INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
- AND -
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
Chairman: Ms Jenkinson
Employer Member: Mr Pierce
Worker Member: Mr Rorke
1. Contracting out of core product.
2. Ballygowan Limited produce a range of bottled water at its location in Newcastlewest, Co. Limerick.
In August, 1999, due to a higher than anticipated demand for the Company's products, caused by a combination of the demands of the market and other related production reasons, the Company proposed the contracting out of some sparkling water production. The Union rejected the proposal. It argued that the workers are concerned that flavoured water production has been on contract for the past two years, despite an undertaking from management that it would only be for a limited period, and that this has affected the workers' earnings. It also argues that the contracting out of the core product could lead to damage of the brand name. The Company's position is that stocks were at a critical level and that Section 4 of the Company/Union Agreement provides for sub-contracting as necessary.
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 28th of October, 1999, under Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place in Limerick on the 23rd of November, 1999.
3. 1. During negotiations in July, 1999 the Union was given a clear understanding by the Company that the contracting out of water would not be an issue. The workers had expressed concern that flavoured water production has been out on contract for two years, despite an undertaking that it would be for a limited period only.
2. The Union has agreed under the Company/Union Agreement that the Company has the right to sub-contract work when necessary and this has been the practice since the agreement was entered into.
3. The Union does not accept management's argument that the need to sub-contract was created by an emergency situation as a result of a rapid rise in sales.
4. The contracting out of flavoured water production has caused unrest amongst the workforce in the past and it is the Union's view that the Company was disingenuous in giving assurances in July that there was no question of water being contracted out.
5. The contracting out of water has had a detrimental effect on the earning potential of the workforce and management should acknowledge that the workers have a right to maximise their earnings.
4. 1. Section 4 of the Company/Union Agreement provides for sub-contracting as necessary.
2. Stock levels were at a critical stage and the need to protect the Ballygowan Brand was explained and fully understood by all of the employees concerned.
3. The workers were fully aware of the serious consequences due to the Company's inability to meet customer requirements.
4. Prior to its request regarding contracting out, the Company concluded a 3% increase under Clause 3 of PESP in July, 1999. As a goodwill gesture payment was backdated to the 1st of September, 1998. Under the agreement the Company formalised its commitment to a productivity and change programme (underpinned with a capital investment) thereby facilitating further discussion/negotiation on pay. As a further gesture the Company agreed to pay a further 1% on the 1st of March, 2000, signifying its commitment to the negotiations.
5. The restriction by the Union is unofficial industrial action and outside the terms of the Company/Union Agreement and Partnership 2000.
6. The circumstances requiring short term contracting out (4 weeks) were exceptional and the workers would not have suffered any loss of earnings as a consequence.
7. The action taken and its ensuing consequences for the Ballygowan Brand's competitiveness in the domestic and export markets is a major concern and could threaten the planned capital investment in the Newcastlewest plant.
The Court has considered carefully the written and oral submissions of the parties to this dispute.
The Court is concerned at the unofficial action of the employees which could have damaged the business and jeopardised the Company's future development and employment.
The 1993 Company/Union Agreement states that the Company has the right to sub-contract work when necessary. The circumstances which arose recently seemed to the Court to be a prime example of a situation which necessitated the need for sub-contracting on a temporary basis, so as to avoid the loss of customers. These circumstances involved the inability of the plant to meet an unexpected increase in business, at the same time as the maximum capacity working conditions and the maximum levels of overtime were being worked to deal with the situation.
The Court is aware of the distrust which has arisen in the past as a result of contracting out, where it was believed by the workforce at the time that the contracting out of certain products was intended to be a temporary measure.
The Court is of the view that refusal to allow contracting out in similar circumstances in the future could prove disastrous to all concerned.
The Court notes the Company's intention to hold a regular monthly meeting with representatives of its workforce. However, the Court suggests that the assistance of the Advisory Service of the Labour Relations Commission should now be sought in an effort to overcome underlying distrust and improve co-operation between the parties for the future.
Signed on behalf of the Labour Court
10th December, 1999______________________
Enquiries concerning this Recommendation should be addressed to Fran Brennan, Court Secretary.