FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : ANORD CONTROL SYSTEMS LIMITED - AND - 40 WORKERS (REPRESENTED BY SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION TECHNICAL, ENGINEERING AND ELECTRICAL UNION) DIVISION : Chairman: Mr Hayes Employer Member: Mr Doherty Worker Member: Ms Ni Mhurchu |
1. Basic pay reductions.
BACKGROUND:
2. The Company is a supplier of power and automation control systems, and its principal market is the UK. The case concerns the Company's proposals to change work practices and make adjustments to basic pay (a 10% reduction for all operative grades) in order to contribute to its Survival & Sustaining Plan. The Company claims that these are necessary in order to re-establish competitiveness in the UK in the wake of the recent world-wide recession and the change in the Sterling exchange rate compared to the Euro. Another issue is the reduction by 50% of the Company's contribution to the employees' pension scheme. The Unions also raised the issue of outsourcing work to a company in Newry. The Unions' case is that discussions have not taken place between the parties resulting in the Company taking unilateral decisions in regard to reductions in pay and the pension issue. The Company claims that it kept the Unions informed of its proposals.
The dispute was referred to the Labour Relations Commission and a conciliation conference took place. As the parties did not reach agreement, the dispute was referred to the Labour Court on the 1st September, 2009, in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 3rd March, 2010.
UNION'S ARGUMENTS:
3. 1. Members of both Unions have already had significant wage reductions in recent years yet the Company is proposing a further 10% reduction in basic pay.
2. Union numbers have reduced significantly by reason of lay-off on a phased basis since April, 2009. This has resulted in the core numbers for both Unions being below that agreed in Company /Union agreement.
3. The Company was profitable up to the end of 2008. The Unions are willing to engage in discussions to effect cost savings but have not been given the opportunity to do so by the company.
COMPANY'S ARGUMENTS:
4. 1. The Company has suffered a severe downturn in work in the last 18 months. The two main reasons are the global recession and the impact of the Sterling/Euro exchange rate which has gone from a steady € 0.67 to fluctuating between €0.86 - €0.94. This has increased labour costs by effectively 35%.
2. The Company needs to reduce its selling price by at least 25% in order to regains its competitiveness. This would involve a substantial drop in hourly wage rates as well as addressing all other elements of the Company's cost base.
3. Whilst the Company was profitable up to 2008 it will be luck to break-even in 2009 and the output for the first half of 2010 will be very poor.
RECOMMENDATION:
Having considered the extensive written and oral submissions, and noting the willingness of both sides to enter discussions without preconditions, the Court recommends that they re-engage directly with each other with a view to arriving at an agreement that recognises the causes and consequences of the trading difficulties facing the Company and adjust the cost base in a manner that maximises the possibility of long term sustainable employment in the Company.
This process should be completed before the end of May, 2010. The parties may avail of the services of the LRC if they consider it helpful and appropriate to do so.
In the event that no agreement is reached before the end of May the Court will, if requested to do so by the parties, revisit the matter and issue a final Recommendation on the issues then outstanding.
Signed on behalf of the Labour Court
Brendan Hayes
11th March, 2010.______________________
CON.Deputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Ciaran O'Neill, Court Secretary.