LCR21560

FULL RECOMMENDATION

CD/17/129

RECOMMENDATIONNO.LCR21560

CCc-161595-17

SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990

PARTIES :

AER LINGUS

- AND -

ICTU
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
IRISH MUNICIPAL, PUBLIC AND CIVIL TRADE UNION
UNITE
TECHNICAL, ENGINEERING AND ELECTRICAL UNION

DIVISION :

Chairman: Mr Foley
Employer Member: Mr Marie
Worker Member: Ms Tanham

SUBJECT:
1. Pay Increase Claim;Profit Sharing;Increments;Licence Pay

BACKGROUND:

2. This dispute concerns a claim by the Unions for an increase in pay, for the introduction of profit sharing, for the restoration of increments lost and for improved licence pay. This dispute could not be resolved at local level and was the subject of a Conciliation Conference under the auspices of the Workplace Relations Commission. As agreement was not reached, the dispute was referred to the Labour Court on the 12th of May, 2017, in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 21st June and the 1st August 2017.

UNION'S ARGUMENTS:

The Unions argued that the Company's strong financial performance was evident from the strong profit levels in 2016 and it's strong performance when compared to other airlines in the IAG group. The Unions also informed the Court that Aer Lingus has made an operating profit every year since 2010 which has enabled the Company to have in the region of €1 billion in free cash on its balance sheet. The Unions further contended that the exceptional financial performance of Aer Lingus is in large measure due to the efforts of it's employees and the dramatic improvements in payroll measured as a percentage cost of revenue from 25.95% in 2009 to 18.5% presently is a reflection of this.

COMPANY'S ARGUMENTS:

The Company stated that although there was a pay freeze in place since 2010, Gain share money of circa €1500 per employee per annum was paid out to employees in this period, a stabilisation payment of circa €1800 per employee was also paid. The Company stated its ability to concede to any of the Unions claims is impacted by the emergence of competitors with significantly lower cost bases.

RECOMMENDATION:

The Court has given very careful consideration to the comprehensive written and oral submissions of the parties.

The submissions of the parties have given the Court an understanding of the financial and competitive position of the business and of its capacity to sustain basic pay increases. The submissions have also given the Court an understanding of the impact on employees of recent pay history as well as the history of achieving cost reduction and significant change and restructuring by agreement.

All of these factors have been considered and taken full account of by the Court in forming a recommendation designed to address the current dispute in a manner reflective of the situation of this company at this time.

The Court notes the recent history of pay movement in the company including agreed pay and increment ‘freezes’. The Court notes in particular the fact that there has not been an adjustment to basic pay since 2010. The Court has been made aware that a number of lump sum payments have been made in that period but is also aware that such payments do not have the value of an adjustment to basic pay when one takes account of pay related payments and the fact that an adjustment to basic pay is an ongoing adjustment whereas a lump sum payment has application only in the year in which it is paid.

Taking account of the all circumstances in this dispute and noting the priorities of the parties as outlined to the Court, the Court recommends as follows:

(1) That the parties make a thirty nine month agreement providing for basic pay adjustments (which have a consequential effect on all payments calculated by reference to basic pay) as follows:
3% with effect from 1^stApril 2017
2.75% with effect from 1^stMay 2018
2.75% with effect from 1^stJune 2019
Agreement to expire on 30^thJune 2020
- The parties to agree that no cost increasing claims will be served during the lifetime of this agreement
(2) That the parties immediately engage for a period of three months to make an agreement on matters of productivity based on the ‘agenda’ developed at Conciliation in the Workplace Relations Commission. Savings achieved as a result of implementation of any agreement arising to be shared between the parties on a ‘one for one’ basis. In the event of a failure to find agreement within three months on all matters in direct engagement the parties to efficiently utilise normal procedures as necessary including a referral to the Court from the WRC if necessary.
(3) That, noting that the parties have had no effective engagement to develop dialogue on the matter of profit sharing, the parties, without prejudice, engage to explore what potential exists to agree an appropriate ‘profit share’ scheme having regard to any potential effect of such a proposition on normal pay determination mechanisms.
(4) That any claims associated with license pay etc. should be dealt with as matters outside this pay round issue and processed through procedures in the normal way commencing with local engagement and utilising agreed procedures as necessary.
The Court notes that an ‘increment freeze’ has applied by agreement in the company in a number of recent years. The Court also notes that normal incremental movement has recommenced in 2017 following the expiry of the agreed ‘freeze’ applying up until that time. In those circumstances the Court does not recommend concession of the Union side claim as regards increment payments.
The Court so recommends

Signed on behalf of the Labour Court

Kevin Foley
JD______________________
29 August 2017Chairman

NOTE

Enquiries concerning this Recommendation should be addressed to John Deegan, Court Secretary.