Eircom agrees to pay rise under partnership agreement in wake of dispute

In a dispute that required the intervention of the Labour Relations Commission, the Republic of Ireland’s dominant fixed-line operator, Eircom, has agreed to meet the terms of the national pay deal under the social partnership agreement, ‘Towards 2016’. Moreover, management and the trade unions have expressed their commitment to developing solutions that address the impact of the company’s change programme.

Threat of industrial action

A decision by Ireland’s largest telecommunications supplier, Eircom, to initially withhold a 2% pay rise provided for under the [Towards 2016 (2.86Mb PDF)](http://www.taoiseach.gov.ie/attached_files/Pdf files/Towards2016PartnershipAgreement.pdf) social partnership agreement led to threats of industrial action by the company’s four trade unions, the largest of which is the Communications Workers’ Union (CWU). The company was seeking agreement from the trade unions that workers would cooperate with changes contained in a company memorandum. However, the unions complained that the level of change would have exceeded the definition of ‘normal ongoing’ associated with the implementation of national pay agreements.

Eircom, formerly the state-owned telecommunications operator Telecom Éireann, employs over 7,000 workers in providing a fixed-line telephone network and internet services. The company was taken over last year by the Australian private equity company Babcock and Brown.

Labour Relations Commission ruling

In a settlement brokered by the Labour Relations Commission (LRC), on 19 July 2007, the trade unions secured full payment of the outstanding 2% pay increase, backdated to its due date of 1 May 2007. Both sides committed themselves to a set of steps on how to handle the company’s proposals for change, how to improve relationships and how to build on existing processes, such as their longstanding local partnership arrangements.

The LRC recommended that the parties should also commit themselves to the ‘uninterrupted operation’ of the partnership structures in Eircom. The parties agreed to immediately carry out a review to improve the effectiveness of these ‘internal partnership structures, processes and accountabilities’, with the external support or assistance of the National Centre for Partnership and Performance (NCPP).

Employee share ownership trust

An employee share ownership trust (ESOT) accounts for 35% of Eircom’s shareholdings. This factor has added a layer of complexity to the traditional industrial relations relationship between trade unions and management in the company. It is estimated that only 50% of the ESOT members are still employed by Eircom, the remainder having left the company on voluntary severance programmes over the past seven years. This has led to the unusual situation where many trade union members own part of the company, while some of the newer managers have no shares.

Impasse between unions and management

The pay dispute has generated considerable anger on the trade union side, particularly from the CWU. The union argues that the management’s move in putting forward its change agenda was ‘offside’, considering both the company’s financial position, which remains profitable, and its recent history of partnership in Eircom. However, the company was anxious to secure change in the context of a necessary business plan, through significant operational changes and an attractive severance offer.

The wording of the overall framework, agreed with the LRC and set within the overall ambit of Towards 2016, explains the immediate issues facing the company’s management and the trade unions.

It is clear to the Labour Relations Commission that the parties face significant challenges in terms of dealing with the business issues facing the company. It is also clear to the Commission that both parties are committed to constructive and realistic joint engagement utilising partnership and other internal structures to find agreement in relation to all issues in all areas of the business.

The Commission is also clear that an industrial dispute in relation to the terms of Towards 2016 was not envisaged by the parties to that agreement and is in no party’s interest in Eircom at this time.

Managing change

The parties agreed that, in the context of each change programme, ‘prompt engagement is required to develop jointly solutions to the significant staff impact issues which flow from them’, including those arising from the current voluntary retirement and voluntary severance scheme. Under this scheme, some 400 workers are expected to leave the company this year, with a further 500 job cuts anticipated by 2010.

Brian Sheehan, IRN Publishing