FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : SCHERING PLOUGH (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Ms Jenkinson Employer Member: Ms Cryan Worker Member: Mr Nash |
1. Redundancy / Restructuring
BACKGROUND:
2. The Company is involved in the manufacture of Biotechnology based pharmaceutical products and employs 520 workers. Following a merger in 2009 it is now owned MSD Incorporated. The dispute involves the Company's site in Brinny, Inishannon, Co. Cork. The Union represents 3 different grades in the plant: Operators - 160, Quality - 124 and Section Leaders - 35. The Company announced a Competitiveness Plan in September, 2010, part of which involved a redundancy programme with the aim of reducing numbers by 160 over the next 3 years. The Company is hopeful that these will all be voluntary redundancies. The main aim of the Plan is to reduce the cost base by 36% from 2010 - 2013. This would include the redundancies, pay adjustments, extended pay pauses, removing the connection between shift and overtime, removal of allowances, transfer of non-core activities to Johnson Controls International (JCI), Performance Management and Development (PMD) and Integrated Process Teams (IPTs). The Union put forward counter-proposals.
There have been numerous meetings between the parties and seven conciliation conferences at the Labour Relations Commissions (LRC). Proposals from the LRC were recommended by both parties but, following a ballot by the 3 Union groups, the proposals were rejected. The workers were concerned about the size of the pay cuts and also about details of the multi-skilling that would be required of them. The Company's case is that is has no choice but to make the savings proposed if it is to remain competitive. The future of the Company and the workers' jobs depend upon these savings being made.
As the parties did not reach agreement at the LRC the dispute was referred to the Labour Court on the 3rd June, 2011, in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 15th June, 2011, in Waterford. The following is the Court's recommendation:
RECOMMENDATION:
The matter before the Court concerns the Company’s proposals to fundamentally change its way of working and its requirement to reduce its cost base by 36% in order to ensure a sustainable future for the Company. In an effort to address the Company’s concerns proposals were put forward in April and May 2011, under the auspices of the conciliation service of the Labour Relations Commission, to three different grades within the plant, - Operators, Quality and Section Leaders. These proposals were rejected by each group.
The Court notes that extensive consultation and discussions (including seven conciliation conferences) have taken place in an attempt to find a resolution. The Union outlined for the Court the concerns for each of the group of workers involved. These concerns mainly relate to a proposed reduction in pay, uncertainty surrounding multitasking proposals, attainment of the appropriate training to enable workers to carry out the tasks involved in the new working arrangements and fears of redundancy/outsourcing.
Both parties agreed that measures need to be taken to address the Company’s competitiveness and sought to actively engage to bring about a resolution. Management stated that it was most anxious to ensure that all changes are arrived at by agreement and the Union expressed its desire to achieve a balance between the Company’s aspirations and the member’s expectations.
Having given careful consideration to the submissions made by Management and by the two Union Officials representing the three groups, the Court recommends that the three sets of proposals should be amended to reflect the following: -
Integrated Process Teams (IPT)
The Court recommends that Management should provide clarity around the mix of tasks (i.e. balance /proportion) to be performed by workers in the new IPT structure. Furthermore, the Court recommends that a joint review committee should be set up to monitor the operation of the new structure, on a quarterly basis.
The Company should now produce its training plans - 12 month and 24 month programmes - associated with carrying out the new tasks and it should endeavour to assure workers of the Company’s commitment to equipping them with the necessary skill sets and qualifications required for their retention within their grades in the organisation.
As the IPT structure represents a fundamental change for all concerned the Court is of the view that the terms and conditions associated with it should be agreed in full by the parties in advance of its implementation.
Redundancies
The Company stated to the Court that it was satisfied that it had sufficient numbers of employees interested in opting for voluntary redundancy to meet its target of 160 redundancies in the coming months. However, the Union expressed its fears that compulsory redundancies may become necessary as part of the Company’s 36% cost reduction target set in September 2009.
The Court recommends that the Company should provide the necessary assurances to alleviate the Union’s fears that compulsory redundancies will not be necessary in the foreseeable future.
Outsourcing
In the event of the Company deciding to implement further outsourcing of activities (post current outsourcing to JCI ) the Court recommends that the parties discuss and agree arrangements in advance of any outsourcing taking place.
Performance Management Developments
The Union expressed concern regarding the introduction of a Performance Management Development (PMD) system to replace the current one-to-one appraisal system and wish to retain the current system.
The Court notes that Management has reserved its position regarding the introduction of the PMD system at the moment and has indicated its willingness to retain the one-to-one system.
Date of Implementation
The Court recommends that the above Recommendations should be completed and in place by 1st September 2011.
Pay Reduction
The Company stressed its requirement to reduce its cost base and informed the Court that management and staff grades have already accepted pay reductions of between 5% and 10%. The Union accepts the Company’s need to make the required savings and it entered into negotiations with a commitment to engage in agreeing measures to reduce costs.
In light of the Recommendations outlined above the Court recommends that the proposed pay reduction of 4% for the Operators/Quality/Section Leader groups should be amended to provide for a phased reduction of 2% to take effect from 1st September, 2011, and 2% from 1st January, 2012, unless the parties can identify alternative cost saving measures to achieve the same result, which could be implemented by not later than the first date of application of the phased pay reductions on 1st September, 2011. The pay reduction or alternative cost saving measures should be applied on an equitable basis across all three groups before the Court to ensure a contribution of a maximum of 4% from each worker.
The Court so Recommends.
Signed on behalf of the Labour Court
Caroline Jenkinson
20th June, 2011______________________
CONDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Ciaran O'Neill, Court Secretary.