FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : DAA - AND - SIPTU TEEU UNITE UCATT DIVISION : Chairman: Ms Jenkinson Employer Member: Ms Cryan Worker Member: Mr McCarthy |
1. Company's Cost Recovery Plan Agreement, Pay Increase and New Management/Employer Operating Model.
BACKGROUND:
2. The case before the Court concerns a dispute between the Employer and the Unions in relation to various outstanding issues resulting from the implementation of the Company's Cost Recovery Plan Agreement, 2009. The dispute relates specifically to six individual issues referred by the Union group and one further issue referred by the Company. The issues in dispute concern employee categories across various sections of the Company and have been the subject matter of a number of conciliation conferences held under the auspices of the Labour Relations Commission. As agreement could not be reached the issues were referred to the Labour Court in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on 12th February, 2015. The Court sought additional information from the Company which was furnished to the Court on 7th May, 2015.
UNIONS' ARGUMENTS:
3. 1. The Unions on behalf of their members are seeking full restoration of earnings that were reduced previously.
2. The Unions are seeking to engage with the Employer in a bid to retrospectively introduce a Profit Sharing Scheme.
3. The Unions are pursuing a 6% pay claim with 3% retrospectively applied from January 2013 and a further 3% applied from January 2014.
4. The Unions maintain that the current CRP Agreement should be abolished, with temporary pay reductions returned to members before negotiations on a new agreement can commence.
EMPLOYER'S ARGUMENTS:
4. 1. The Employer asserts that it is inappropriate for the Unions to seek retrospection on deductions made in line with the CRP Agreement.
2. The Employer is of the view that no meaningful discussions have taken place in relation to a Profit Sharing Scheme.
3. In terms of the Unions' 6% pay claim, the Employer contends that no meaningful negotiations have taken place on this matter. Furthermore, the Employer asserts that it is not in a position to concede the Unions' claim.
4. It is the Employer's contention that it is open to reaching agreement on an alternative CRP however there are certain key areas which must be addressed in doing so.
RECOMMENDATION:
The dispute between the daa and SIPTU, TEEU, UNITE, UCATT relates to seven separate issues. The first five issues are centred on the Company’s Cost Recovery Plan (CRP) Agreement 2009 and are applicable to staff within various sections, whereas the claim for a pay increase encompasses all employees. The issues have been the subject of extensive discussions and negotiations and numerous conciliations conferences at the Labour Relations Commission.
The seventh issue concerns a new Management /Employee Operating Model proposed by Management.
The following are the issues before the Court:-
- i.Retrospection – Scale Max
ii.Composite Pay v Roster Duty Allowance
iii.Overtime – Double Hit
iv.Restoration of Double Time for Compulsory Overtime
v.Profit/Gain Sharing Provision
vi.6% Basic Pay Increase
vii.New Management /Employee Operating Model
These targets have not been met.
The Unions stated that the CRP Agreement has delivered efficiencies and savings, including €45.9m in pay roll costs. However, it has not delivered a restoration in the temporary pay cut contributions, nor any benefits from the profit sharing scheme as per the CRP Agreement and neither has it facilitated an intended pay increase since mid-2011. They submitted that the CRP Agreement was no longer fit for purpose and had created a stagnant, regressive, conflictual and hostile industrial relations climate. The Unions stated that the five claims before the Court which come under the CRP are the unintended consequences and anomalies which have arisen as a result of its implementation.
Management stated that the ROE targets and profit points have not been met due to the fact that the Company is not performing to the level expected, considering the huge level of investment in infrastructure and the significant costs involved in pension/insurance cover investment, which are costing the Company c. €1.5m per annum. It stated that annual increments continued to be paid in line with the CRP Agreement and 63% of employees who had a pay adjustment are now earning higher pay. Although the financial position of the Company has improved since 2010 its position remains very challenging and is facing further serious financial difficulties.The Court was supplied with details of the Company’s financial position for the years since 2009, these figures demonstrate that for 2014 Return on Equity was 4% and group profits pre-exceptional items were €39.8m of which circa €22m was generated domestically.
- i.Retrospection – Scale Max
Management maintained that there was no basis for retrospection as the CRP Agreement was correctly applied and the concession was made in good faith in recognition of the equity issue raised by the Unions. It referred to the fact that there were a number of employees who had continued to receive increments in error resulting in their pay now marginally exceeding the reduced temporary maximum of the scale at an annual cost to the Company of €68,000 it was not seeking such monies back.
It is clear to the Court that the targets set in the CRP Agreement have not been met, therefore in accordance with the agreed terms of that Agreement there is no obligation to restore pay levels at this point. The Court upholds the Agreement and rejects the claim.
- ii.Composite Pay v Roster Duty Allowance
Employees either receive composite pay (inclusive of shift premium) or base pay plus Roster Duty Allowance (RDA). Under the CRP Agreement all 2009 earnings including RDA were included for the purpose of identifying the % cut to apply. Due to the fluctuating nature of this component, Management identified the RDA separately as attracting the lowest 4.25% cut, which in effect meant that those with an RDA pay component were slightly advantaged over those employees on the same pay with no RDA component.
Management stated this was a benefit to staff due to the fluctuating RDA earnings from year to year and that the issue was discussed and agreed with SIPTU at the time of the CRP Agreement in 2010. Management question why it is been referred to at this point.
