INDUSTRIAL RELATIONS ACTS, 1946 TO 2004
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
WYETH NUTRITIONALS IRELAND
- AND -
SUPERVISORY REPRESENTATIVE GROUP (SRG)
Chairman: Ms Jenkinson
Employer Member: Mr Grier
Worker Member: Mr Nash
1. Non payment of performance related pay.
2. Wyeth Nutritionals Limited manufactures baby food in Askeaton, Co. Limerick. The case before the Court involves around 60 SRG members who are shift mangers and facilitators who provide front line management in all areas of activity in the Plant. Many of them are qualified to graduate level and have substantial experience of managing a modern high quality manufacturing plant. This case arises from the Company's refusal to honour the terms of the 2000/2001 Agreement.
In 2000/2001 the parties entered into a new salary and performance related pay structure. The SRG members annual review of pay takes into account two factors.
- The Cost of Living Pay Increase;
- Performance Related Pay.
The SRG is seeking that:
- The Company pays all the increases due and owing to date under the current Agreement;
- That these include the pay increase due under Labour Court Recommendation LCR 17778;
- That the phasing advocated by the SRG for the introduction of the increases, back pay due as set out in the submission to the Court is fair and reasonable in the circumstances;
- That the introduction of an alternative Pay Review mechanism which results in a permanent reduction in potential income forever, should be accompanied by compensation, not based on a 'loss of earnings' mechanism designed for loss of overtime or shift pay compensation, but based on a 'return of investment' approach yielding at least cover for four years losses.
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 16th February, 2006 in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 20th October, 2006.
3.1 The SRG believes that when it negotiates and reaches an Agreement with the Company, it could be reasonable to assume that the Company will respect and abide by that Agreement. This was the case at the outset, however, it has not been the case over the past few years.
2. The SRG contend that a party to a collective agreement is not free to unilaterally retreat from the Agreement simply because it does not suit that party. This would be the Company's position if the SRG were not to abide by agreements freely entered into.
3. The Company's proposals seek to disregard its obligations to implement the terms of the current Agreement as evidenced by
- The refusal to guarantee that percentage increases due would be paid within the scheduled time-frames as set down by the Company itself;
- The non payment of back-pay due when implementing the terms of the existing agreement on a phased basis;
- The company's inability to put forward a coherent offer to secure the implementation of an alternative pay structure, the effects of which would substantially and permanently be below the value of the current agreed regime.
4.1 The Company believes that the proposals set out in its correspondence of 18th November, 2005, details supplied to the Court provide for a fair and reasonable settlement of the issues in dispute.
2. The Company's annual salary increases are the subject of corporate approval and cannot be exceeded. The Company is, therefore, attempting a comprehensive settlement within this constraint.
3. The three outstanding elements referred to in its correspondence of 9th March, 2006 by the SRG have been dealt with in the submission to the Court. In summary, the Company cannot alter its standard buy-out formula without knock-on claims being incurred, the salary increase system will be the same as that for other management, and the timing of the implementing of the 5.5% increases into the future will be dictated by annual corporate salary increase decisions.
4. Salary increases received by the SRG have exceeded those that accrued under the National Wage Agreements. These increases together with the salary levels that now pertain under the annualised hours system have resulted in a situation where members of the SRG are now amongst the best paid management group within the pharmaceutical/healthcare sector.
5. The Company is facing increasing competition within the internal nutritional manufacturing network. The Company has faced major cost increases over the past number of years in ingredients, energy, pension and people costs which have further eroded its competitive position.
The case before the Court concerns the Union’s claim concerning the non-payment of agreed pay increases and performance related pay on behalf of Shift Managers and Facilitators, represented by the Supervisory Representative Group (the Group). In acknowledging its liability the Company put forward a proposal, set out in its correspondence dated 18th November 2005. These proposals were rejected by the Group who sought enhanced terms in relation to compensation for the effects of the proposed new pay mechanism and a commitment on payment of all increases due under the various National Wage Agreements including the current phase of “Towards 2016”.
The Company’s proposals dated 18th November 2005, set out the detail of how it proposed to pay all increases and backmoney due (since the new mechanism has been put in place for 2006, the Court notes that further losses have been incurred); proposals on a revised salary system for the future and details of a *buy-out package in relation to the cessation of the current system of pay increases.
Having considered the views of the parties expressed in their oral and written submissions, the Court is of the view that the Company’s proposals should form the basis of a resolution to this dispute. In relation to proposed elimination of the current Salary and Performance Related Pay Structure and substitution with an identical system, which applies to all other members of Management, the Court is of the view that a buy out arrangement is not an appropriate mechanism for dealing with the consequences of this change. The changes envisaged in this instance will be permanent, and will have an impact on Shift Managers and Facilitators’ basic pay, which could potentially impact on all other pay related matters, such as pension, sick pay etc and for that reason are wholly different to the normal buy-out arrangements historically applying in the Company where there is a loss of overtime/shift earnings etc.
Therefore the Court recommends that the proposals should be amended at paragraph 7 to include a compensation package of three times the annul loss associated with the implementation of the new pay increase system. This clause should specifically refer to the Court’s finding that this is a wholly different matter than applies to “a buy-out arrangement” and should not be relied upon as a precedent.
At the Court hearing the Company gave assurances on its commitment to pay the outstanding monies due, if not within the time frame outlined in the proposals then at the earliest possible opportunity. The Court accepts that this commitment was given in good faith.
Consequently, the Court recommends that the proposals should be amended as outlined above, and accepted by the SRG in full and final settlement of the issues in dispute.
The Court so recommends.
*(The proposals inadvertently referred to the buy-out policy under paragraph 7 of the proposals as “52 times the annual loss” instead of “52 times the weekly loss”).
Signed on behalf of the Labour Court
Enquiries concerning this Recommendation should be addressed to Jackie Byrne, Court Secretary.