Labour Court Database
File Number: CD91276
Case Number: LCR13405
Section / Act: S26(1)
Parties: AVONMORE FOODS PLC - and - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
Dispute concerning the introduction of an incentive scheme.
Division: MrMcGrath Mr Keogh Mr Rorke
Text of Document__________________________________________________________________
CD91276 RECOMMENDATION NO. LCR13405
THE LABOUR COURT
INDUSTRIAL RELATIONS ACTS 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT 1990
PARTIES: AVONMORE FOODS PLC
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
1. Dispute concerning the introduction of an incentive scheme.
2. The dispute concerns 43 heavy haulage drivers. The current
system of payment to drivers is one based on basic pay and
overtime payments. The Company proposes to introduce a
performance incentive scheme (Appendix A) which will relate pay to
the number of loads carried and the distance travelled by each
driver. The Company claims that the present system is
uncompetitive and is not a viable option for the future. It is
necessary to introduce the incentive scheme in order to remain
competitive and maintain employment for the workers concerned.
The proposals have been rejected by the Union on the grounds that
the workers concerned will suffer a substantial loss of earnings.
The issue was not resolved at local level discussions. It was
referred to the conciliation service of the Labour Relations
Commission on the 21st March, 1991. Conciliation conferences were
held on the 17th April and 2nd May, 1991 but no agreement was
reached. The dispute was referred to the Labour Court by the
Labour Relations Commission on the 21st May, 1991. A Court
hearing was held in Kilkenny on the 20th July, 1991.
3. 1. The Company has produced no evidence to support its
proposed incentive scheme other than relying on cost cutting
and competitiveness as sufficient arguments in itself. The
Union is not aware of any studies having been conducted on
which the new pay rates and distance payments are based. The
Company has not produced any evidence to support its
contention that its heavy haulage transport is uncompetitive.
2. The highest basic pay rate of the drivers concerned is
#178.45 per week, which is not a generous rate within the
industry. This rate compares unfavourably with other
transport rates outside the dairy sector. The Company
proposals represent a serious worsening of the position of
the drivers through a substantial reduction in their earnings
for the same level of performance, or through having to work
considerably more hours than at present for no increase in
earnings. For example the Union estimates that to maintain
his earnings at current levels a driver would need to
increase the number of loads per year from 760 to over 1,000;
an increase of 33% or more. A scheme of this nature cannot
be regarded as an incentive.
3. The concept of piece work in transport operations is not
favoured by safety experts, as it applies pressure on drivers
to achieve performance at the expense of safety. It leads to
breaches of the Road Traffic Acts in terms of speed, rest
4. In dealing with the Company's reference to costs and
competitiveness it must be pointed out that since 1987 the
Company has had the benefit of a low level of pay increases
under the P.N.R. This pay trend will continue for the next
three years under the P.E.S.P. Agreed changes in the
transport system over recent years have resulted in a
reduction in the number of transport employees and a
considerable increase in productivity.
5. The Company is currently negotiating a merger with
Waterford Foods PLC. All the indicators are that such a
merger will take place in a matter of months rather than
years. The Company has not consulted the Union on the likely
impact of such a merger even though it is anticipated that the
main savings will accrue in the area of labour costs. In
the circumstances it would be irresponsible on the Union's
part to negotiate changes on behalf of its members, without
having a reasonable idea of what the future holds.
6. The Union has not rejected out of hand the idea of an
incentive scheme. It has offered to conduct an assessment of
the Company proposals though its Industrial Engineering
Department or to have an assessment conducted by an agreed
independent expert at the Company's expense. These offers
have been rejected by the Company.
4. 1. The Company is divided into four operating divisions,
Agricultural Trading Division, Milk Processing Division,
Liquid Milk Division and Meat Division. Each of these
divisions must operate as a totally independent profit
generating centre. The Trading Division is responsible for
the manufacturing and distribution of animal foods, grain
trading and the supply of other farm inputs such as
fertilised seed and agricultural hardware.