The Court notes that while there is a dispute about the implications of the terms of the CRP Agreement at this point, it is not disputed that the Agreement has been implemented in accordance with its agreed terms, therefore the Court upholds the Agreement and rejects the claim.
- iii.Overtime – Double Hit
Overtime payments (inclusive of on-call, RDA and snow & ice payments) form part of “reckonable earnings” for the purpose of the CRP Agreement. The totality of these payments were added to basic pay in 2009 to create the earning levels of employees for the purpose of deciding on the appropriate pay adjustment to make. The Unions maintain that this was an artificial method to devise earnings and as these payments were subsequently eliminated, consequently such earning never materialised, thereby creating a “double hit” on such employees.
Management stated that a number of such cases were referred to the Implementation Adjudication Committee, provided for under the CRP Agreement, and benefitted financially as a result.
The Court notes that while there is a dispute about the implications of the terms of the CRP Agreement at this point, it is not disputed that the Agreement has been implemented in accordance with its agreed terms, therefore the Court upholds the Agreement and rejects the claim.
- iv.Restoration of Double Time for Compulsory Overtime
This is predominately an issue for craft workers. The Unions are seeking the reintroduction of double time for compulsory overtime. The CRP Agreement provided for a reduction in overtime to time plus a half. At the time the craft workers reserved the right to progress this matter post the signing of the CRP Agreement. The Unions now submit that this also affects other grades and sought the restoration of double time in respect of compulsory overtime only.
Management reject this claim and refer to the fact that overtime premium was reduced in the CRP Agreement.
The Court notes that while there is a dispute about the implications of the terms of the CRP Agreement at this point, it is not disputed that the Agreement has been implemented in accordance with its agreed terms, therefore the Court upholds the Agreement and rejects the claim.
- v.Profit/Gain Sharing Provision
One aspect of the CRP Agreement provided that if the necessary savings were achieved and sustained and when the Company returns to the required profitability there would be a mechanism (profit/gain share) devised to ensure staff share in the benefits of change. The Unions now seek such a mechanism on the basis that the €38m targeted savings have been achieved and surpassed and the Company has made profits on a year on year basis since the CRP Agreement of 2009 – 2011 profit €25.98m; 2012 profit €43.18m; 2013 profit €28.11m; 2014 profit €38.9m.
Management was of the view that there has been no meaningful engagement on this claim. It stated that its priority is to restore base pay levels and then to consider implementing a profit/gain share programme and to this end has devised a model for employees to share in the gains of productivity agreed.
The Court recommends that discussions should take place on examining this issue further to devise a mechanism whereby staff can share in profits achieved, in line with the terms of the CRP Agreement.
- vi.6% Basic Pay Increase
The Unions submitted that since 2011 the Company’s financial situation has improved significantly, yet employee’s pay remains temporarily cut from between 4.25% up to 9%. This reduction has been coupled with further reductions in entitlements, loss of bonus payments, reduction in overtime payments, detrimental changes to pension scheme, etc. and an un-agreed pay freeze since mid-2011, as the CRP Agreement prohibited any pay claims until then. At the Labour Relations Commission conciliation talks in early 2014, the Unions submitted a claim for a retrospective 6% increase in pay for all employees, including those not encompassed by the CRP Agreement, i.e. 3% from 1stJanuary 2013 and 3% from 1stJanuary 2014.
Management stated that there has been no meaningful engagement on this claim. No claims were lodged in 2011, 2012 and 2013.
The Court’s recommendation on the claim for a pay increases is as outlined below.
- vii.New Management /Employee Operating Model
Management proposed to introduce a new Management /Employee Operating Model which would be fit for purpose, and which it stated must be flexible and responsive to increasing and decreasing demands and allows employees to grow and develop their careers and earnings potential. It submitted that if there was any prospect of replacing the CRP Agreement with a new agreement it must address the following:-
- •Productive "Working Relationships" Framework
•The operating models for Dublin and Cork
•Operating models need to have simplified structures, be fit for purpose and flexible and responsive to increasing and decreasing demands
•Pay and terms and conditions that relate to the market and both individual and Company performance
•Elimination of poor work practices
•Improved day to day management
The Unions submitted that they have not been provided with any proposals on this initiative by Management. A presentation on the Model was given by Management at the Labour Relations Commission conciliation conference on 17thJune 2014. However, they are of the view that they have never been presented with an actual proposal to consider. They stated that in order to enter into discussions on this Model they wish to see an end to the CRP Agreement and a structured restoration of employees’ earnings.
Having considered the position of both sides and in particular the financial information supplied to the Court, the Court recommends the following pay increases, in return for full acceptance by the Unions to immediately engage with Management on the proposed new Management /Employee Operating Model, with the assistance of the Labour Relations Commission, if required:-
- •2% increase in pay with effect from 1stJuly 2014 for 12 months
•2% increase in pay with effect from 1stJuly 2015 for 12 months
In recommending the above, the Court is stating that both sides must consider this Recommendation as a composite package, in full and final settlement of all issues before the Court.
The Court so recommends.
Signed on behalf of the Labour Court
Caroline Jenkinson
26th May 2015______________________
SCDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Sharon Cahill, Court Secretary.