INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
GOLDEN VALE PLC
(BUTTER MILK POWDER DIVISION)
- AND -
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
Chairman: Ms Jenkinson
Employer Member: Mr Keogh
Worker Member: Mr O'Neill
1. Reorganisation of Butter Milk Powder Division.
2. Golden Vale is structured on a divisional basis and consists of five divisions employing approximately 2,200 employees in Ireland and 300 in Great Britain. The divisions are divided into one commodity division and four consumer goods divisions.
In December, 1998, the Company announced its plan to restructure the Butter Milk Powder Division in Charleville, Co. Cork in order to improve competitiveness and ensure viability. The Division has two other plants in Artigarvan, Co. Tyrone and Bailieboro, Co. Cavan. The Butter Milk Powder Division is the commodity division comprising 37% of the turnover of the Group.
The plan involves a change from a 12 month milk assembly season to an 8 month season (March to October) and a programme to limit milk production to a 10 month season, with a reduction in the manning level of 31 (agreement has been reached on a package to apply to any person made redundant as part of any agreement reached). The Company propose a change in the organisation of work so that a Group accepts overall responsibility for all areas under its control, an annualised hours system for workers employed in the Powder area while retaining traditional mechanisms in the Butter area.
In relation to pay the Company has offered a rate of pay reflecting the average earnings in the various grades over the past three years. The Union is seeking a rate of pay for all, reflective of the earnings of the highest earners in the past year or past years, plus improvements in the pension and sick pay schemes.
Extensive discussions took place at local level but agreement was not reached and the matter was referred to the Labour Relations Commission. Conciliation conferences took place on the 22nd of July, 9th of August, 6th of September, and the 17th of September, 1999. As agreement was not reached the dispute was referred to the Labour Court on the 22nd of September, 1999 under Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 11th of October, 1999. A recommendation was issued by letter on the 20th of October, 1999.
3. 1. At the outset of negotiations the Union recognised the need for the Butter Milk Powder Division to operate at maximum efficiency, optimise productivity and reduce costs. During discussions it agreed to measures which will see workers significantly increase their productivity, substantially reduce energy costs, and eliminate unnecessary waste.
2. The change to an 8 month processing/assembly season and the programme to limit milk production to a 10 month season, along with the reduction in employee numbers will result in ongoing savings of £1.5 million annually. In companies where this Union has negotiated solely on the implementation of the 'Organisation of Working Time Act, 1997', it has successfully achieved settlements whereby employees retained their previous levels of pay. The Company's plan not only provides for the implementation of the Organisation of Working Time Act, 1997 but also the introduction of significant change which will impact on all employees and their families. In the circumstances the rates put forward in the Union's claim (details supplied to the Court) are justified.
3. In the Powder Department where annualised hours are proposed, the Company's offer on pay will result in long serving employees who may work 48-hours receiving less than under the present system. These employees who are asked to take a significant drop in earnings are the employees from whom all the extra co-operation and productivity is required.
4. The Company's offer to include shift pay for pension purposes is inadequate as it has excluded productivity pay and the 4% bonus, both of which are fixed payments and should be included. Overtime will now be more structured than before and should also be included.
5. The proposed improvements to the current pension scheme are dependent on integration with State pensions. The Union is opposed to this approach. It considers that the State pension earned over many years of contribution should not affect their entitlements under the Company pension scheme.
6. The Union is seeking that the terms of the existing sick pay scheme be increased to provide seven days uncertified leave in any year, 26 weeks pay and 26 weeks at three-quarters pay less social welfare entitlements. Shift allowance, productivity and structured overtime to be included for sick pay purposes.
7. The workers have played a key part in the growth of Golden Vale. They have worked unsociable hours over many years to ensure its success and their personal and family needs were often sacrificed.
