FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 2004 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : CHADWICKS LIMITED - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION AMALGAMATED TRANSPORT AND GENERAL WORKERS' UNION DIVISION : Chairman: Mr Duffy Employer Member: Mr Murphy Worker Member: Mr Nash |
1. Pension Scheme; Sick Pay Scheme, Profit Sharing; and Collective Agreement.
BACKGROUND:
2. Chadwicks Limited is a subsidiary company within the Grafton Group plc. They are National Builders Providers and Merchants and employ over 1,000 workers in 24 locations within the Republic of Ireland. The claim is on behalf of approximately 200 members of SIPTU and the ATGWU employed in various grades on a national basis. Following Conciliation Conferences in November, 2005 and July, 2006 a number of issues still remained to be resolved.
The issues before the Court relate to:
- Pension Scheme
- Sick Pay
- Increase in Profit Sharing
- Review of Current Agreements
As the dispute could not be resolved at local level and following Conciliation Conferences under the auspices of the Labour Relations Commission agreement was not reached. The dispute was then referred to the Labour Court on the 3rd August, 2006 in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 7th June, 2007.
UNION'S ARGUMENTS:
3.1Pension Scheme
The Unions are seeking that the Pension Scheme be indexed-linked to the CPI for all benefits going forward or remove the State Pension off-set of one time's, going forward from the date of the Recommendation. It is the Unions' understanding that the Pension Scheme is well funded and very capable of sustaining the increase in benefit sought. The Unions state that the elimination of the State Pension off-set will be funded by both employees and the employer.
With the current level of inflation at almost 5% and predicted to remain high, the non-indexation of pension benefits going forward is highly significant to retiring members' level of pension. The Unions contend that the current Pension scheme is substantially out of line with many other pensions schemes in the Building and Retail Trades.
2.Sick Pay Scheme
The Company operates a Sick Pay Scheme for its entire staff, both indoor and outdoor. At an earlier stage following negotiations it was agreed that out door staff would receive the better indoor sick pay provision of 6 months' full pay (less social welfare) and 6 months' half pay (plus social welfare) from the first day of illness. A provision in the sick pay rules for outdoor staff also states that after 10 days sick leave the employees lose the payment for the first three days' sick pay on any further sick leave claims. The Unions are seeking the removal of the 10 days provision and that the outdoor staff should receive the same sick pay benefits as applies to the indoor staff, which require the removal of the 10 day qualifying rule.
3.Profit Sharing
Workers currently have an Approved Profit Sharing Scheme in operation. The Scheme provides for a base payment of 4% of basic pay plus an additional 1% of basic pay if the Company is profitable. The Unions are seeking the 1% to be guaranteed into the future and increase the total payout by an additional 2% of basic pay. This would provide a total of 7% of basic pay be paid through Profit Sharing.
The Unions are seeking this payment on the basis of a substantial increase the in profits of the Grafton Group to which Chadwicks is a major contributor. The Company has seen substantial growth in its Builder Providers Sector due to the buoyancy in the Building Sector.
4.Collective Agreement
The Company committed itself at the Labour Relations Commission to discuss and review the existing Collective Agreement. To date this has not happened. The Unions are seeking the commencement of discussions within an agreed time frame to review the Agreement.
COMPANY'S ARGUMENTS:
4.1Pension Scheme
Management contends that the current Company defined benefit plan is superior in the industry and at a time when pensions are being overhauled and being moved to a defined contribution basis and/or a hybrid model, the closure and non availability of defined benefit plans for employees in general is manifest.
The Company believes that there is no basis whatsoever for the Unions to make any claim for pension enhancement and in line with Towards 2016 for there to be any concession of this claim. Part Two, Section 3.1 of Towards 2016 states"Unions are not precluded....from making claims for the improvement of such schemes where they are substantially out of line with appropriate standards in comparative employments"This is clearly not the case in this matter at issue.
Sick Pay Scheme
Following a Labour Court Recommendation in March 1996 and further discussion at local level the "outdoor" staff moved to a broadly equivalent benefit of the "indoor" staff in January 1997 though retaining the first 10 days' sick payment without any reduction for the first three days' non-payment period in any absence.
