INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
KENDALL COMPANY LIMITED
(REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION)
- AND -
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
Chairman: Ms Jenkinson
Employer Member: Mr Pierce
Worker Member: Ms Ni Mhurchu
1. Dispute concerning an increase in the rate of pay.
2. The Company (formerly Sherwood Medical Industries) manufactures a range of medical devices serving world-wide markets and employs 650 workers at its plant in Tullamore. It is a subsidiary of the Tyco Corporation, a U.S. multi-national company. The Union's claim is for an increase in the basic pay of the workers it represents on the basis that current pay levels are totally inadequate. The Company rejected the claim. The dispute was referred to the Labour Relations Commission and conciliation conferences were held in July and October, 1998. At conciliation the parties agreed to pursue the issue through a gain sharing mechanism (details to the Court). A proposal put forward by the Industrial Relations Officer was recommended for acceptance by both sides. It was, however, rejected by workers following a ballot. The gain sharing plan provided for the setting up of a steering committee to supervise and monitor the progress of this initiative. As a gesture of goodwill the Company would pay the 2% increase under Clause 2 (iii) of Partnership 2000 with effect from 1st of October, 1998. The Company also agreed to pay the next phase of Partnership 2000 (1½%) at the end of May, 1999, if efficiency reached 79% by that time. As further agreement was not possible the dispute was referred to the Labour Court by the Labour Relations Commission on the 14th January, 1999. A Court hearing was held on the 17th of February, 1999. A letter recommendation was issued on the 3rd of March, 1999.
1. Partnership 2000 specifically facilitates improvements in pay and conditions (Clause 9). Agreement exists in principle regarding the basis for the gain sharing initiative. The Union takes issue with the commitment of the Company to fully implement what had been agreed and the amount of remuneration available therefrom.
2. The cause of the low efficiency figures which have been identified by the Union must be addressed. There is a loss of skilled operators and particularly technical/craft workers through new wage competition in the area. It is a serious concern and action is needed to redress the situation.
3. The workers have given significant co-operation to new work practices and to the growth of the Tullamore operation. Any analysis of pay rates either locally or nationally in comparative employments will show a significant inequity toward the workers in terms of remuneration. Despite the Union's best efforts on the gain sharing plan, the Company's offer was not perceived as addressing a historically low pay problem in this employment. The Union is very concerned that these low pay rates will continue to haemorrhage valuable employees from the organisation particularly technical workers crucial to the successful implementation of the plan.
4. The Company's action in withdrawing the monetary aspects of the offer (2% under Partnership 2000 as of 31st of January, 1999) was unhelpful in the extreme. It is obvious that the original offer was found wanting by the workers therefore any solution would have to be an improvement in the totality of the Company's original offer to have a realistic chance of success.
5. The offer on gain sharing was significantly rejected by the workers as it obviously falls short of their expectations. The offer must be improved to allow the plan to be implemented as soon as possible.
1. Management is very concerned at the rejection of the scheme. This is particularly so in light of the fact that the Company is newly owned and has not yet proved its worth to the new owners. The new owners may view the rejection as a sign of the unwillingness or inability of the Irish plant to embrace change or buy into a new way of doing business.
2. In light of the fact that the scheme has been rejected, local management have been instructed to remove the 2% and 1½% which was proposed to be paid early since this is not budgeted for and would have to be funded out of the Company's portion of the savings on increased efficiency.
3. Efficiency in the plant is a cause for serious concern and is going to have to increase from where it is currently to an acceptable level whether or not the Company is involved in a gain sharing arrangement.
4. The plant manager has had meetings with all members of the workforce and has taken recommendations from them. The Company has set up its side of the steering committee and has already began to act on some of its recommendations, which has been a welcomed initiative.
5. Tyco Healthcare is running plants in a number of low labour rate areas with whom the Irish plant will not be able to compete at its current efficiency levels, resulting in potential loss of investment.
6. The Company would ask the Court to support the IRO's proposal for the introduction of a gain sharing scheme. It is important that the Court recognise that in May, 1998, the Union accepted that, given the competitive forces facing it, the Company was unable to enter into discussions on increasing the basic rate of pay. Both parties however, recognise the value of introducing a gain sharing scheme which would improve efficiencies and deliver 50% of these yields to the employees.
7. The Company regrets the Union's decision to reject this scheme given that its yield had not been experienced and there is the potential to review the scheme 12 months from the date of introduction at which stage all parties will be more familiar with its operation.
The Court has given careful consideration to the written and oral submissions of both parties. The Court notes the acceptance of both sides that change is necessary if this company is going to survive.
The Union pointed to the sense of mistrust that has existed in this Company over the years and how this has led to a lack of progress on the vital need to improve efficiency, as supported by both Company and Union assessment. The Company is now under new ownership and an opportunity exists to bring about change.
The Court considers that partnership initiatives are needed to provide for greater understanding of the challenges facing the Company and an acceptance of the measures needed to meet these challenges. The Company must also ensure that adequate arrangements exist for communication. A new ethos between management and the workforce is needed based on trust, openness, transparency and a sense of goodwill. The inter-dependence of all who contribute to the eventual success of the Company must be clearly acknowledged by both sides.
A proposal has been put forward on a Gainsharing Scheme, to improve efficiency, while at the same time improving the position of employees' pay. While this may partially address the problems as outlined above, a lot of effort needs to be made by both sides to ensure its success.
An offer agreed by both sides and recommended for acceptance, in an effort to secure a future for the Company was rejected by the Union members. This offer proposed to bring forward the payment under Clause 2(iii) of Partnership 2000 to an early date and fell with its rejection.
The Court recommends that the Gainsharing Scheme as proposed should be introduced on a trial basis, with a review in October, 1999. In return, the Company should pay alead in paymentof £100 net to each employee and 2% increase in pay in line with Clause 2 (iii) Partnership 2000 from 1st of April, 1999. The Gainsharing Scheme should bring about a reduction in net labour costs while at the same time bring financial gains for employees through the mechanism of improved performance.
The Joint Steering Committee to monitor the progress of the scheme, should be set up without delay. Every effort must be made to ensure the success of the scheme.
If it is deemed necessary by the parties, the issue may be referred back to the Court following the review in October, 1999, when the Court will re-examine all outstanding issues, in the light of circumstances prevailing at the time.
Signed on behalf of the Labour Court
19th March, 1999.______________________
Enquiries concerning this Recommendation should be addressed to Tom O'Dea, Court Secretary.