FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : IRISH DISTILLERS LIMITED (REPRESENTED BY THE IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION MANUFACTURING, SCIENCE, FINANCE AMALGAMATED ENGINEERING AND ELECTRICAL UNION TECHNICAL, ENGINEERING AND ELECTRICAL UNION DIVISION : Chairman: Mr Duffy Employer Member: Mr Pierce Worker Member: Mr O'Neill |
1. Profit share.
BACKGROUND:
2. The dispute concerns the Unions' claim concerning the administration of the Company's Profit Share Scheme. The basis of the scheme which was set up in 1975, to replace the Christmas Bonus Scheme, is the payment of 6.25% of consolidated profit before tax of wholly owned subsidiary companies of Irish Distillers Wine and Spirits Division in Ireland as certified by external auditors.
In 1986, the Company adopted the provision of the 1982 Finance Act, which facilitated the tax efficient conversion of this payment into Company shares. Following the take-over of Irish Distillers in 1988 by Groupe Pernod Ricard, this facility was extended to purchase Groupe Pernod Ricard shares.
The Unions argue that management are not adhering to the Profit Share Agreement, in particular the inclusion of Company Directors in 1997 and 1998, and have identified the following aspects with which they are concerned:-
(1) Treatment of the Profit Share Scheme in Company accounts.
(2) Inclusion of Directors.
(3) Inclusion of staff of IDC Group companies not specifically named in the original scheme.
(4) Absence of agreement on a definitive list of employees entitled to payment.
Management's position is that the administration of the scheme is fair and equitable and the small companies included are an integral part of the Group and fall within the spirit and meaning of the original document.
The matter was the subject of a number of conciliation conferences 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 12th of May, 1999 under Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 16th of June, 1999.
UNION'S ARGUMENTS:
3. 1. The inclusion in the scheme of Company Directors at the expense of other participants caused serious dissatisfaction and gave rise to concerns in relation to the handling by management of other aspects of the scheme.
2. The agreement is specific on the exclusion of Directors from the scheme.
3. There are four companies specifically named in the agreement i.e., Irish Distillers Limited, Irish Distillers International Limited, Irish Distillers Grains Limited, and Waterford Liqueurs Limited. Employees of these companies alone, are entitled to be participants. However, employees of Fitzgerald & Co. and Watercourse Distillery have been included in recent years. While there is no principled objection to the inclusion of employees of Fitzgerald & Co. the Unions are concerned that management is attempting to supplement the poor terms and conditions of employees of Watercourse at the expense of the participants of the scheme.
4. The cost to the participants of the inclusion in the scheme of Company Directors and employees of Fitzgerald & Co. and Watercourse is approximately £100,000.
5. There can be no agreement until a mechanism is put in place which will resolve the issues of the profit figure to be shared,and the number of participants who meet the criteria for inclusion.
6. In the circumstances the Unions are seeking the following:-
(1) The exclusion of all Directors from the scheme as per legally binding scheme rules with appropriate compensation to scheme participants for 1997/1998.
(2) The Court to satisfy itself that the inclusion of Directors only took place in 1997/1998.
(3) The exclusion of Watercourse Distillery employees as they do not meet the agreed criteria.
(4) The establishment of a confidential committee with professional independent back-up.
COMPANY'S ARGUMENTS:
4. 1. The treatment of the profit share in the Company's accounts is proper and correct. This has been verified by the Irish Profit Sharing Association. It further adds that the operation of the scheme while of mutual benefit to all involved, represents a cost of to the Company.
2. As of the 27th of May, 1999, Fitzgeralds Wines and Spirits has been fully amalgamated with Irish Distillers in the formation of the Irish Distillers Sales Company and consequently all its employees have and will continue to be involved.
3. As part of the Company's sales and marketing initiative, particularly internationally, two heritage centres have been set up to provide a shop window for its whiskeys worldwide. This is an integral part of the Company's sales drive and as such employees of Watercourse are also included.
4. The Company is willing to exclude the five main Board Directors as defined.
5. The administration of the Profit Share Scheme is fair and equitable by all standards. The Company is satisfied that the scheme has benefited employees immensely. Were the scheme to be negotiated today there is little doubt that it would not be in its current lucrative form and that capping, attendance and personal performance would be some of the new criteria.
6. The Company is concerned that a profit sharing scheme, with such obvious benefits should be attacked in this manner. It must be recognised that the benefits of the scheme far outweigh any imagined shortcomings and complaints put forward by the Unions. In the circumances the Court is requested to recognise the current scheme as fair and reasonable, high yielding and beneficial to all employees and reject the Unions' unsubstantiated claims
RECOMMENDATION:
The Court is satisfied that the present dispute arose as a direct consequence of the Company's failure to adequately communicate with its employees and their Unions in relation to changes which were made in the scope of the scheme. The scheme has worked extremely well since its inception with significant financial benefits accruing to staff which far surpassed what might have been available under the Christmas bonus scheme which it replaced. It is regrettable that the different understandings as to how the scheme should apply were not resolved between the parties by open dialogue and co-operation.
Having considered the submissions of the parties the Court recommends that the specific points of difference be resolved on the following basis:-
1.Inclusion of Directors
The Company has pointed out that main Board Directors were included in the scheme as a result of a misunderstanding of recent statutory provisions. Following clarification of the actual position those Directors have ceased to be included. The remaining issue relates to the inclusion of Directors of subsidiary companies. It is the Company's case that while these individuals are technically Directors, they are in reality employees and should, in equity be included. The Court accepts that the Company's position in that regard is cogent.
Nonetheless, the Agreement of 1975 is quite specific in excluding Directors per se. The term Director is not defined in the Agreement. Since the format and language of the Agreement is couched in legal rather than industrial relations terms, the Court believes that Director must be given its technical meaning. Accordingly, the Court recommends that the parties accept that it relates to a person who hold the office of Director within the meaning of the Companies Act.
2.Inclusion of Subsidiary Companies
The Court understands the purpose and intent of the Agreement as being to include the staff of all subsidiary companies. It would be contrary to that purpose and intent to exclude employees of the two subsidiaries now in dispute. The Court recommends that the Agreement should be amended, with retrospective effect, so as to expressly include the staff of those companies.
3.Method of Calculating of Profit Share
The Court notes that the same method has consistently been used, since the inception of the scheme, to calculate the amount of profit share. It does not recommend any change in that method.
4.Provision of Information
It is noted that information on the number of participants in the scheme has either been made available or is now available for the information of employees.
5.Monitoring of the Scheme
The Court recommends that the parties should agree and put in place practical and transparent arrangements for the ongoing monitoring of the scheme.
Signed on behalf of the Labour Court
Kevin Duffy
2nd July, 1999______________________
F.B./D.T.Deputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Fran Brennan, Court Secretary.