8. Though the Butter Milk Powder operation in Charleville is experiencing difficulty, the Company itself is highly profitable with increased profits forecast for this year. Despite the fact that they work for a profitable multi-national Company the workforce feel less secure than when they worked for a small local Co-op. The implementation of redundancies, the curtailment of operation and the various other cutbacks proposed will bring further insecurity. The Court, therefore, is requested to support the Union's claim for a guaranteed level of income, with improved pension and sick pay entitlements. This would enable the workers honour the financial commitments entered into when they had access to high levels of overtime. It will also give them more confidence to face the challenges of the future if they can see that even in times of rationalisation and cutbacks, their contribution is acknowledged through the improvement of their conditions of employment.
4. 1. The Company has outlined the commercial reasons for the changes in this plan. The Milk Powder and related businesses are facing major challenges and it is imperative that we move ahead with proposals to minimise losses wherever possible. The Company's proposals merely face up to points in the sector which clearly need to be addressed such as low milk period with associated costs and losses. Equally the assumption by employees of responsibility in their area for items under their control represents a norm for many manufacturing companies in Ireland.
2. The ability of the Division to implement change is critical in securing the long term survival of the facilities in Charleville. The equipment is in need of reinvestment in the immediate term because of standards required by the Health and Safety Authority. The Company recognises that the long term future of the Division lies in attracting added value customers and not in selling skim milk into intervention. To maintain and develop business with these customers the Company requires investment to upgrade its facilities. A failure by the Division to implement this programme will sound a major negative signal to the Group and represent a major obstacle to freeing up investment.
3. Each area in the Division has faced the issue of change arising from the analysis of the business and the resulting programme. The Company has changed the duration of the milk season in Artigarvan, reduced the number of Farm Services Managers in Munster, and reduced the number of managers in Charleville. The changes identified for the manufacturing operation in Charleville are as valid as the above changes.
4. The Company has to adjust for the Organisation of Working Time Act, 1997 and it was logical that the plan should integrate this change. The legislation was not sought by this sector and cannot guarantee a particular income regardless of the hours worked. However, the plan is designed to minimise the impact on an ongoing basis by constructing the annualised hours proposals in the vast majority of cases on the 48-hour model.
5. The company has made strong efforts to work through the details of the plan with the employee groups and has modified a number of aspects in local discussion. It has made significant breakthrough in agreeing terms of redundancy and has ample volunteers for same.
6. In general we are asking the Court to recommend the overall proposal as the Union has never formally accepted same. In relation to conditions, the Court is requested to recognise that the package represents an attempt to balance the aspirations of employees with the needs of a Division attempting to reduce losses. The annualised hours system moves employees from a variable to a stable income at the higher levels allowed by the new legislation. The reserved hours mechanism offers the possibility of greater time off. The proposals on the pension moves the Company
into the top half of employee schemes in this area and offers an attractive scheme going forward. Finally management has clearly indicated greater flexibility on sick pay subject to the schemes proving to be working satisfactorily.
The Court has carefully evaluated the submissions in this dispute. The Court understands the Company's need to rationalise and restructure the Butter Milk Powder business in order to improve competitiveness and ensure viability.
The Court recommends acceptance of the Company's proposals, as modified at the hearing in respect of service pay and the fire fighting allowance, with the following amendments:
- the sick pay should be extended to 15 weeks and provide the first 9 weeks at full pay. Sick pay to include shift and fixed bonuses but excluding overtime pay. The scheme to be reviewed after 12 months to assess the scheme's performance.
- the Court considers that the pension scheme as offered is very favourable and understands that shift pay and all fixed bonuses will be included for pension purposes. The Court recommends acceptance and implementation from a current date.
- additionally, in endorsing the proposed changes, the Court believes that a plus payment of £20.00 per week should be paid to every employee who is party to this agreement.
Finally, the Court recommends that a lead-in payment should be paid, in full and final settlement of all aspect of this claim, as well as a speedy introduction of the restructuring involved. As it is obvious to the Court that no discussions have taken place on this lead-in payment, the Court recommends that immediate discussions should take place. These discussions should not hold up proceedings on the other changes proposed.
Signed on behalf of the Labour Court
26th November, 1999______________________
Enquiries concerning this Recommendation should be addressed to Fran Brennan, Court Secretary.