FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : LEO PHARMA (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Ms Jenkinson Employer Member: Mr Doherty Worker Member: Mr Nash |
1. Breach of Agreement on loss of earnings formula
BACKGROUND:
2. This case concerns a dispute between the Union and the Company in relation to the appropriate formula for the calculation of loss of overtime. The Company is involved in the production of pharmaceuticals specialising in products for skin ailments.
Both parties agree that there has been a substantial loss of overtime in the first six months of 2007 but have opposing views on the appropriate formula to be used in calculating the loss.
The Union is seeking that the appropriate formula is the "non-fluctuating" loss of earnings agreement which is used as a result of management decisions to change work practices, shift patterns or changes in production.
Management's position is that the loss is due to a decrease in market demand for certain products and not as a result of unilateral management decisions. Management contends that the appropriate formula is the "fluctuating" loss agreement.
The dispute was not 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 matter was referred to the Labour Court on 21st February, 2008 in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on 30th April, 2008.
UNION'S ARGUMENTS:
3 1 The loss of overtime came about as a result of managements decision to prduce less quantities of a certain product. The claim relates to a continuous period where overtime did not exist, therefore it cannot be classed as a fluctuating loss. The appropriate agreement is the non fluctuating loss of earnings agreement.
2 If the Union accept management's position on the application of the fluctuating loss agreement, it would result in workers incurring further delays in receiving compensation for loss of earnings. The Unions claim as presented is fair and reasonable in the circumstances.
COMPANY'S ARGUMENTS:
4 1 The reason for a reduction in overtime in the period in question was not as a result of a unilateral decision by management. It was as a result of a reduction in the production of a certain product due to a decrease in market demand
2 On the basis of the fluctuating demands in the market place the appropriate agreement on loss of overtime is the fluctuating loss agreement.
RECOMMENDATION:
The issue before the Court concerns an interpretation of the Company’s policies on compensation of loss of overtime earnings. Having examined the Company’s policies, the Court’s understanding of the two formulae is summarised as follows: -
- Non-Fluctuating Loss of Earnings
This formula relates to loss of overtime earnings which arise due to a permanent change in work practices, e.g. introduction of automation, introduction of shift working, where rostered overtime is permanently cancelled etc.
Fluctuating Loss of Earnings
This formula relates to loss of overtime earnings, which arise when a pattern can be shown which indicated a significant fluctuation in overtime earnings, which arose due to a downward trend in the market for the Company’s products.
The Court is of the view that the latter could only be established when an examination of overtime earnings is carried out over a number of years, (minimum three).
While both parties accept that a loss of earnings has arisen in the period from January to June 2007 inclusive, the Union submitted that the loss arose directly from the Company’s decision to withdraw one of its products (Dovonex Ointment) from the market and therefore the “Non-Fluctuating Loss of Earnings” formula should apply.
Whereas, the Company submitted that the reduction in overtime earnings arose due to changes in market demands for two of its products (Fucidin & Fucithalmic) as well as the drop in demand for its samples for the US marketand therefore the “Fluctuating Loss of Earnings” formula should apply.
Having investigated the detail of the overtime hours worked for the period in question, the Court is satisfied that they indicate that there was a reduced level of overtime worked. In the case of the TPP, this loss was significant for the first six months of 2007, however, the level rose again later in the year and is indicating a further increase for 2008. Therefore, the Court has no hesitation in finding that the reduction in overtime worked arose due to a downward trend in the market for the Company’s products. Hence, the appropriate formula to be used to ascertain compensation for loss of overtime earnings is the “Fluctuating Loss of Earnings” formula.
In order to avoid further difficulties in interpreting the formulae, the Court recommends that the parties should re-engage and clarify the situation for the future.
The Court so recommends.
Signed on behalf of the Labour Court
Caroline Jenkinson
15th May 2008______________________
AHDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Andrew Heavey, Court Secretary.