INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
LMS OIL LTD
(REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION)
- AND -
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
Chairman: Ms Jenkinson
Employer Member: Mr Pierce
Worker Member: Mr Rorke
1. Introduction of sick pay scheme.
2. LMS Oil Limited is involved in the sale and distribution of fuel oils to the industrial and domestic market in the Leitrim, Mayo and Sligo region. It employs 14 people.
The dispute concerns the Union's claim for the introduction of a sick pay scheme on behalf of drivers and clerical staff. The Union first raised the issue with Management in April, 1997, under Clause 4 of Partnership 2000. The Company rejects the claim. It argues that it is operating in a very competitive market and that the costs involved could be a threat to its viability.
The matter was the subject of a conciliation conference held under the auspices of the Labour Relations Commission. As agreement could not be reached the dispute was referred to the Labour Court on the 30th of June, 1999, under Section 26 (1) of the Industrial Relations Act, 1990. A Labour Court hearing took place in Sligo on the 17th of November, 1999, the first date suitable to the parties.
3. 1. The Union has not had the opportunity to articulate its position as to what type of scheme it envisaged due to the Company's refusal to discuss details of such a scheme.
2. The Union is seeking a standard non-contributory sick pay scheme, which would cover the workers for 6 weeks in any given year. The Union propose that the Company would "top up" social welfare payments to the level of take home pay.
3. The level of absenteeism in the Company is below the national average. Therefore, any costs incurred would be lower than perhaps initially perceived.
4. The Company has used the inability to pay argument on many occasions. In 1993 and 1995 the Company made a loss. However, since 1995 the Company has consistently made a profit with 1998 being the most profitable year to date.
5. The workers concerned have played their part in re-vitalising the Company in recent years. Many companies within the industry operate pay sick pay schemes. In the circumstances, the Union's claim is justified.
4. 1. As a small business, operating in a fiercely competitive market with a financial performance which underpins the continuing threat to its viability, the Company would not be acting in the best interests of its shareholders by permitting the introduction of a comprehensive sick pay scheme. The Company's auditors (details supplied) has stipulated that "any measures incurring additional costs at present would not be in the interest of the long term future of the business".
2. The Company is concerned that the introduction of a sick pay scheme would have negative implications for attendance.
3. It is currently competing against some 25 non-union operators, none of which operate a sick pay scheme. The funding of a sick pay scheme in the current climate does not make for sound commercial judgement. This is all the more apparent on review of the performance of the business where in each of the last 3 years, in 1996, 1997 and 1998, labour costs accounted for 56%, 53% and 60% of overheads.
4. The Company's auditors, referring to the period 1986 - 1998 during which the Company has been under its current ownership. Key points arising were the facts that:-
- Directors and shareholders had taken no salary/dividend over the period
- The level of profitability in 1997 and 1998 represented a break even performance of 0.3% and 0.8% of turnover respectively.
- Over the period from 1/1/86 to 31/12/96 (11 years) the figures show that at 31/12/96, the Company had nil retained profits.
- The Company in view of its financial performance has had to put back its requirement for vehicle re-investment each of which would conservatively cost £75,000.
- The Company has three 9 year old vehicles in need of replacement.
- The net asset value of the Company at the end of 1998 equated only to the value of approximately 1.5 new trucks.
The Court has considered carefully the written and oral arguments presented by both parties to this dispute.
The Court notes that there may be funding difficulties for the Company by the introduction of a sick pay scheme at this point. However, the Court recommends that, as a form of sick pay scheme already exists whereby payment is made on a discretionary basis, discussions should take place with a view to the introduction of a basic sick pay scheme within twelve months of this recommendation. The design of the scheme should ensure that protections against excessive costs and increased absenteeism are included.
When finances allow, consideration should be given to introducing an enhanced scheme, at which point cost offsetting measures from changes in procedures or otherwise should form the basis of discussion in return for improved benefits of the sick pay scheme.
Signed on behalf of the Labour Court
3rd December, 1999.______________________
Enquiries concerning this Recommendation should be addressed to Fran Brennan, Court Secretary.