SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
CASTOLIN EUTECTIC IRELAND LIMITED
(REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION)
- AND -
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION)
Chairman: Ms Jenkinson
Employer Member: Mr Murphy
Worker Member: Mr Hall
1. Bonus scheme.
2. This dispute could not be resolved at local level and was the subject of Conciliation Conferences under the auspices of the Workplace Relations Commission. As agreement was not reached, the dispute was referred to the Labour Court on 16 May 2019 in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on 24 July 2019.
3. 1. The Union states that although it was aware of the Company position in relation to the bonus scheme that it did not mean anything in reality as there had been no pay-increases during the period 2014to 2016.
2. The Union states that it is unaware of the Company's financial position although it does not dispute the figures.
3. The Union says that their members will not engage on the issue of a new bonus scheme until the issue in relation to the current scheme is rectified.
4. 1. The Employer states that the Union was aware of their position to apply pay increases to basic pay only and not to the bonus. The Employer says that the Union was aware of this since 2014 but did not challenge it until 2016.
2.The Employersays that the Company is operating at a serious loss and that it simply cannot afford to pay the existing bonus as the plant is operating at 50% capacity.
3. The Company wants to engage with the workers through their Union with the assistance of an outside Consultants to develop a new bonus scheme but to date the Union has not engaged.
The matter before the Court concerns a dispute by the Union on behalf of 35 General Operatives relating to the non-application of 2% increase in pay to the bonus, known as the Partnership Bonus. It sought the application of the increases in pay that were agreed in 2016 and 2018 to be applied to the bonus payment.
On 3rdMay 2019 the Company gave notice of its intention to withdraw the bonus payment as it was no longer fit for purpose.
It was agreed by both parties that the issue of the future of the bonus scheme was a matter before the Court for adjudication.
Management stated that in June 2014 employees were informed that all future pay increases would apply to the basic rate of pay only and not to the Partnership Bonus. It questioned why the issue was now being raised. Management stated that the bonus, which was introduced in 2000, is no longer fit for purpose and the difference in production output since its introduction is due to major improvements in the plant, equipment and with optimisation of production processes, rather than a result of extra effort by the Production Operatives. It stated that paying an average of 48% of basic pay is unsustainable in its current financial circumstances where the Company is making significant losses and where it has achieved nothing of value from the bonus. It stated that despite the plant operating at 50% capacity, the income from the bonus is still increasing for employees. Therefore, as it is no longer fit for purpose, Management has given notice to the Union that it will withdraw the bonus as per the rules of the scheme and the notice period will expire on 2ndAugust 2019.
At the Workplace Relations Commission, a proposal was put to the workers as a means of progressing the dispute and it included a proposal for a once-off increase in the Christmas Bonus, broad ranging engagement on a new bonus scheme and the provision of the Company’s audited accounts to the Union with a commitment to address any queries raised by the Union’s financial expert. The proposal was rejected by the Union.
Management stated that it engaged a firm of Consultants to work with the Company and its employees to develop and introduce a new “Productivity- Based” bonus scheme. The Consultants' work had now been completed on devising the new bonus. The Company has offered to pay a goodwill gesture payment to bring closure to the old bonus scheme.
The Union stated that if the 2% issue is dealt with to the satisfaction of its members they will have no difficulty in discussing alternative bonus structures once they do not result in a loss of income for its members.
Having considered the submissions made by both parties, the Court notes the precarious financial circumstances of the Company, where it has been sustaining serious losses for a number of years. Furthermore, the Court notes that the Company has willingly shared its financial information with the Union.
Given the level of losses sustained, the Court is concerned about the future viability of the Irish operation coupled with the future employment prospects of its employees. On that basis the Court accepts the need to radically revise the bonus scheme and to introduce a new scheme focused on increasing productivity and efficiencies and one which is more suitable to the current production needs of the business.
The Court notes that assurances given by the Company that the potential bonus earnings of the newly devised bonus scheme will be of equal or greater value than the Partnership Bonus. Therefore, the Court recommends that the Company and Management should immediately engage in discussions on the new bonus scheme so that all employees areau faitwith the workings of the scheme. On that basis, due to the short time period for discussions with the Union on the new scheme, the Court recommends that the deadline date for withdrawal of the Partnership Bonus Scheme should be extended to 31st August 2019 and the new scheme should become operational from Monday 2nd September 2019. In return the Court recommends that the gesture of goodwill proposed at the WRC should be paid, in the most tax efficient manner, for the years ending 2019, 2020 and 2021.
The Court so recommends.
Signed on behalf of the Labour Court
25 July 2019Deputy Chairman
Enquiries concerning this Recommendation should be addressed to Ceola Cronin, Court Secretary.