2. The Trading Division is very labour intensive, with high
overheads producing low margins. The overall market is in
decline in recent years because of EC milk quota and grain
price restrictions. There is intense competition from other
suppliers who operate more flexible and cost efficient
systems. The current downturn in agriculture is reflecting
itself in the Company's business with sales to date down on
last year. The Company has stated on many occasions that
transport continues to be a major cost factor which needs
further efficiencies if the business is to survive on a
3. The drivers concerned are amongst the best paid workers
in the business. It is the Company's desire to maintain the
maximum amount of employment for its employees and at the
same time compete in a difficult market place. The Company
has taken steps, as far back as 1985, to make its transport
system more competitive. To date with the co-operation of
the Union and workers the Company has in place payment
systems on Bulk Milk and Bulk Feed. Both of these systems
are based on payment by performance. The Company also has
contractual agreements with some transport personnel and it
is currently engaged in discussions on further contacts.
4. The Company's proposal is a positive action to remain
economically viable and protect the employment of drivers.
The Company acknowledges that some drivers may see the
present system as financially more beneficial than that
proposed. The expection of continued over costly systems is
unrealistic and harmful to business and employment.
5. The target earnings of #19,000 for a heavy haulage
driver and #15,000 for a farm delivery driver are realistic
and represent improved earnings when compared to drivers from
competing firms and private transport firms. The earnings
when compared to the farming incomes of many of the Company's
key suppliers and customers are generous.
COMPANY PROPOSAL TO HEAVY HAULAGE DRIVERS:
The following is the Company's offer to Drivers based on a load
and kilometre rate. The intention is to pay people on the basis
of work carried out as distinct from hourly rate.
TYPE OF WORK TRUCK SIZE PAY RATE JOURNEY LENGTH
Heavy Haulage 24 Ton #10/load + 8p/km Less than or equal
to 225 kms round
#12/load + 9p/km Greater than 225
kms round trip
Farm Delivery 16 Ton 70p/ton + 8p/km All
N O T E S
* Target Earnings
- Heavy Haulage Driver #19,000 p.a.
- Farm Delivery Driver #15,000 p.a.
* Shunting Grain at Harvest at a branch
- Driver paid on clock
* Heavy Haulage truck (24 ton) doing Farm Delivery work
- #10/load + 8p/km
* Farm Delivery truck (16 ton) doing Heavy Haulage work
- #7/load + 8p/km
* Drivers working on both Bulk Feed and Heavy Haulage during
the year would be paid:
- the Bulk Feed rates for Bulk Feed work
- The Heavy Haulage rates for Heavy Haulage work
* The Transport Manager concerned will be the sole arbiter in
deciding whether or not a round trip falls over 225 km. He
will determine this in advance of the journey actually taking
5. The Court has fully considered all aspects of the case as
outlined by the parties in their oral and written submissions.
The court is conscious of the need of the Company to carry out its
transport in an effective and cost efficient manner. Equally the
Court is conscious that what are proposed are radical changes
in the method of working which give rise to fears on the part of
the workers concerned that problems perceived in the operation of
the scheme will not be rectified and they will be at a loss of
If the transport operation is to be carried out in an effective
and cost efficient manner then these issues will have to be
The Court accordingly makes the following recommendations to
enable the issue to be resolved to the satisfaction of both
1. That the scheme as proposed by management be introduced on a
trial basis for a period of 12 months.
2. That a monitoring committee be established with a view to
keeping the operation of the scheme under continuous review and
arranging for problems in the operation of the scheme, or
affecting the earning capacity of the workers involved to be dealt
with as quickly as possible.
3. That, to enable a smooth transition to the new working
arrangements, and to enable any problems identified to be
rectified the following payment arrangements to apply.
(a) The drivers be guaranteed their average earnings* for a
period of three months from the date of the implementation of
(b) For a further 3 months the drivers be guaranteed a
minimum 80% of their average earnings* or earnings based on
#16,000 per annum for Farm Delivery Drivers or earnings based
on #20,000 per annum for Heavy Haulage Drivers whichever is
(Average earnings based on the earnings during the 12 months
up to the date of implementation).
(c) Thereafter for the remainder of the 12 month trial
period earnings to be earnings achieved or based on #16,000
per annum for Farm Delivery Drivers and #20,000 per annum for
Heavy Haulage Drivers.
4. At the end of the 12 month trial period the operation of the
scheme to be reviewed in all its aspects and such adjustments made
as may be agreed between the parties.
Should it be necessary the Court will make itself available to
assist the parties to resolve any issue that may be in dispute
following the review.
Signed on behalf of the Labour Court
23rd September, 1991 Tom McGrath
T.O'D / M.O'C. _______________