INDUSTRIAL RELATIONS ACTS, 1946 TO 2001
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
- AND -
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
IRISH MUNICIPAL, PUBLIC AND CIVIL TRADE UNION
AER LINGUS CRAFT GROUP OF UNIONS
Chairman: Mr Flood
Employer Member: Mr Carberry
Worker Member: Mr. Somers
1. 1. Payment of the 4% increase under the Programme for Prosperity and Fairness (PPF) 2. Holidays 3. Overtime Premium 4. Payment of Increments.
2. Under the Company's Survival Plan, negotiated and agreed between the parties under the auspices of the Labour Relations Commission, provision was made for the non payment of two phases(5.5% and 4%) of the PPF, a reduction of one day in holiday entitlement, a reduction in 2T overtime, and the non payment of increments due in 2002. The pay freeze under the plan was due to expire at the end of February 2003. The Company has paid the 5.5 % increase from 1st March, 2003. The Unions' claim is for the payment of the remaining 4% under the PPF, a restoration of holiday entitlement, the restoration of 2T overtime rate, and the payment of the lost increment for 2002 plus the normal increment for 2003. At local discussions the Company offered to pay the 4% but linked it to further productivity changes. Management rejected the other claims. This was not acceptable to the Unions. The dispute was referred to the Labour Relations Commission. A conciliation conference was held but agreement was not reached. The dispute was referred to the Labour Court by the Labour Relations Commission in February, 2003. A Court hearing was held on the 18th March, 2003.
4% Increase under PPF.
3. 1.The Company is now viable and profitable. Workers have made a very significant contribution and given full cooperation with substantial ongoing change. This type of flexibility will continue as required under the PPF. The Company's agenda, in return for payment of the 4% increase, is clearly outside the terms of Clause 7 of the PPF regarding "ongoing cooperation with change".
2. The 4% increase under PPF must be paid. The Unions will then negotiate with the Company on its agenda.
3. The LRC Survival Plan proposed that staff concede a day's leave in 2002 and 2003 and that " this requirement be reviewed after 2003". It was not intended that this should apply on a permanent basis. The Company should restore the pre survival Plan annual leave situation and implement same for 2004.
4. Under the LRC Survival Plan overtime was reduced to time and three quarters in light of the present financial circumstances". The Company's financial circumstances have been transformed to the extent that the overtime rate should now be restored to 2T.
5. The LRC Survival Plan provides for the restoration of incremental progression from 1st January, 2003. Therefore the foregone increment should be paid in 2003 along with the normal increment. Management cannot view it as a saving on an ongoing basis. The only element permanently foregone under the Employee Share Option Plan, (ESOP), is the 1% lump sum under the revised terms of the PPF.
6. The foregoing of the increment forever would create financial loss for workers on various points on the scale, also in terms of preserved pension (workers who leave the Company), and long service increments in the case of some workers.
The upturn in the aviation market envisaged has not materialised. The Company forecasts a shortfall in revenue for the first half of 2003. The Company's cost base is twice that of its main competitor.
4% Increase Under PPF.
4. 1. The Company is prepared to pay the 4% increase immediately provided that there is acceptance by workers of relevant work changes which are crucial to maintain the competitiveness of the Company.
2. The annual leave day was conceded in the LRC Survival Plan. The Company agrees to review this reduction after 2003 as provided for in the Survival Plan.
3. The LRC Survival Plan provided that the rate for all areas where 2T is presently paid be reduced to time and three quarters. Sixty five per cent of overtime worked in the Company is at the higher overtime premium rate of time and three quarters. A restoration of 2T rate would compound a situation where costs are already higher than competitors.
4. The increment forms part of the pay foregone in the ESOP agreement.
The foregoing of the increment will not impact long term on employees' pensions as the long service increments will still be related to length of service and will not be impacted on by foregoing this increment.
The dispute before the Court arises as a result of a difference in interpretation between the parties on a number of issues contained in the Company Survival Plan formulated by the Labour Relations Commission.
The Court in considering the areas of dispute must form a view on what was intended by the Company, the Unions and the Labour Relations Commission at the time of negotiations. In this regard it should be noted that the Court is interpretating the agreement reached by the parties in earlier negotitations.
In doing so the Court is conscious, given the serious situation that prevailed at the time, that items may not have been fully discussed or clarified, in order to move the process forward.
