INDUSTRIAL RELATIONS ACTS, 1946 TO 2001
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
FRUIT OF THE LOOM
(REPRESENTED BY THE IRISH BUSINESS AND EMPLOYERS' CONFEDERATION)
- AND -
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
Chairman: Mr Flood
Employer Member: Mr Pierce
Worker Member: Mr. Somers
1. (A) Method of applying PPF minimum increase. (B) National Minimum Wage.
2. The Company is engaged in the textile industry and employs approximately 600 people at its two plants in Buncrana, Co. Donegal, of whom approximately 320 are SIPTU members.
The issues in dispute concern the interpretation and application of the pay element of the Programme for Prosperity and Fairness (PPF) and the method of implementation of the National Minimum Wage (NMW). In previous National pay agreements, the Company applied the increase to the base rate and, in order to maintain a differential between base and incentive rates, it further multiplied the base rate by one third to give the bonus/piece rate. However, the Company proposed to apply the 5.5% increase (subject to a minimum increase of £12) (15.24 Euro) of Phase 1 of PPF with effect from April 1st, 2000 to both the base rate and to the bonus/piece rate. The previous method of application would not, therefore, be maintained.
The second issue in dispute is the Company's application of the National Minimum Wage. The Company applied the increase due under the PPF on the 1st of April, 2000, and then adjusted the rates upwards that were below the NMW. Both issues were the subject of local discussions and of a conciliation conference on the 15th of March, 2001, under the auspices of the Labour Relations Commission. The conference was adjourned until the end of May to enable the Company to consider its position. The Company then requested a further six to eight weeks, which the Union rejected. The issues were then referred to the Labour Court on the 29th of June, 2001, in accordance with Section 26(1) of the Industrial Relations Act, 1990. The Court investigated the dispute in Donegal on the 10th of October, 2001, the earliest date suitable to the parties.
3. 1. PPF: The Company initially delayed the implementation of the PPF citing that it was awaiting the outcome of the JLC's and JIC's, although it was not subject to their recommendations. The Company then changed its view when it became apparent that the JLC's and JIC's would endorse the Union's interpretation, as the Labour Court did.
2. The Company's actions are undermining well established Company/Union agreements, which have benefited both parties over many years. If the Company is allowed to reduce the differential and, therefore, the pay terms of the PPF, it will bring such agreements into disrepute.
3. The claimants are extremely angry and bitter at the Company's position of not honouring agreements and at the delay in processing this dispute. The delay has had a serious adverse effect on morale and has also damaged industrial relations in the Company.
4. Minimum Wage: The Company's position is totally unreasonable. There are very few workers involved, yet the Company did not apply the Minimum Wage first and then the PPF, as has been endorsed by the Labour Court. The Company also selected a pay reference period of four weeks, although the employees are paid weekly.
4. 1. PPF: The Company has closed five factories and has made 1,400 employees redundant since 1997. It continues to experience economic and commercial difficulties and any further cost increases will have implications on competitiveness and employment.
2. Prior to the PPF the Company maintained the differential between basic pay and the incentive rate because a substantial number of employees were on the incentive rate. In recent years, however, the number of employees on live incentive schemes has decreased dramatically. There are now only 34 cutting operators on a live incentive scheme.
3. The Company is in full compliance with the PPF by applying the 5.5% increase or £12 (15.24 Euro) as appropriate to the current rates. Furthermore, Clause 7 of the PPF provides a mechanism that due regard must be had for the economic, commercial and employment circumstances of the firm.
4. Minimum Wage: The Company first applied the PPF to ensure that it complied with the terms of the National Minimum Wage Act, 2000. The Act set down a minimum hourly rate of £4.40 (5.59 Euro) per hour from 1st April, 2000, to be calculable over a four week period. The Union is seeking a minimum wage of £4.71 (5.98 Euro) per hour (NMW £171.60 + £12 =£183.60) (217.89 Euro + 15.24 Euro = 233.13 Euro) with a reference period of one week. This would result in an increase of 6.6% instead of 5.5%. This would penalise the Company and would ultimately erode competitiveness.
The Court, having considered the written and oral submissions made by the parties recommends as follows in the 2 issues in dispute.
1.Method of applying P.P.F. minimum increase.
It is accepted that the Company has changed the method of applying the pay increases granted under the National Agreement, for reasons outlined to the Court.
While the Court notes the arguments made by the Company, it is of the view that a change such as that proposed should be the subject of discussion, and if possible agreement, before implementation.
The Court, therefore, recommends that the parties make a final effort to reach an accommodation on this matter bearing in mind the financial situation outlined at the hearing. If agreement is not reached, then the Court will on request make a definitive recommendation.
2.National Minimum Wage
The Court is satisfied that the correct application is for the 1st phase of the P.P.F. to be applied to the National Minimum Wage, both of which were due on the 1st of April, 2000, i.e. the National Minimum Wage to apply first.
Signed on behalf of the Labour Court
12th November, 2001______________________
Enquiries concerning this Recommendation should be addressed to Dympna Greene, Court Secretary.