New pay model for state forestry company

A new pay and reward system has been agreed between the Republic of Ireland’s state-owned commercial forestry company Coillte and the trade union IMPACT. It promises to end traditional incremental pay and hierarchical grading structures at the company. The agreement was seen as necessary to reflect the external challenges and volatility facing each of the Coillte businesses. The negotiations also took into account the company’s fluctuating financial performance.

Traditional public service pay structure ended

A new pay system at the Republic of Ireland’s state owned commercial forestry company Coillte means the end of a pay determination system that historically applied to office-based professional grades. The new Reward Model and Transformation Agreement states that the old pay system was ‘typical’ of what was found ‘within a Public Service culture’ in Ireland. Its implementation date is 1 January 2013.

The agreement was accepted in summer 2012 by the 300 Irish Municipal Public and Civil Trade Union (IMPACT) members directly involved. The vote was 60% in favour, 40% against. The other main union at the company, the Services Industrial Professional & Technical Union (SIPTU), which represents general operatives, was not involved in the agreement. The total workforce at Coillte is around 1,100.

The agreement is to be registered with the Labour Court, making it legally binding on both parties. Its most important points include:

  • an initial 2% lump sum to be paid to all staff covered by the agreement;
  • in future, annual pay rises will be linked to increases in 23 high-profile comparator firms in the private and public sectors;
  • existing professional staff who earn promotion, and who are currently on what are referred to as ‘legacy pay scales’, will receive an increase of not less than 4% or 5% (depending on category);
  • future increments will be linked to performance and there will be access to an annual bonus depending on results;
  • the monetary value of the lump sum bonus will be determined by performance on a group basis and on an individual basis.

Independent mediator’s role

The agreement was overseen by an independently agreed mediator, Joe McDermott, who played a critical role in managing negotiations. Explaining the origins of the agreement, McDermott said that in 2004 both sides committed to replacing the older ‘legacy’ pay scales with a new system of pay bands.

He suggested to both sides that they adopt a ‘gradualist approach to evolving the new structure with joint oversight’. This suggestion was instigated by a jointly-agreed management-union group.

At the outset, the agreement stated that the environment in which Coillte now operates had changed radically over recent years. It said the company’s financial performance had also fluctuated significantly, reflecting the external challenges and volatility facing each of the Coillte businesses.

In negotiations with the mediator, Coillte and IMPACT representatives agreed in principle that the incremental pay and hierarchical grading structures were no longer suited to the organisation’s future development. They agreed to work together in developing approaches in this area

...which are more aligned with the needs of a modern day commercial entity, and would envisage all areas moving, over time, to a structure which is based on pay bands or ranges in place of incremental scales...

Job size, market rates and base pay progression, linked to job performance and competency, were seen by both parties as key elements in this context. They agreed that there was a pressing need to ‘fast-track’ this approach in areas of the organisation where there was evidence that a lack of flexibility was ‘undermining the ability of some (Coillte) businesses to compete in the marketplace’.

Remote working

The agreement also includes innovative ‘remote working’ arrangements. It states that the provision of ‘mobile and technological capabilities’ will mean staff are able to carry out their main jobs ‘where and when they require, without the necessity for a fixed place of work’.

This aspect of the agreement is being operated on a trial basis. It is broadly similar to a remote working programme in one of Ireland’s major telecommunications suppliers, the former state-owned Eircom.

Severance scheme

Separately, a voluntary redundancy scheme and voluntary early retirement terms were also made available across the entire company for 2012. A total of 200 employees are expected to take the redundancy packages. The Government has imposed a strict template on such agreements, which means that the basic terms are the same as those offered at other state bodies and in Ireland’s state-dependent banks. Terms include three weeks’ pay per year of actual service plus statutory entitlement under the Redundancy Payments Acts, with an overall limit of three years’ pay.

The company reserved the right to reject applications for the scheme ‘in instances where acceptance would not be in the company’s financial, commercial, future strategy, business or operational interests’.

Brian Sheehan, IRN Publishing

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