INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
- AND -
MANUFACTURING SCIENCE FINANCE
Chairman: Mr Flood
Employer Member: Mr Keogh
Worker Member: Ms Ni Mhurchu
1. Remuneration terms.
2. (Following Labour Court Recommendation LCR15204) the Company restructured its managerial sales force. It reduced its management team from 98 (78 Sales Managers, 14 Area Auditors and 14 Area Managers) to 41 Personnel Finance Managers (PFMs).
The Union claims that the restructuring has resulted in savings of £2m to the Company. The current dispute involves commission rates paid to PFMs as follows;
For the first £2m worth of business sold: 25p per £1,000
For any business sold after that: 48p per £1,000
The PFMs are on a salary of £20,000 per annum. The average commissions paid in 1995 (latest figures available) were £35,370 per annum based on £8.27m worth of business sold per manager. The Union claims that the PFMs will suffer a substantial financial loss if the current commission rates are not maintained. It rejects the Company's proposal to reduce the commission rate it pays the PFMs from 25p/48p to 16p/31p respectively.
The Company claims that following the restructuring the sales managers had four options:-
(a) applying for a PFM role
(b) reverting to a Personal Financial Advisor(PFA)
(c) taking up a corporate agent role
(d) early retirement
Those who opted for the PFA route were aware of the Company's intention to reduce commission rates. The Company has put forward a package which it argues will maintain earnings at existing levels based on the 16p/31p commission rates.
As no agreement was possible between the parties the dispute was referred to the Conciliation Service of the Labour Relations Commission. Conciliation conferences took place on the 6th December, 1996 and 13th December, 1996 but no agreement was reached. The dispute was referred to the Labour Court on the 7th January, 1997 under Section 26(1) of the Industrial Relations Act, 1990. The Court investigated the dispute on the 31st January, 1997.
3. 1. The Union is vehemently opposed to any proposal to reduce the current level of commission for PFMs from 25p/48p to 16p/31p respectively.
2. The "once off" gap payment for a reduced commissioned rate was conditional on 25p/48p rate being maintained and is not acceptable. The proposed reductions in rates will reflect seriously on pensions and salary increments for PFMs.
3. The Company had profits in excess of £80m last year. It can afford to leave the commission rates at their current level.
4. The introduction of "fact find forms" together with the different selling procedures will slow down the number of sales and increase the number of calls for PFMs. This will increase overheads for the PFMs in travel and time. The Company is not offering any compensation or increase in expenses for this extra work.
5. The Company has introduced lower commission rates on new savings and existing pension products without consultation with the Union.
4. 1. The Company regards the PFM's claim as simply a claim for an increase in remuneration which cannot be counten anced.
2. The Company operate in a very competitive market. It must reduce costs and provide a better service for its customers.
3. The cost of running the direct sales division was £3m in excess of what the Company charges its customers. This deficit must be reduced.
4. The average earnings for the PFMs in 1996 was £57,650. They also enjoy a fringe benefit package which is valued at £16,000. These rates are above the industry norm.
5. All those who accepted PFM positions were aware of the Company's intentions on adjusting commission rates.
6. The Union accepted the compensation proposals for any losses due to new commission rates , the only issue was the "transition "arrangements.
The Court having considered the background to this case and the written and oral submissions recommends that the current commission rate of 25p/48p apply up to the end of May,1997. The new rate of 16p/31p to apply from 1st June, 1997.
In making this recommendation the Court is conscious of the Company's commitment to ensure that the necessary training will be provided.
Signed on behalf of the Labour Court
24th March, 1997______________________
Enquiries concerning this Recommendation should be addressed to Larry Wisely, Court Secretary.