INDUSTRIAL RELATIONS ACTS, 1946 TO 2004
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
(REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION)
- AND -
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
Chairman: Ms Jenkinson
Employer Member: Mr Doherty
Worker Member: Mr O'Neill
1. Sustaining Progress.
2. Shannon Aerospace was established in 1990 as a joint venture involving GPA, Swissair and Lufthansa. The Company employs approximately 800 workers of which 550 are represented by SIPTU.
The Union is seeking the payment of the final 2 phases of Sustaining Progress (i.e. 1.5% from July 2005 and 2.5% with effect from 1st January, 2006).
The Company is seeking cost offsetting measures under clause 1.10 (iii) of Sustaining Progress and claiming inability to pay the terms of the Agreement in full and/or that cost offsetting measures are necessary to do so. The situation is somewhat complicated by the Company’s desire to also achieve a freeze on employees annual increment which has a value of approximately 4% to those affected. The Company also wishes to negotiate a new salary system which would generate pay increases in line with national wage agreements.
The dispute could not be resolved at local level and was the subject of a conciliation conference under the auspices of the Labour Relations Commission. As agreement was not reached, the dispute was referred to the Labour Court on the 24th February, 2006 in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 20th June, 2006.
3.1 The Company has made profits every year since incorporation due to good management. The workers co-operated with everything management requested.
2. It is quite clear the Company can afford to pay Sustaining Progress. The Company accounts have shown profits of €5.12 million in 2002, profits in 2002, 2003, and €2.21million in 2004.
3. The Union believes that the Independent Assessors Report (which outlined cost offsetting measures) is seriously flawed. The Union contends that any interpretation once the Company is in profit relates to whether the Company iswilling rather than able to pay National Agreements. The Company's position has been that it is making a profit (after all costs including pay) it is just not making enough.
4. The workers will not accept any diminution of their pay and conditions
4.1 The Company is in serious difficulty at the moment and requires a significant transformation to make it viable for the future as stated in an Independent Assessor's Report on the Company. Progress is being made on the change programme, the benefits from its implementation are still some time off.
2. Despite employees understanding of the need for significant change, there is still obvious reluctance to engage with the Company on making the changes that are required. As an overall objective, the Company wants to (a) secure 750 jobs in a viable, sustainable operation (b) be in a position to pay national wage agreements into the future and (c) share the benefits of its success with its employees.
3. In order to achieve that, the Company needs :
- Full co-operation with, and implementation of Lean Manufacturing (a new profit sharing scheme which will generate approximately 1% of additional pay for employees on attainment of profit and in addition will provide significant payments where profit target is exceeded)
- Cost off setting measures to fund the payment of Sustaining Progress and
- A new salary system which limits the exposure of substantial automatic salary growth
This dispute concerns a claim by the Union for outstanding pay increases due under Sustaining Progress, 1.5% from 1st July 2005 and 2.5% from 1st January 2006. The Company claims that some cost-offsetting measures are necessary to pay the full terms of the Agreement.
The case has been referred to the Court under Clause 1.10 (iii) of the Agreement.
The procedures prescribed by the Agreement involve an examination of the economic, commercial and employment circumstances of the employer by an Independent Assessor appointed by the LRC. If the dispute remains unresolved, it is to be referred to the Court.
The Court has considered the submissions made by both sides and the report submitted by the Independent Assessor. The Assessor’s report outlined the cost offsetting measures sought by the company and the likely savings, which could result from implementation of such measures. His report concludes: -
- “….. going forward there is no doubt that it is now in a very difficult trading position with very competitive external competition ………….. in all the circumstances I believe that the company is entitled to and needs cost off setting costs.”
The Court has considered the submissions made by both sides and has considered the financial and economic circumstances of the Company. The Court is satisfied that the Company has been experiencing significant financial pressures and needs to address its costs structure going forward in order to compete for business.
Therefore, the Court recommends that the parties should enter into discussions as outlined in the conclusion of the Assessor’s Report and take a balanced approach towards agreeing cost offsetting measures in return for payment of the increases due under Sustaining Progress.
The Court so recommends.
Signed on behalf of the Labour Court
4th July, 2006______________________
Enquiries concerning this Recommendation should be addressed to Jackie Byrne, Court Secretary.