INDUSTRIAL RELATIONS ACTS, 1946 TO 2001
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
- AND -
MANUFACTURING, SCIENCE, FINANCE
Chairman: Ms Jenkinson
Employer Member: Mr Keogh
Worker Member: Mr. Somers
1. Integration of the workforce and conditions of employment following merger.
2. Following the merger of the Irish Permanent and the TSB, it was agreed that the TSB employees would be given a 14.9% equity stake - also known as an employee share ownership trust (ESOT) - in the business. In return, the employees agreed to a number of terms, including foregoing the 2nd phase of the PPF, commitment to flexible working practices and an increase in working hours from 35 to 37 per week. In the present case, the Union's claim is for an ESOT for the Company workers similar to the TSB employees.
In mid-February 2001, the parties met to agree an ESOT model. Following a number of roadshows around the country to demonstrate what was on offer, the following was proposed:-
1. Based on identified savings, a capital sum of £17.5m (22.22m Euro) would be placed in an ESOT for distribution to eligible IP employees.
2. In addition all IP employees would receive a grant of share options, the value of this equals£14.5m (18.41m Euro),equivalent to 50% of their annual salary, subject to a minimum grant of £7,500 (9,520 Euro) worth of options.
3. The 2nd Phase of the PPF would be brought forward by 5 months for IP employees. This was equivalent to an increase in earnings of 2.3% per annum assuming broadly similar national pay trends into the future.
The savings/benefit were to be as follows:-
1. Move from 33.75 to 36.25 hours per week.
2. Buy-out of luncheon vouchers/canteen subsidy and health allowance (value of £3,600 per year (4571.06 Euro).
3. Preferential home loan rate increased by 0.5% to 3%.
4. Employees' pension contribution increased from 3% to 4%.
The proposal was recommended by the Company and Union but was rejected by a 2:1 majority by Union members.
The dispute was referred to the Labour Relations Commission and a conciliation conference took place. As the parties could not reach agreement, the dispute was referred to the Labour Court on the 15th of May, 2001. Labour Court hearings took place on the 7th of June and the 13th of July, 2001. One of the main difference between the parties is that the Company favours a lump-sum payment whereas the Union is seeking an ongoing percentage increase in pay.
3. 1. The workers have a serious issue with the concept of an ongoing increase in hours being bought with a lump sum, especially such a large concession representing 7.5% at the minimum and 11.1% at the maximum.
2. The emotive nature of benefits such as lunch subsidy, bonus bonds, health allowance, etc. is difficult to present in monetary terms, as its value is more work environment related. These benefits were won after difficult negotiations and are valued accordingly.
3. A combination of the cost savings that the Company will enjoy from the overall merger expressed as a meaningful lump-sum, coupled with the payment for hours on a voluntary basis as an on-going increase in salary would meet the needs of both parties.
4. 1. The Company's proposals effectively met the Union's original claim, exceeding it in terms of quantum and providing a similar structure to the TSB ESOT. The Union recommended the deal for acceptance.
2. Existing Company staff would be "red-circled" on the current scale, the maximum of which - £29,054 (36,898 Euro) - is approximately £7,000 (8,888.17 Euro) higher than the TSB maximum. In exchange for the proposals, the Company would have harmonised pay scales (except for red-circled staff), working hours and pension contributions.
3. The Union has changed its original position and is seeking to move away from the ESOT model whereby a capital sum is distributed to a model that increases individuals' salaries. If conceded, this would result in knock-on claims by TSB Unions on behalf of their members.
4. The Company's proposed increase in working hours could be achieved by employees reducing their lunch breaks by half an hour each day. There would be no need for employees to start earlier or stay late.
The Court has given consideration to all aspects of this case and, following extensive exploration with both sides, has decided to make a recommendation on all aspects of the integration of Irish Permanent with the newly acquired TSB Bank.
The Company proposals dated 2nd April, 2001, were put forward for ballot and rejected. The Court is of the view that these proposals should be amended, with the following changes being recommended.
- In return for the proposed increased working hours, employees' salaries should be increased by 7.5%.
- The Company should pay a lump sum to employees in two equal instalments, the first in September, 2001, and the second in February, 2002, (subject to Revenue clearance). The employee should have the option to choose whether to opt for a cash lump sum or an APSS scheme (subject to Revenue clearance). The amount of the lump sum should be dependent on the level of salary the employee is on at the date of this recommendation, as follows:
- Employees earning less than £20,000 (25,394.76 Euro) - Lump sum of £10,000 (12,697.39 Euro)
- Employees earning more than £20,000 (25,394.76 Euro) - Lump sum of £13,500 (17,141.46 Euro)
- Salaries for existing Irish Permanent staff to be red-circled.
- The Court accepts the Union's argument in relation to the Lunch Subsidy and the Health Allowance and, therefore, recommends their retention on a personal to holder basis for existing Irish Permanent employees. Accordingly, the application dates of PPF will not need to be brought forward as per the Company's proposals.
- The Court recommends that the proposals to move from payment on a weekly basis to payment on a monthly basis should be accepted as part of this package. The Court recommends that monthly pay should be introduced from January, 2002, on a trial basis for a period of 18 months, at which time the method should be reviewed and any significant problems dealt with at that time.
- The above package to include the second phase (5.5%) of PPF.
The Court's recommendation should now be presented to the employees of Irish Permanent as a final package for ballot and resolution of the dispute.
Signed on behalf of the Labour Court
20th July, 2001______________________
Enquiries concerning this Recommendation should be addressed to Ciaran O'Neill, Court Secretary.