INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
MORRIS BUILDERS PROVIDERS LIMITED
- AND -
UNITE THE UNION
Chairman: Ms Jenkinson
Employer Member: Mr Murphy
Worker Member: Mr Shanahan
1. Proposed pay cut of 10% and other cost reduction measures.
2. The Company commenced trading in 1983 and currently employs 68 people made up of full-time and part-time employees. For the past number of years the Company's business has deteriorated and is now in a serious loss-making situation due to the collapse of the construction sector. The Company announced a number of proposals aimed at cutting wage costs on 5th January 2011 which they deemed to be essential for the Company to survive and prosper into the future. The Union stated that the Company's proposals were too severe on their members and put forward alternative proposals of their own.
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 4th May, 2011, in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 27th July, 2011.
3. 1. The Union's proposals will generate the required savings without having the need to the reduce the hourly rate of pay of members who already have borne the full brunt of previous cost cutting measures.
2. The workforce are very experienced in giving customers personal attention and advice, a quality of service that is often lacking within competitor's stores. It is therefore unfair to try and draw comparisons on the hourly rate of pay.
4. 1. Since 2009 the Company has systematically examined all overhead cost to achieve reductions and unfortunately despite these efforts, the current situation is that the Company continues to incur significant losses principally to meet the payroll bill.
2. The Company's hourly rate for Sales Assistants is currently over 40% higher than the regional rate as per an IBEC Survey on rates of pay in the retail sector in 2010. This anomaly needs to be corrected and the proposals announced on the 5th January 2011 are the only logical solution.
The matter before the Court concerns the Company’s cost reduction proposals which it claims are essential in order for it to survive, maintain employment and continue the business.
The Court notes that this issue has been the subject of protracted discussions since January 2011 and has been the subject of a number of Conciliation Conferences at the Labour Relations Commission.
On 5th January 2011 the Company submitted its proposals which included, inter alia, removal of structured overtime, new overtime rates, a reduction of 10% in pay rates and a freeze on pension contributions. At a Conciliation Conference on 18th January 2011 both parties agreed to the appointment of an independent financial Assessor to examine the Company’s position and give their view on the necessity for such cost reduction measures. The Assessor found that such measures were necessary and stated that the Company needed the support of all of its employees to maintain the viability of the enterprise and the employment which it provides. It concluded that the Company clearly needed to make the savings of at least the value of its proposed package as outlined in its proposals from all of its employees.
The Union responded with an offer to reduce the working hours from 39 hours per week to 36 hours. The Company stated that this measure would not achieve the type of savings required and would only serve to have a negative effect on customers and drive sales down further. Furthermore, it agreed to the removal of structured overtime in return for financial compensation.
The Company stated that all management and salaried staff had taken a 5% reduction in pay rates since October 2009 and it planned to apply the 10% pay reduction along with other cost saving measures on a Company-wide basis. The Company informed the Court that management and salaried staff have given a commitment to accept the additional 5% reduction as soon as the operative grades are on board.
The IBEC and ICTU Protocol for the Orderly Conduct of Industrial Relations and Local Bargaining in the Private Sector, agreed in 2010, makes it clear that the maximisation of sustainable employment is the most important objective to be secured in the economic downturn. The Company expressed its intention to maintain employees in employment as far as it is possible and accordingly sought to engage with the Union on implementing the cost-saving measures. The Company outlined for the Court the various other cost-saving measures taken to address its financial difficulties.
Based on the financial circumstances of the Company as independently verified by the Assessor, it is clear to the Court that a saving in payroll costs is essential for the Company’s survival and must be addressed as a matter of urgency. It is also clear from the report that management and salaried staff have incurred the 5% reduction in pay. The Court notes that the Union is willing to work with the Company on securing the viability of the business and maintain the employment of its members and accordingly put forward proposals to achieve payroll cost savings.
Having considered all aspects of this case, the Court recommends that both sides should accept the findings of the report carried out by the independent Assessor. Accordingly, the Court recommends that the 5th January 2011 proposals should be adjusted with the following amendments and should be implemented with immediate effect: -
Reduction in Pay
In line with contributions already made by management and clerical grades, the Court recommends that the parties should accept a 5% reduction in pay rates with effect from 1st August 2011. Furthermore, the Court recommends that the additional 5% reduction in pay should take effect from 2nd January 2012.
Loss of Regular and Rostered Overtime
The Court recommends that those employees who will lose regular and rostered overtime should be compensated by the payment of one-and -a-half times' the annual loss of such earnings. This compensation payment should be paid in two equal moieties, the first on 2nd January 2012 and the second on 1st July 2012.
All other aspects of the Company’s proposals should be accepted and the parties should keep the situation under review and the Company should keep the Union informed of its financial position going forward.
The Court so recommends.
Signed on behalf of the Labour Court
29th July, 2011______________________
Enquiries concerning this Recommendation should be addressed to John Foley, Court Secretary.