st January, 2005. However, whereas Management has offered a non-pensionable allowance of €2,500 per annum in respect of this change the Union is seeking a pensionable increase in basic pay in the amount of €10,000. 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 on the 16th May, 2006 in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Court hearing was held on the 12th October, 2006.
UNION'S ARGUMENTS:
3. 1. The Union made it clear at all stages in negotiations that in return for acceptance by the foremen of a range of additional responsibilities that their basic pensionable pay should be increased. The new responsibilities represent significant value to the Company. The Union cannot accept that it is appropriate to compensate employees for increased responsibilities by such an allowance. Such an approach would lead to an erosion of established terms and conditions and the elimination of pensionable employment by stealth.
2. An arrangement to make a contribution to the defined contribution pension scheme in respect of the allowance proposed by the Company is of negligible value to mature employees with significant service in the Company. It is essential that any pay increase related to increased responsibilities be on pensionable pay.
3. The Company has argued that because the BNM General Employees Superannuation Scheme currently has a deficit that it cannot agree to any improvement in pensionable pay. Although the Company refusal to fund this deficit is the subject of a separate referral to the Labour Court, the Union's claim in the foremens' case is not dependent on the outcome of that issue. It is normal business procedure to allow for salary growth of employees and any employer with a defined benefit pension scheme will have such an actuarial expectation built into their funding arrangements.
COMPANY'S ARGUMENTS:
4. 1. The most recent review of the role of foremen and the associated proposals regarding improvements to their remuneration package must be viewed in the context of a number of issues at the forefront of discussions between the parties. The first of these is the Pay and Productivity Agreement concluded between the parties in early 2004 which provided special pay increases for foremen over and above the pay provided under the Sustaining Progress Agreement. On top of the pay increases of 12.5% as part of SP there were two special pay increases each of 3% and these were paid to foremen with effective dates of 1 January, 2004 and 15th September, 2004. The Company has offered a further €2,500 per annum increase in the foremens' allowance. This level of increases on top of the basic pay terms of SP is a totally reasonable and fair response by the Company to compensate for the type and level of change being sought from the foremen group.
2. At all times in discussions the Company has pointed to the significant deficit in the Staff Pension Scheme and this is the scheme in which the foremen are members. The most recent estimate provided by the Actuary shows the deficit to be €13.3 million at September, 2006 and the issue of how this deficit is to be funded is the subject of a separate referral to the Labour Court. In view of this current difficulty in the Staff Pension Scheme the Company approach has been to offer to increase the foremens' non-superannuated overscale allowance. This overscale allowance which is a fixed and regular payment to foremen has been in place for ten years. In view of the current unresolved difficulties in the Staff Pension Scheme the Company also offered to match up to 6% of an individual foreman's pension contribution to a defined contribution scheme in respect of the overscale allowance.
RECOMMENDATION:
The dispute before the Court concerns the Company’s proposals to change the role of Foremen to the newly titled role, Regional Operations Leaders. Management offered a non-pensionable allowance of €2,500 per annum in respect of these changes; the Union sought a pensionable increase in pay on behalf of the 25 Foremen involved. It maintained that the changes envisaged were significant, requiring a shift from direct supervision of employees to production systems management and a requirement to manage across all areas of the Company. The Union expressed its view that there is no obstacle, in principle, to agreement being reached on the Company’s proposals.
The Company submitted to the Court that since 1996 Foremen had been paid on a trial basis a payment system including a performance related pay element of 15% of salary as well as a non-superannuated overscale allowance. Furthermore, it submitted information to the Court giving details of other grades, which are also paid a non-superannuated overscale allowance. The Company informed the Court that the Union’s claim presented major difficulties for the Company due to the scale of deficit in the staff pension fund.
Following an interim agreement in March 2005 each foreman received a once off lump sum payment of €2,500 to be offset against the terms of any future comprehensive agreement, which will be backdated to 1st January 2005. Furthermore, the Company offered to increase the overscale payment by €2,500 with effect from 1st January 2005 and to contribute a matching amount of up to 6% on the new overscale allowance into a defined contribution scheme. This offer was rejected by the Union.
The Court notes that considerable effort has been made by both parties to bring the issue to conclusion however the issue of a non-superannuated method of payment has prevented the matter from being resolved. The Union are looking for an increase of €10,000 in basic pay in return for the increased responsibilities involved, non-replacement of staff and increased efficiencies.
The Court has given careful consideration to submissions of both parties and recommends that in recognition of the level of changes involved in the new role for Foremen, the following should apply:
- In addition to the Company’s offer to increase the overscale payment by €2,500 with effect from 1st January 2005, the Court recommends that the Foremen’s current basic pay scale should be increased by €2,500, backdated to 1st January 2005.
- Secondly, the Court recommends that the €2,500 lump sum already paid should not be offset against the recommended payments.
- Furthermore, the Court recommends that the status of the overscale payment should be reviewed in two years from the date of acceptance of this recommendation.
- The Court also endorses the Company’s offer to contribute a matching amount of up to 6% on the new overscale allowance into a defined contribution scheme.
Signed on behalf of the Labour Court
Caroline Jenkinson
20th November 2006______________________
TODDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Tom O'Dea, Court Secretary.