INDUSTRIAL RELATIONS ACTS, 1946 TO 2001
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
CHUBB SECURITY PERSONNEL LIMITED
(REPRESENTED BY THE IRISH BUSINESS AND EMPLOYERS' CONFEDERATION)
- AND -
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
Chairman: Ms Jenkinson
Employer Member: Mr Keogh
Worker Member: Mr. Somers
1. Application of additional 2% under the review of the Programme for Prosperity and Fairness (PPF).
2. Chubb Security Personnel Limited is part of the Chubb Ireland Group and employs approximately 470 people in the provision of static security services at locations throughout the country.
The issue in dispute is a claim by the Union on behalf of its members for the application of a 2% increase in basic pay under the Programme for Prosperity and Fairness (PPF). This increase was agreed by the social partners and the government in late 2000 in response to increases in the rate of inflation. The Company rejected the Union's claim and the issue was the subject of a conciliation conference under the auspices of the Labour Relations Commission on the 11th of July, 2001. As agreement was not possible, the dispute was referred to the Labour Court on the 23rd of July, 2001, in accordance with Section 26(1) of the Industrial Relations Act, 1990. The Court investigated the dispute on the 27th of September, 2001, the earliest date suitable to the parties.
3. 1. The Company should have implemented the additional 2% increase with effect from April, 2001, as all other reputable security companies with whom Chubb is in competition, have done. All security companies paying the minimum rates of pay increased their rates by 8% in March, 2001, in line with Phase 1 of the Security Industry Employment Regulation Order (ERO). These companies will again increase their rates by another 8% from January, 2002, in line with Phase 2 of the ERO. 2. The level of the increase conceded by the Company in October, 2000, was a knock-on cost resulting from the introduction of the first Security Industry ERO in March, 2000. All other security companies bore similar pay costs, which were part of a security industry drive to address very low basic rates of pay and the associated job retention and recruitment problems. However, the benefit of the October, 2000, increase has since been wiped out due to the curtailment of overtime working. 3. The Company's contention that it is not obliged to apply the increase as it has agreed increases “far in excess” of Phase 1 of the PPF (5.5%) in October, 2000, is not a credible one. The Company claims that increases of 11% to 15% were conceded in October. However, when account is taken of the consolidation of the unsocial hours payment (£11 or 13.97 Euro), the actual increase conceded was 8.5% (inclusive of 5.5% PPF).
4. In Labour Court recommendation LCR16824 the Court recommended that the 2% increase should be paid on the construction industry minimum rates, notwithstanding the fact that the industry agreed phased increases of 25% outside the PPF in September, 2000.
4. 1. In September, 2000, the Company and the Union concluded an agreement on basic pay and conditions of employment to take effect from October, 2000, which is due to run until the end of the PPF. The agreement provides for increases in basic pay ranging from 10.2% to 15.73%, depending on the particular point of the incremental scale. When Phases 2 and 3 are paid the increases will total 20.9% to 26.97%.
2. The September/October agreement expressly provides that the improvements in pay “are in full and final settlement of all outstanding claims with regard to the ERO and the PPF”. This means that no further claims would be entertained during the lifetime of the PPF. The issue of inflation was considered in arriving at the terms of the final agreement.
3. The Company's pay costs, taking account of overtime payments, holiday pay and employer PRSI, have increased significantly above the terms of the PPF. Total labour costs have increased by 35% when compared to the same reference period in 2000. The increase in costs amounts to approximately £1 million (1,269,738 Euro) per year. The Company's circumstances should, therefore, fall within the ambit of that envisaged by the 'stability enhancing measures' of Clause 7 of the PPF and the Company should not be obliged to apply the 2%.
4. Staff costs are currently running at 80% of turnover. Concession of the 2% will cost the Company an additional £200,000 per annum (253,947.61Euro). In the high tech sector, the Company has already lost two contracts and other customers are seeking cost reductions. This puts a total of 60 jobs at risk in this sector.
5. Concession of the Union's claim would increase costs and would have adverse consequences for competitiveness. The high number of industrial closures in recent months will invariably give rise to a greater level of competition within the industry. Therefore, the Company cannot countenance any further increase in costs.
Where companies have paid significantly in excess of the PPF, the terms of the Stability Enhancing measures of PPF allow such companies to avoid further pay increases where such increases would put employment and competitiveness at risk.
It is for the employer to demonstrate to the Court that the additional increases already paid, combined with the payment of the 2%, would put the competitiveness and employment at risk.
On examination of the arguments made before the Court, and taking account of the Company's trading position, the Court recommends that the 2% should be paid with effect from 1st November, 2001. The issue of retrospection should be reviewed in June, 2002, in the light of the trading position of the Company at that time.
Signed on behalf of the Labour Court
1st November, 2001______________________
Enquiries concerning this Recommendation should be addressed to Dympna Greene, Court Secretary.