The issues the Court has been asked to address are:
1. Payment of 4% under PPF
2. Payment of Increment for 2002
3. Restoration of Overtime Premium
4. Restoration of Annual Leave Entitlement
5. Payment of 1% Lump Sum under PPF
1. Payment of 4%
The Company has indicated its willingness to pay the 4% P.P.F. payment but seeks changes in return. The Company proposals include items that were in the Survival Plan, items that have been under discussion and new items.
The Union case is that the Company proposals must be taken in the context of change already given in the Survival Plan, and that the proposals are by their extent and nature, over and above what would be classified as ongoing change.
The relevant P.P.F. clause states:-
"Economic, Competitive and Commercial Circumstances
7. Clause 3 shall be negotiated between the employers and unions through normal industrial machinery, due regard being had to the economic, commercial and employment circumstances of the particular firm, employment or industry, whether arising from exchange rate movements or otherwise. The need for ongoing co-operation with change and for continued adaptation and flexibility accepted by the parties may include necessary measures to sustain competitiveness and employment on the implementation of Clause 3"
The Court finds the position taken by both sides to be unsatisfactory, the Unions arguing that the payment should be made without agreement to further change at this time, and the Company's position being that the changes are within the P.P.F. definition.
The Court is satisfied that the Unions should agree to changes in return for the 4% payment, but not to the extent and range of the changes proposed by the Company.
As the Company proposals affect each group in different ways it is not possible to make a common proposal for the 4%.
The Court therefore recommends that the parties enter into immediate negotiations in order to reach an agreement on a level of change to be implemented in return for the payment.
These negotiations to be completed within 1 month of the date of this recommendation and if any group fails to reach agreement the matter can be referred back to the Court.
2. 2002 Increment
The Company case is that it was never envisaged in the Survival Plan that the 2002 increment would be paid, and that its non-payment was taken into account in the ESOP.
The Unions are adamant that the non-payment of the 2002 increment was not provided for in the ESOP, and that it was never put to them at any stage that this increment would be foregone permanently.
The Court in considering this matter notes the wording used in the Labour Relations Commissions proposal“there should be no incremental progression until 2003”. There is no mention of the 2002 increment being paid at that stage.
In the absence of any wording or evidence to the contrary the Court finds that the intention was that increments would cease, and would only recommence in April 2003 and that the 2002 increment would not be paid.
The Court notes that the Company is adamant that contrary to the Union’s statement there will be no long term impact on employees pensions. The Court recommends that the Company clarify this for employees.
3. Overtime Premium
In the plan premium double time payments were reduced to time and three quarters. This was done“in light of the present financial circumstances”.
The Unions have argued that this was done in the context of a €140m loss and the forecast for 2002 of a further €27m loss. However, the performance for 2002 actually turned into a profit of €64m which indicates that the previous financial situation no longer applies.
While the Court notes that the Company has put forward arguments indicating the necessity for ongoing competitiveness it is clear that the financial circumstances that prevailed when the reduction was made do not currently exist. The Court therefore recommends that the payment revert to double time.
The Court makes this recommendation in the context of the wording in the Survival Plan but accepts that the Company may raise this issue again should financial circumstances warrant it.
4. Annual Leave
The LRC proposal was for staff with holidays in excess of 20 days to give up one day in each of the years 2002 and 2003. The Union side indicated that the Company had signalled that these reductions would become permanent.
However, it was clarified at the hearing that the Company was prepared to review this reduction after 2003 as outlined in the LRC proposals.
5. Payment of Lump Sum 1%
It was agreed at the hearing that this issue had been dealt with under the ESOP Agreement.
The Company has, during the hearing, laid great emphasis on the requirements to remain competitive, particularly given the ongoing difficult trading situation facing the industry. This, the Company has indicated, will require on going change from employees.
The Court has noted the Unions stated willingness to enter into such discussions when the issues before the Court are resolved.
However, the Court is concerned that there seems to be major differences between the parties in their assessment of the financial performance of the Company. This situation, coupled with the Unions stated lack of confidence in the Company accuracy when forecasting financial performance, requires to be addressed by the parties in order to facilitate the discussions on the Company business requirements.
Signed on behalf of the Labour Court
11th April, 2003______________________
Enquiries concerning this Recommendation should be addressed to Tom O'Dea, Court Secretary.