An IBEC survey in 2004 found that only seventy per cent of manual employees were covered by sick pay schemes and that ten per cent of these schemes were contributory. Similarly any review of terms and conditions within REAs and JLCs will confirm that both the level and duration of sick payment and similarly pension entitlements are substantially below what are available to this Company's employees.
In recent years there has been some particular deterioration in attendance at work and this matter is currently under review by the Company. Any increase in the current scope of sick pay entitlement will only exacerbate this issue and increase the urgency for review and potential retrenchment of the sick pay entitlements.
This claim for improvement in sick pay benefit is unwarranted given the current level of benefit. The Company's provisions in this regard are plainly not substantially or otherwise out of line with comparators. This position is fully vindicated within the current national agreement provisions.
Profit Sharing
A share participation scheme was introduced for Group Companies in 1998. For this Company it consists of an annual Group share appropriation of four per cent of basic pay plus an extra one per cent of basic pay when the Group's ROI published operating performance increases year on year. Since its inception the Scheme has produced on average each year over one hundred per cent gross benefit to all employees.
The Company see no justifiable case to further increase the cost base of the Company in this regard. It is also clearly disallowable in the current agreement as a cost increasing claim.
Collective Agreement
It is currently the intention of the Company and in the context of employee communications and induction programmesto outline the various employment policies, practices and procedures in an appropriate form.
RECOMMENDATION:
Provision of Pay Agreement Associated with Towards 2016
The Company submitted to the Court that each of the claims as presented are cost-increasing in nature and, as such, are precluded by the terms of Clause 1.4 of the pay agreement associated with the Towards 2016 National Partnership Agreement.
Clause 3 of that Agreement provides that Unions are not precluded by Section 1.4 from making claims for the introduction of pension or sick pay schemes where none exist or from making claims for the improvement of such schemes where these are substantially out of line with appropriate standards in comparable employments. This provision have been applied in formulating the recommendations which follow.
Pension Scheme
The Unions have sought improvements in the Pension Scheme operated by the Company. It is seeking the introduction of post-retirement increases or, in the alternative, that the current provisions relating to the integration of the Scheme with social welfare be eliminated. In advancing that submission the Unions relied on the findings of a survey conducted by the Irish Association of Pension Funds, in 2002 which show that the majority of private sector funds provide for such increases.
The clear intent of Clause 3 of the Towards 2016 Agreement is that in considering claims of this nature the Court should make a comparison between the Scheme at issue and similar schemes incomparableemployments. In that regard it seems to the Court that the onus is on the party making the claim to identify a range of comparable employments in the same business or sector and to demonstrate by reference to those comparators that the Scheme at issue is substantially out of line.
In this case no information has been made available which demonstrates that the Scheme at issue is substantially out of line with similar schemes in comparable employments. Accordingly the Court cannot recommend concession of the Unions' claim.
Sick Pay.
At present staff classified as “indoor” receive sick pay from the first day of illness. Staff classified as “outdoor” do not receive payment for the first three days of illness. The reasons for this difference in treatment are largely historical. In that context they are in comparable employment. Against that background the less favourable term in the sick pay arrangements for outdoor staff is substantially out of line and anomalous. The Court can see no reasonable basis upon which the continuance of that anomaly could be justified.
Accordingly the Court recommends that the terms of both schemes be brought in line. However, the Court further recommends that if there is any appreciable increase in absenteeism following the implementation of this recommendation, the position will have to be reviewed.
Increase in Profit Sharing.
The Court is satisfied that the Unions' claim for changes in the profit sharing arrangements constitute a cost-increasing claim and, as such, it is precluded by Clause 1.4 of the pay agreement of Towards 2016. Accordingly the Court does not recommend concession of this claim.
Review of Current Agreements.
On the understanding that the review sought by the Union will not produce any changes which will be either directly or indirectly cost-increasing, the Court recommends that the claim be conceded.
Signed on behalf of the Labour Court
Kevin Duffy
15th June,2007______________________
JBDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Jackie Byrne, Court Secretary.