FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : LEO PHARMA (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Ms Jenkinson Employer Member: Mr Doherty Worker Member: Mr O'Neill |
1. Implementation of "Securing The Future/Productivity Plan-2009
BACKGROUND:
2. This case concerns a dispute between SIPTU and Leo Pharma in relation to the implementation of the "Securing the Future Productivity Plan 2009" restructuring agreement.
The parties are in dispute in relation to the work practice changes required as a result of the plan and the appropriate payments to be applied as a result of implementation. Specifically the issues between the parties are; (a) pay rates, (b) performance bonus (c) new single scale and assimilation (d) enhanced competency payments (e) shift pay (f) staff transfer to P5 sterile work location (g) voluntary severance terms.
Management's position is that the parties have conducted protracted discussions over a long period and that the acceptance of the restructuring plan is essential for future viabilty and the protection of employment. It also contends that it may secure additional product lines from its parent Company in Copenhagen if it can become more competitive. It further contends that failure to reach agreement with the Union on these issues will affect the viability of the Company's Irish operation going forward.
The Union position is that the restructuring plan will yield significant savings for the Company and ensure its continued success into the future. As a result of the restructuring plan and changes to workplace practices, the Union is seeking resolution on the disputed issues.
The dispute was not resolved at local level and was the subject of a number of conciliation conferences under the auspices of the Labour Relations Commission. As agreement was not reached the matter was referred to the Labour Court on 10th March 2009 in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on 25th March, 2009.
UNION'S ARGUMENTS:
3. 1 The Union cannot accept the phased payments of the 4% increase. An initial payment of 2% and an addtional 2% once the production targets have been met is unsatisfactory as the targets are unspecific and aspirational. The Union's claim is for the increase to be applied on a phased basis if necessary but without any target based restrictions.
2 The performance bonus offered by the Company relates to immeasurable and unspecific targets being met as well as other unclear changes to work practices. The Union does not accept Management's costings of the bonus or the inclusion of absenteeism as a qualifying criteria for payment. A further increase of basic pay rather than an unclear bonus scheme is more desirable to the members.
3The Union accepts the asimilation to a single payscale but requires vacancies to be filled prior to the assimilation. In relation to pay, the normal practice on assimilation is to be paid - the nearest point plus one on the new payscale. The application of lower pay rates of pay for trainees is unacceptable to the Union as it is contrary to union policy and did not form part of local level discussions.
4 The Union accept the value of the additional payments for enhanced competencies but suggest an all inclusive system to allow payment for all staff. The system proposed by the Company will create a two tier system and will be at variance with setting up a single pay scale.
5 Any changes to the existing shift working premia of workers will not be accepted.
6 Workers who transfer to the P5 Sterile Operations should have their earnings red circled. If this is not done there will be a significant loss of earnings as a result.
7 The terms of the Voluntary Severance Terms are unsatisfactory. The Union is seeking an increase in the cap on redundancies to reward those with long service and to have shift pay included for those opting for the package who previously worked on shift.
8 The terms of the entire claim sought by the Union have been moderated to take account of changes in the economic environment. The Company is extremely profitable and will make significant further savings as a result of the restructuring.
COMPANY'S ARGUMENTS:
4 1 The required targets in relation to the increase in basic pay are specific and measurable. Management contend that the targets have been agreed previously and are easily achievable within a matter of months.
2 The payments in the bonus scheme have been increased in an attempt to reach agreement. The Company is not in a position to apply the bonus payments to basic pay as it will only apply when specific targets have been met.
3 The Union's claim for the assimilation onto a single scale is excessive. If the Company applied a plus one point on the new scale increase, there would be an unwarranted move to higher earnings. New lower level pay rates are appropriate to those who are in training.
4 The payment of additional competency based payments is inappropriate to all workers. The Company require that it be specifically applied to the 37 workers in question as it relates to product changeover and an ability to carry out craft related duties.
5 The Company apply excellent shift premia to those who work on shift. It has made generous offers in relation to the disputed issues and cannot enhance the payments further.
6 The move to P5 is optional and if workers wish to maintain their higher earnings they may transfer to other areas of the business.
7 The Voluntary Redundancy package on offer is already oversubscribed. The Company, as a result, will obviously not be enhancing it further.
8 The future viability of the Company depends greatly on a return to competitiveness and securing new product lines from its parent Company in Copenhagen. If the Compny fails in its initiatives going forward, it will inevitable leads to job losses.
RECOMMENDATION:
The matter before the Court concerns the outstanding issues arising from the Company’s draft “Plan for Securing the Future of Manufacturing in Leo Pharma in Dublin”. The outstanding issues concern the rewards to be paid for the changes envisaged as part of the plan and for the improved level of performance expected.
The Court understands the urgency attached to this matter and understands the need to complete the process, which had undergone protracted and extensive discussions and negotiations.
Having carefully considered the submissions of both sides the Court recommends that the Company’s Plan should be finalised with the following recommended amendments and implemented with immediate effect:
Increase in Basic Pay
The Company’s proposes to pay the 2% second phase increase in basic pay once the training has taken place and the work practice changes and targets set in the plan have been delivered for two consecutive months. The Company expect that this will be achieved at some point during the second part of 2009, when the increase will be applied.
With this clarification, the Court recommends that the Union should accept the Company’s proposal as outlined in its offer of 2nd March 2009.
Performance Bonus
The Court is satisfied that the structure and details of the performance bonus as outlined in the document presented on 19th February 2009, including the method of deciding the level of payment which will be dependent on the individual’s levels of absenteeism, is fair and reasonable and should be accepted by the Union.
New Single Scale
The Court recommends that the new single scale (the existing Scale 2) should include one point below the current minimum point as an introductory/training point at the commencement of the scale. The Court recommends that that point should be set at €33,250.00, inclusive of the 4% increase in basis pay referred to above.
Assimilation onto a Single Scale
The Court is satisfied that the method of assimilation proposed by the Company is reasonable and should be accepted by the Union.
Payment for Enhanced Competencies
The Company identified 37 positions which it considers will meet the criteria set down in the plan to attain and utilise significant additional special skills which will deliver measurable performance targets and it offered to pay an enhanced 2% competency payment to them. The Court is satisfied that this payment should only apply in the circumstances outlined and accordingly upholds management rights to limit it to 37 employees.
Shift Rates
The Court is satisfied that the shift rates proposed for the various shift systems are reasonable in the context of new structures and arrangements proposed in the plan overall. Accordingly, the proposed rates should be accepted by the Union.
P5 Sterile Operations
The Court notes the voluntary nature of the new positions, which will become available in the new P5 facility. It also notes that where a loss of earnings occur for those who volunteer to transfer to the new facility, as a result of moving on to a different shift cycle, that the Company’s agreed compensation formula will apply.
In such circumstances, the Court is satisfied that the Company’s proposals should be accepted.
Voluntary Severance Terms
The Company’s proposals included details of the terms of a package offered to those who opt for voluntary redundancy. The Court is of the view that the terms are very generous and recommends that they should be accepted by the Union.
Conclusion
The Court recommends that the Company’s proposals as amended by the above clarification/recommendation should be put to a ballot of the Union members as a composite package in full and final settlement of all the outstanding issues referred to the Court.7
Signed on behalf of the Labour Court
Caroline Jenkinson
31st March 2009______________________
AHDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Andrew Heavey, Court Secretary.