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: Mr Duffy
Employer Member: Mr McHenry
Worker Member: Mr O'Neill
1. Introduction of Pension Scheme and extension of Sick Pay Scheme.
2. The Company is a privately owned German multi-national Company. The Cork plant commenced operation in 1980 and is engaged in the manufacture of plastic injection moulded parts and other shower unit parts for the export market. The dispute concerns the Union's claim for the introduction of a pension scheme and improvements in the sick pay scheme on behalf of approximately 105 people.
Management rejects the claim. It argues that the introduction of a pension scheme would put the Company in a loss making situation and this could have serious implications for the future of Showerlux.
Sick Pay Scheme
The existing sick pay scheme provides for 4 week's full pay and 4 week's half pay. There is no payment for the first 3 days of absence and payments from the scheme are deducted on a pro rata basis from the annual bonus. The Union is seeking 8 week's full pay and 8 week's half pay, plus payment from day one of absence and an end to the practice of deducting such payments from the annual bonus. Management has made an offer of 6 week's full pay and 6 week's half pay.
The matter was the subject of a conciliation conference under the auspices of the Labour Relations Commission. As agreement could not be reached, the dispute was referred to the Labour Court on the 25th of October, 2000. A Labour Court hearing took place in Cork on the 14th of February, 2001, the first date suitable to the parties.
UNION'S ARGUMENTS: - PENSION SCHEME
3. 1. While the claim was last served in November, 1999, the history of the claim goes back to 1981. Management has continually rejected the claim on the basis that the owner of the Company is opposed to funding a pension scheme and that the Union's claim could put the future of the plant at risk.
2. John Davis Design Limited which is 99.9% owned by Showerlux (Cork) and one of the signatures on the Company/Union agreement has been performing very well over the past number of years. While Management refused to supply the Union with any financial information regarding its trading position, the Union obtained copies of its accounts from the Companies Registration Office. The accounts show that the Company is in a position to fund the claim.
3. While substantial investment has been made in extending and modernising premises, updating plant and equipment, little or no investment has been made in respect of improving wages and conditions of employment.
4. Many of the workers who have made significant contributions to the growth of the plant are now approaching the reality of retirement and in the circumstances concession of the Union's claim is justified.
SICK PAY SCHEME
4. 1. The claim that payment of the sick pay be paid from day one is based on the scheme in operation for the supervisory grade. In this climate of partnership, it is reasonable for the general operative grade to be treated on a par with their supervisory colleagues.
2. The general operative grade is the only grade where sick payments are deducted from the annual bonus. While it was agreed some 15 years ago that the bonus was linked to attendance, this clause has been eliminated in respect of the other grades.
3. It is the Union's view that the scheme as it exists is not abused. However, when the workers concerned are forced to take time off to get over some minor illness, the losses suffered are substantial, bearing in mind the low basic wages. The Union would not condone any abuse of the scheme if improvements to the scheme are conceded.
COMPANY'S ARGUMENTS:-PENSION SCHEME
5. 1. The Company's profit has declined over the past 6 years. This decline in percentage profit is due to two factors:-
(a) The significant increase in the price of aluminium. (World Traded Commodity)
(b) The poor performance of the Euro. (USD base currency of aluminium)
Both of these factors are outside the Company's control and no change is expected in the near future.
2. The introduction of a pension scheme would put the Company in a loss making situation. This could have serious implications for Showerlux in the future. The parent Company will not run Showerlux at a loss. The Company recognises the Union's claim and its rights under both Partnership 2000 and the Programme for Prosperity and Fairness(PPF). However, under Clause 9 of Annex 1 of the PPF, it states that "negotiations on these matters shall be governed by the capacity of the enterprise to absorb the costs involved".
3. The operation is German owned and managed. The philosophy of the Company is that none of its other plants in Europe, 9 in total, have pension schemes. Management fear the consequences of the introduction of a pension scheme in its plant in Cork.
4. Showerlux are proposing that if the Company returns to 15% profitability in the future it would consider the introduction of a pension scheme at that time.
SICK PAY SCHEME
6. 1. Under Clause 8 of Annex 1 in the PPF it states in relation to sick pay schemes that unions can make claims for "improvement of such schemes where these are substantially out of line with appropriate standards in comparable employments".
2. The Company considers that it is not out of line in relation to the payment of the first 3 days in comparable employments as the majority of schemes have this in place.
3. Under Clause 9 of Annex 1 of the PPF it discusses the implications for attendance in relation to the sick pay scheme. The Company feels that by allowing the first 3 days to be paid, that absences would increase significantly which would cause a problem in an already competitive environment.
4. As already stated in regards to the pension issue, Showerlux must control its costs in the future. During negotiations the Company agreed to increase the sick pay scheme from 4 week's full pay plus 4 week's half pay to 6 week's full pay and 6 week's half pay. There is a cost implication to the Company which further erodes the current profit situation.
The Court has carefully considered the submissions of the parties and recommends as follows on each of the union's claims:
Introduction of a Pension Scheme
Whilst the current financial circumstances of the employment have been relied upon by the Company in opposing the Union's claim, the Court believes that the overriding consideration is its objection in principle to the provision of pension benefits to employees.
Having regard to established standards in Irish employments generally, the Court does not accept that a principled objection to the provision of an occupational pension scheme is sustainable or acceptable. For this reason the Court recommends that the Company should now agree to introduce an appropriate pension scheme for employees. The detailed terms and conditions of the scheme should be negotiated and agreed between the parties within 6 months from the date of this recommendation.
Sick Pay Scheme
The Court is not satisfied that the requirement for three waiting days renders the current sick pay scheme significantly out of line with appropriate standards in comparable employment. The Court does not, therefore, recommend any change in that aspect of the scheme. The Court does, however, recommend that the current arrangements whereby a deduction is made from the annual bonus in respect of sick pay received should be discontinued.
With this modification the Court recommends that the Company's offer of extending the duration of the scheme to six week's full pay and six week's half pay be accepted.
The Court so recommends.
Signed on behalf of the Labour Court
1st March, 2001______________________
Enquiries concerning this Recommendation should be addressed to Fran Brennan, Court Secretary.