INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
(REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION)
- AND -
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
Chairman: Ms Jenkinson
Employer Member: Mr Keogh
Worker Member: Mr O'Neill
2. The Company is owned by GenCorp, a US multinational. It specialises in the manufacture of rubber components for the European automotive industry and employs 250 people at its plant in Ballina, Co. Mayo.
The dispute concerns the Company's rationalisation proposals which involves a reduction in the manning levels by 28. It argues that the implementation of the plan is essential for the Company's viability and is seeking to implement the following:
"Reduction of indirect labour costs (i.e. reduction in administration, maintenance and shipping).
Elimination of additional bonuses that were introduced in June, 1999.
Restructuring in production: reducing the number of indirects in each team.
Outsourcing of labour intensive work resulting in a reduction of 20 direct employees.
Modification of existing Pay Performance System to improve quality".
The Company's offer in relation to employees leaving the Company under the plan is two weeks' pay per year of service plus statutory entitlements. In the context of an overall agreement the Company is committed to bringing forward the implementation of the Programme for Prosperity and Fairness to January, 2001 in addition to accepting the proposal put forward by the Labour Relations Commission to combine and bring forward the implementation of Phase 3 and Phase 4 of Partnership 2000.
There are two separate and distinct bonuses in place. One is a plant wide bonus and a further bonus applies to 45 employees in the maintenance, quality control and part of the production area which the Company introduced in June, 1999. As the increased targets have not been achieved the Company wishes to revert back to the old system.
The Union is seeking that all redundancies be implemented on a voluntary basis with a redundancy package of five weeks' pay per year of service plus statutory entitlements. As part of an overall agreement it is seeking that the Programme for Prosperity and Fairness be paid with effect from April, 2000.
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 4th of April, 2000 under Section 26 (1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 19th of April, 2000.
3. 1. The Union is seeking that all redundancies be implemented on a voluntary basis and that the redundancy package offered by the Company to individual workers of 5 to 6 weeks' pay per year of service be applied to all the workers concerned.
2. As part of an overall agreement the Programme for Prosperity and Fairness should be implemented with effect from April, 2000.
3. Twenty seven employees have left the employment since November, 1997 resulting in savings to the Company of approximately £360,000. The current proposals in relation to manning levels will result in further substantial savings. In the context of "gainsharing" the workers are seeking a share of these savings.
4. The current bonus scheme should remain in place pending the involvement of an agreed third party to assess the merits of the present scheme and to address the concerns of both management and workers.
4. 1. As a result of measures implemented in July, 1997 the Company has reduced its annual losses from £2.017M. in 1997 to approximately £720,000 and £843,000 in 1998 and 1999 respectively. Unfortunately, due to price erosion and loss of sales, the Company continues to be in a loss making position and is unable to attract new business due to its current cost base. Since 1997 the average piece price has dropped by 13%. In particular over the past year contracts have been transferred out of the Company to Czechoslovakia and to Germany.
2. Due to the extreme competitive nature of the business, the Company is forced to outsource labour intensive finishing and inspection work in order to reduce costs. As this outsourcing is implemented over a three month period the Company requires a reduction of twenty people in production/finishers.
3. In June, 1999 the Company introduced an additional bonus which was linked to the achievement of specific performance targets. The maximum bonus was paid up front for three months. As the targets were not achieved the Company is seeking to revert back to the old system.
4. The current Pay Performance System is promoting behaviours which are to the detriment of the Company performance overall. It requires that this system be modified by the beginning of May, 2000. The average level of the bonus paid out will not be affected by this exercise.
5. The Company has attempted to address the concerns of the Union and reiterates its commitment to remaining in Ballina. However, in this competitive business, constant change is inevitable and necessary for survival. The Company acknowledge the efforts of all the employees over the past three years and believes that the proposed changes will return the Company to a profit making organisation.
The Court has given careful consideration to the arguments put forward on both sides. In return for the necessary changes (details outlined in the submission) which the Company must implement in order to survive, the Court recommends that the following should be accepted:-
- The Court recommends that the Company's proposal to bring forward the implementation date of the PPF, should be amended and the implementation date should now be 1st November, 2000.
- The Court recommends that the redundancy settlement terms should be improved to 3 weeks' pay per year of service plus statutory entitlements, with a rounding up of service to the nearest 6 months for all employees selected for redundancy. The Court further recommends that the method of selection for redundancy should be LIFO ("Last in first out") principle.
- The Court recommends that the additional bonus, introduced in June, 1999 should be phased out over a period of six months from the date of acceptance of this recommendation.
- Given the present difficult trading position of the Company, the Court does not recommend the introduction of a gainsharing scheme. However, when the Company returns to profit making, the Court recommends that the Company should honour the commitment already given, to share the profits with the workforce.
Signed on behalf of the Labour Court
Enquiries concerning this Recommendation should be addressed to Fran Brennan, Court Secretary.