FULL RECOMMENDATION
CD/22/58 c-165616-21 | RECOMMENDATION NO. LCR22627 |
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
PARTIES :TOYOTA LOGISTICS SERVICES IRELAND LIMITED (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION)
- AND -
GENERAL OPERATIVES (REPRESENTED BY SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION)
DIVISION :
Chairman: | Ms Connolly | Employer Member: | Mr Murphy | Worker Member: | Mr Hall |
SUBJECT:
1.Kaizen Bonus Scheme
BACKGROUND:
2.This dispute could not be resolved at local level and was the subject of Conciliation Conferences under the auspices of the Workplace Relations Commission. As agreement was not reached, the dispute was referred to the Labour Court on 21 March 2022 in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on 17 June 2022.
UNION’S ARGUMENTS:
3. 1. Pay outs from the Kaizen Bonus have declined since 2018 2. The Union are seeking compensation for the loss of earnings since November 2018, to include current and former employees 3. The Union request a clear bonus structure going forward with a minimum bonus of €85.90 EMPLOYER'S ARGUMENTS:
4. 1. The bonus scheme is variable and not a guaranteed part of pay
2.Service levels are expected to improve in the coming months 3. The Employer is open to review the bonus scheme
RECOMMENDATION:
The dispute before the Court concerns the operation of a productivity bonus scheme (the Kaizen Scheme). Since 2018, pay outs from the scheme have declined and SIPTU seeks compensation for loss of earnings from November 2018 to date for both current and former employees. It also seeks that the company implement a clearer bonus structure going forward, with a guaranteed minimum bonus payment of €85.90 per week. Management rejects the claim but is willing to engage with SIPTU to review the bonus structure in place.
Introduced in 1998 in partnership with SIPTU, the Kaizen bonus scheme is based on achieving service rates, calculated by reference to the number of parts supplied to the dealer network. Bonus pay outs are based on achieving service levels greater than 91%, increasing in 1% steps thereafter. From 2004 to 2018 the supply chain service rate averaged between 93% and 94%, with bonus payments averaging €110 per week (€5720 pa) to each worker. Since 2018, pay outs from the scheme have declined with no payments made at all in some months. No payments have been made in 2022.
Management recognise that the scheme has changed since first introduced in 1998, when ‘Toyota Ireland’ owned the parts centre and had full responsibility for service levels. In 2004, responsibility for ordering parts transferred to Belgium, and then subsequently to the UK. In 2018, the delivery of parts transferred back to Belgium as a measure against possible ramifications of Brexit.
Management sought to change the bonus scheme in 2011, as it recognised that workers could not influence the bonus outcome to the same extent as before, however, no agreement was reached at that time and the Kaizen bonus remained in its current format.
SIPTU contends that the Kaizen bonus paid out consistently for 20 years and so has become an integral part of pay. Changes made to the supply chain by the company in 2018 resulted in a significant reduction in service to the Irish dealer network and a loss of bonus earnings for workers. The scheme is now influenced by a range of external factors outside of the worker’s control. SIPTU acknowledges that management has on occasion made bonus payments when the service levels were not achieved but contends that worker should be compensated for the loss in bonus earnings. A 2003 Collective Agreement provides for compensation for loss of earnings and provides that ‘A proposed change that might affect the financial conditions or imply the cancellation of a financial benefit, has to be compensated with a salary or benefit of equal value’.
Management contends that a bonus scheme by its nature is variable and therefore not a guaranteed part of pay. It disputes that any entitlement to compensation arises as management has not introduced or proposed any change to the Kaizen scheme that can give rise to such a claim. Following engagement at conciliation, a series of briefings were held to improve understanding of how the scheme operates.
Management is open to reviewing the current bonus structure or, alternatively, engaging on a new bonus system, aligned to systems in other regional depots that are more directly influenced by employee performance. Management put forward a proposal in December 2021 to reduce the base service rate criteria from 91% to 89% to support the payment of the bonus. This was rejected by SIPTU, as it was conditional on the union committing to review other aspects of the 2003 agreement.
The Court has given careful consideration to the oral and written submissions made by the parties.
Both parties acknowledge that a succession of events have negatively impacted the operation of the Kaizen scheme since 2018. Those factors primarily lie outside the control of the parties and, as a result, pay outs have diminished significantly to a point where no pay out have been made to date in 2022.
While Management told the Court that service levels are expected to improve in the coming months and into next year, it is not expected that service levels will return to previous levels in the immediate future.
The Court notes that both parties confirm that they are willing to engage in reviewing the bonus structure system to ensure that reward levels can be maintained in the longer term.
Having considered all aspects of this matter, the Court recommends that the parties engage in a review of the bonus structure system, with the assistance of the WRC if required, with a view to ensuring that reward levels can be maintained in the longer term. Such a review should be undertaken as a priority with a view to concluding an agreement within four months of the date of this Recommendation.
As an interim measure, the Court recommends that the company reduces the base service rate criteria of the kaizen bonus from 91% to 89% for the duration of the above period pending the outcome of that review.
Finally, the Court recommends a payment of €3,350 to those members of the bonus scheme currently in employment for loss of earnings in full and final settlement of the dispute before the Court.
The Court so recommends. | Signed on behalf of the Labour Court | | | | Katie Connolly | OC | ______________________ | 18 July 2022 | Deputy Chairman |
NOTE
Enquiries concerning this Recommendation should be addressed to Shane Lyons, Court Secretary. |