INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
BOART LONGYEAR LIMITED
(REPRESENTED BY THE IRISH BUSINESS AND EMPLOYERS' CONFEDERATION)
- AND -
TECHNICAL, ENGINEERING AND ELECTRICAL UNION
AMALGAMATED ENGINEERING AND ELECTRICAL UNION
Chairman: Mr Flood
Employer Member: Mr Keogh
Worker Member: Ms Ni Mhurchu
1. 1. Pension Scheme 2. Interpretation of arrangements relating to assimilation to chargehand rates.
2. The Company is involved in the manufacture of percussive rock drilling equipment. It has been located in Co. Clare since 1960 and employs 202 workers.
The dispute before the Court concerns:-
(i) The Unions' claim on behalf of craft workers that the Company imposed a new pension scheme for employees recruited after 1st January, 1984.
(ii) Rate of pay applicable to chargehands on promotion.
Local level discussions failed to resolve the issues and the dispute was referred to the Labour Relations Commission. Conciliation conferences took place on 14th November, 1995 and 10th July, 1996. As agreement could not be reached the dispute was referred to the Labour Court on 8th October, 1996 under Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place in Limerick on 26th March, 1997.
3. Prior to the 1st January, 1984 the Company operated two pension schemes, one scheme for members of staff (craft workers included) and the other for hourly paid employees. With effect from the1st January, 1984 the Company decided that all new appointees, both hourly paid and staff members would be covered under a new scheme. The main differences between the two schemes related to an increase in the retirement age to 65 from 60 years and integration with the Social Welfare System. The existing pension arrangements were preserved for those workers in employment at that time.
In 1985 the Company recruited a craftsman, a member of NEETU, and the issue relating to pension arrangements was raised in 1986. Local level discussions and a conciliation conference took place following which agreement was reached between the parties and there the matter rested until the issue was raised by the TEEU in late 1994. The Unions argue that the agreement was reached with the NEETU only and that no meetings took place with the other craft unions on site.
The Company for its part took the view that the agreement put together in 1986 embraced all the craft unions.
4. 1. Management has consistently ignored the craft unions group representations on the matter of pension rights of the workers concerned. Management's action in imposing, without agreement, a new pension scheme for new employees is unacceptable to the Unions.
2. In early 1984 the Unions sought information on the new scheme. The Unions never received the information requested.
3. The Unions are seeking that the pension arrangements for existing craftsmen be rectified and that management meet with the Unions to discuss and agree the future position regarding pensions.
5. 1. The pre-1984 scheme provided that the Company "reserves the right to amend or terminate the Plan at any time." Integration with Social Welfare (following the 1974 legislation in respect of staff/salaried employees) was a common adjustment being made after the legislative change. The cost of the old scheme - with retirement age at 60 - would have become prohibitive. At the time in 1984, it was estimated that the funding rate would reach 29% of payroll and was not sustainable.
2. As far as the Company is concerned, the issue was resolved in March, 1987. It is somewhat disingenuous of the Unions to claim that NEETU was acting on its own behalf at the time. Meetings with all the craft unions took place in December, 1983 and January, 1984. Correspondence from NEETU in respect of a Labour Court referral in 1986 resulted in a conciliation conference attended by all craft unions in August and the issuing of a strike notice by NEETU which was copied to the other unions. The meeting of 9th October, 1996, where a resolution was discussed, was attended by all officials and NEETU's letter of March, 1987, which confirmed the end of the dispute, was copied to the other craft unions.
3. The issue has not been raised since 1986 despite a number of craft appointments in the interim. As such, the new single status scheme has operated successfully and applied to all staff apart from the 40 red-circled employees who were members of the old scheme prior to 1984.
4. The current pension scheme is an excellent scheme by any comparison. It provides for two thirds pension after thirty years service, once normal retiring age is reached.
5. Concession of the Unions' claim would lead to a succession of knock-on claims from the 160 members of the current scheme. The cost to the Company would be an astronomical £3.2 million to buy out past service liability, representing a 30% hike in the current value of the fund. In addition, it would add a future liability of up to an additional £250,000 per annum (on 1997 calculations). These consequences would have significant adverse implications for the solvency of the plan and the Company would not be in a position to meet this sort of cost and the viability of the operation at Shannon would be threatened.
INTERPRETATION OF ARRANGEMENTS RELATING TO ASSIMILATION TO CHARGEHAND RATES
6. In 1984 agreement was reached between the parties on the introduction of incremental scales (to replace the existing merit payment system) for craftsmen and craft chargehands. The differential between both incremental scales was 10%. There is a difference of interpretation of the rate of pay applying on promotion to chargehand. The issue arose following a promotion in 1995.
The Company applies promotion on the basis of the value of the increment of the higher grade and pay is adjusted accordingly. The Union argues that promotion should attract a 10% differential.
7. 1. The Unions are seeking that the chargehand in question be placed on the appropriate rate of the chargehand scale in accordance with his length of service and the appropriate percentage increase for the job.
2. The Company's system of incremental movement on promotion to chargehand was never agreed with the craft unions.
8. 1. The system of assimilation in Boart is clearly established and provides that the value of the higher increment is received on promotion and on an annual basis thereafter. It applies consistently in the Company and any alteration in this regard would have serious knock-on cost implications for over forty positions. (It should be noted that the differential between most grades is 20%).
2. The Unions argue that they are not party to the Job Evaluation System. Job Evaluation was merely a means of classifying jobs in a particular grade with an accompanying incremental scale. In the case of the craft unions, the grade/scale was established without the use of Job Evaluation. However, 13 Point Scales with a 48% spread were agreed. There was no separate discussion or different agreement on the method of assimilation and accordingly, that which applies in the Company to all grades, has equally applied in this instance.
The Court having considered the written and oral submissions made by the parties recommends as follows on the two issues in dispute:-
While there may have been disagreement within the Union grouping in relation to how the discussions on the proposed changes were conducted, it is clear to the Court that the reason for the change and the details were known to the craft personnel.
It was not unreasonable therefore for the management to assume there was agreement to the new scheme, particularly given the time span since implementation.
In the circumstances the Court does not recommend concession of the Unions' claim.
(ii)Assimilation to the chargehand scale
It would appear that the previous method of calculating the assimilation point for promotion for this group has been changed from an undefined percentage increase.
While the new Company method of calculating the assimilation salary may operate within other groups of workers, the Court is of the view that it was not unreasonable for the crafts group to believe the criterion for promotion would be 10% above the individuals existing rate of pay.
The Court therefore recommends that the Company concede the Unions' claim in this particular case but that the criterion for promotions that applies across the Company should apply for future promotions unless the parties reach an agreement on an alternative.
Signed on behalf of the Labour Court
20th May, 1997______________________
Enquiries concerning this Recommendation should be addressed to Fran Brennan, Court Secretary.