INDUSTRIAL RELATIONS ACTS, 1946 TO 2001
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
(REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION)
- AND -
Chairman: Ms Jenkinson
Employer Member: Mr Carberry
Worker Member: Mr. Somers
1. New reward policy.
2. In 1987, the VHI and the MSF Union concluded an agreement which focused on staff agreeing to on-going change and new technologies in exchange for improvements in pay and benefits. This agreement is known as the '1987 Agreement' within the Company. Crucial to this agreement was a periodical review of pay, terms and conditions. This was to take place at five-yearly intervals.
The Company has in place a voluntary Performance Related Pay (PRP) system for some categories of staff. In December, 2002, a proposal on rolling out the PRP system to the remaining staff was put forward by management. It was recommendedfor acceptance by the Union but the members rejected it.
The Management had given the Union an assurance that if the ballot was rejected the review of pay and conditions, overdue since 2001, would then be carried out. The Union, in May, 2003, sought to change the accepted methodology used in determining the review and also to change the term of the review from the 5 year reference period.
Local discussions could not resolve the issue. The dispute was the subject of three conciliation conferences under the auspices of the Labour Relations Commission. As agreement was not reached, the dispute was referred to the Labour Court on the 1st of December, 2003, in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 16th of March, 2004.
3. 1. In 2001, the Union agreed to postpone the review of pay and conditions due in September that year based on a commitment from the Management that the proposed system for adjusting salaries would generate greater pay increases for their members.
2. When the proposal was rejected, the Management refused to honour the commitment to commence the 2001 review.
3. Following conferences at the Labour Relations Commission, a revised proposal was considered in August, 2003. However, the term of the review was limited to the period ending September, 2001. The Union is of the opinion that the review should cover the period September, 1996 to the date of this hearing and should be concluded before any further ballot on PRP.
4. 1. The Company wishes to move from a 5-yearly review system as it is no longer a beneficial or practicable manner in deciding appropriate rewards for employees.
2. The Company agreed to carry out the 2001 review on the understanding that PRP proposals would be negotiated in tandem.
3. The Company position is that the 5-yearly reference period for the review is as per the '1987 Agreement' and should not be altered.
The Court considered the submissions of both parties. When a five yearly pay review scheduled for September, 2001 fell due, management put forward a proposal to introduce a performance related payment system (PRP) to replace the existing incremental salary scales with each employee being allowed to voluntarily opt for the PRP system.
A number of issues were raised at the Court, as follows:-
Timing of pay review
The Union are claiming that, due to the delay caused by the negotiations on the PRP system, that the incremental pay review should be reflective of the movement in the agreed comparator's rates of pay, as at September, 2003 and not as at September, 2001. The Union sought completion of this exercise before being required to give consideration to the Company's proposed PRP scheme.
The Company sought the introduction of the PRP scheme in tandem with the pay review, and that the pay review should be carried out in accordance with the terms of the 1987 agreement, i.e. review of rates as at September, 2001.
The Court recommends that the review should reflect the movement in agreed comparator's rates of pay as at September, 2003. The Court makes this recommendation on the basis that the proposed voluntary PRP scheme proposals are also accepted at the same time.
Methodology of pay review
The Court notes that agreement was reached between the parties on the methodology for the review of the incremental scales. Both sides indicated their acceptance of the terms agreed, as outlined by the Union at the hearing.
Performance related pay - additional pay progression steps
To address the concerns of longer serving employees, the Company offered at conciliation to add one additional pay progression step (€1,500) to the performance related pay for those employees at Level 3. At the Court hearing, the Company also offered to add an additional pay progression step to those at Level 2, which is offered conditional on acceptance of PRP. The Court endorses the Company's offer.
The Court notes the concern raised about the requirement in the Performance Related Pay proposals to work an additional nineteen minutes per day. The Court notes that this is a prerequisite for the introduction of the new payment system, and that all other staff who accepted similar proposals were also required to work longer time periods. Therefore, the Court does not recommend any alteration in this condition in the terms proposed.
The above recommendations are made on the understanding that they, together with the 'New Reward Structure 2002' as amended, will be put to a ballot of the Union members as a composite package in full and final settlement of all issues referred to the Court.
Signed on behalf of the Labour Court
23rd March, 2004______________________
Enquiries concerning this Recommendation should be addressed to Madelon Geoghegan, Court Secretary.