FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : BOLIDEN (TARA MINES) REPRESENTED BY THE IRISH BUSINESS EMPLOYERS CONFEDERATION - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION UNITE TECHNICAL, ENGINEERING AND ELECTRICAL UNION DIVISION : Chairman: Ms Jenkinson Employer Member: Ms Cryan Worker Member: Ms Tanham |
1. Labour Cost Reduction And Containment
BACKGROUND:
2. This case concerns a dispute between Boliden (Tara Mines) and SIPTU, UNITE and TEEU in relation to proposed labour cost reductions. The issues in dispute were not resolved at local level and were 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 9th February, 2013 in accordance with Section 26(1) of the Industrial Relations Act, 1990. Labour Court hearings took place on 11th, 12th and 25th February, 2013. The following is the Court's Recommendation:
RECOMMENDATION:
The matter before the Court concerns the Company’s proposed reduction in labour costs which it contends are necessary in order to meet its budget for 2013. The Company told the Court that reductions in labour costs are necessary to secure vital capital investment for mine development and to extend the life of mine up to 2018 and beyond. It stated that without these reductions 2013 would be loss-making. Given the sensitivity of the financial matters put before the Court, it has been agreed by all parties that the actual figures including the proposed reductions in labour costs will not be identified in this Recommendation. These figures were made available to all parties including the Court.
As part of its change management initiative in 2010, “The New Boliden Way”, the Company set out to improve production and productivity in order to secure “The Life of Mine Plan”. The required level of production was not achieved in 2012 and with accumulating operating costs the Company sought the reduction in its overall costs in 2013.
Agreement has been achieved on a number of items including a proposed reduction in headcount of 25 employees by way of voluntary redundancies; a decrease in overtime working hours and non-payment of the non-budgeted excess performance bonus. The Company is also seeking a reduction in earnings up to 10% from all of its remaining 675 employees to be achieved in the main by way of a reduction in performance bonus; a change in overtime premia; non-payment of pay increases and lump sums which were due to be paid to hourly paid workers and staff as per the 2012-2014 Agreement.
Included in the Company’s proposal and as part of an overall agreement was a plan to provide the opportunity to recoup the reduced earnings over time.
The proposed change in overtime premia and reduction in pay/performance bonus are being resisted by the Unions who instead submitted alternative cost saving measures to contribute to the savings required by the Company.
SIPTU on behalf of the mining operatives proposed a number of suggestions to achieve labour costs savings, including: replacement of contractors carrying out waste muck removal with direct labour; increased utilisation of plant and equipment by a combination of early start and staggered breaks on Sundays and a reduction in overtime hours worked.
UNITE and TEEU on behalf of craftsmen agreed to examine all possible ways of making labour costs savings, including reduction in overtime hours worked; replacement of contractors with direct labour; restructuring of shifts to provide more efficient use of manpower and deferral of bonus payments for a period of time.
UNITE on behalf of staff and the craft foremen group agreed to examine all possible ways of making labour costs savings, including deferral of bonus payments for a period of time and increased use of “unpaid” leave.
The Unions sought an independent financial assessor’s report on the business case being proposed by the Company. Mr. Eugene McMahon, Mazars was appointed to carry-out this exercise. The Report has been made available to the Court.
The Court notes that Mr. McMahon’s report concludes that without very clear visibility of a positive return across the remaining life of the mine that it is unlikely that a shareholder would contemplate the level of investment required. His report states: “the challenge for the management and the workforce is to deliver levels of efficiency and profitability which will persuade the shareholder of the business viability over the years to eventual closure”. In his report Mr. McMahon recognised that the proposals submitted by the workforce in this regardmerited serious attention, and reported that the current challenge for the Company is to maximise efficiencies with the cooperation of the workforce, in order to ensure the continuation of mining until the end of the natural life of the mine.
Having carefully considered the positions of all parties, the Court notes that while this is a profitable company, by its very nature its requires significant investment to ensure continuation of mining therefore based on the financial position of the Company, it is satisfied there is a real and genuine risk to the business if cost savings are not achieved.
The Court notes the willingness on all sides to reduce costs including labour costs and recognises the efforts made by the Unions to address this necessity. The Court is aware that an agreement was reached covering the period 2012-2014 with SIPTU and staff which provided for lumps sums/ pay increases in return for increased flexibilities/productivity. The Company’s labour costs reduction proposals will impact on the lumps sums /pay increases. UNITE and TEEU were in negotiations with the Company on a similar agreement, however, events overtook those negotiations.
Taking account of all the circumstances, the Court is of the view that as viable alternatives suggestions have been proposed by the Unions before the Court these should be assessed and given serious consideration before the Court could recommend in favour of any reduction in basic pay, guaranteed bonus payment and/or current premia. In this regard the Court is satisfied that significant reduction in operating costs including payroll costs are absolutely essential to secure the investment required for the remainder of the life of the mine and retention of employment.
In this context the Court recommends that the parties should immediately enter into joint discussions, i.e. collectively with all Unions present, on concluding an agreement on cost saving measures to deliver efficiencies and productivity which will yield the required reduction in labour costs, which should be proportionate across all sectors of the workforce, including management. In this regard the Company should clearly outline the quantum of savings required of each sector of the workforce.
The Court notes the excessive levels of overtime hours worked since 2009, these levels are at extreme proportions and accordingly recommends that all parties should co-operate to achieve a substantial reduction in overtime hours beyond the proposed reduction included in the Company’s proposals.
Furthermore, measures included in the 2012 -2014 Agreement, should be accepted by all employees, i.e. the Site Entry System, Maximo and Mine Operations Control. Therefore, the Court recommends that the 2012-2014 Agreement and any payments due should be reviewed in light of the Company’s performance at the end June 2014 if all elements of the agreement have been adhered to.
The Court recommends that these joint discussions referred to above must be completed as soon as possible but in any event no later than 26thMarch 2013; the parties should give serious consideration to availing of the services of a Facilitator(s) to assist this process. In the event that an agreement is not reached by 26thMarch 2013, then the matter may be returned to the Court for a final recommendation on the cost reductions required.
The Court so recommends.
Signed on behalf of the Labour Court
Caroline Jenkinson
26th February 2013______________________
AHDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Andrew Heavey, Court Secretary.