FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : GERNORD LTD (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - UNITE DIVISION : Chairman: Ms Jenkinson Employer Member: Mr Murphy Worker Member: Mr O'Neill |
1. Profit Sharing Agreement.
BACKGROUND:
2. The case concerns a dispute between the Company and the Union in relation to the application of the Company's Profit Sharing Scheme. The Company is a subsidiary of the French Company Gerflor which makes flooring products.
The payment criteria of the Bonus Scheme prior to 2005 was based on the performance of the group whereas since then it is applied on the basis of each Company's individual performance.
Management's position is that the parent Company introduced changes into the bonus scheme in France where it does not negotiate with workers or trade unions on the critera for payment under the Scheme.
The Union's position is that expectations have been created due to previous payments made and that no consultation took place nor was any notification given in relation to the non-payment of the bonus in recent years.
The dispute was 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 2nd February, 2009, in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on 2nd April, 2009.
UNION'S ARGUMENTS:
3 1 Management should have informed the workers that a change had been introduced in the Scheme and that payments would only be made based on individual Company performance rather than that of the whole group.
2 An expectation existed that payments would continue to be made on the basis of custom and practice. There was no consultation in relation to the changes to the Scheme and workers did not know that payments would cease.
COMPANY'S ARGUMENTS:
4 1 A review of the Scheme took place and management amended the qualification criteria for payment, as it is entitled to do.
2The Company does not negotiate with employees or trade unions in relation to the operation of the Scheme. Changes were made at board level and notified to the Company's susidiaries.
RECOMMENDATION:
The matter before the Court deals with the Unions concerns regarding the Company’s application of its Profit Sharing Scheme. In 2005 the Company’s French Headquarters changed the methodology of determining profit sharing payment under the scheme, which was introduced in 1992. Prior to 2005 profit sharing payment was determined by the overall performance of the Company as a group of companies whereas from 2005 profit is now determined by performance in each individual company within the Gernord Group.
Management held that this change came about as part of a three-year review of the Scheme, which does not allow for negotiations with management, employees or trade unions in France or any of the other countries where subsidiaries are based. Changes are made at Board level in the French operation and are advised to the subsidiary companies.
The Union contended that through custom and practice, payment of an annual profit share had become part of the employee’s terms and conditions of employment, with the average payment yielding between €500 - €1000 per annum. It held that in November 2007, it only became aware of the changes made to the Scheme when it was informed that there would be no payment in respect of 2006 and there have been no payments since then.
Having considered the submissions of both sides the Court is of the view that local management should have entered into an information and consultation exercise with the Union on the changes resulting from the Scheme’s three yearly review. The Court recommends that in respect of the year 2008 and onwards such an exercise should be conducted following any further changes that may come about as a result of such reviews. Furthermore, as there is a void of information on the current workings of the Scheme, the Court recommends that the Union should be provided with a full explanation (in English) of the operation of the Scheme.
Finally, the Court recommends that the measurement criteria used in 2004 and preceding years should be used to determine the appropriate profit sharing payment, if any, payable in respect of years 2006 and 2007, based on the application of those rules.
The Court so recommends.
Signed on behalf of the Labour Court
Caroline Jenkinson
27th April, 2009______________________
AHDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Andrew Heavey, Court Secretary.