by Joseph Wallace & Noreen Clifford

VI. The outcomes of collective bargaining on flexibility

C. Case-studies

1. The Dunnes Stores case: Atypical work in the retail sector

This case is constructed from the Labour Court Recommendation LCR14816 and a subsequent letter from Dunnes Stores to Mr. Owen Nulty, General Secretary, MANDATE trade union, dated 9 September 1996, which set out the terms for final settlement of the dispute. The following is an edited version of the background to the case as contained in LCR14816:

Dunnes Stores is an Irish owned company involved in the retailing of foodstuffs, drapery and hardware/household goods. The company has developed over the past 50 years to become Ireland's largest retailer, with 62 outlets nationwide, employing approximately 9,000 workers (including a number in Northern Ireland (United Kingdom), Spain and the United Kingdom). It is the view of Dunnes Stores that it is vital to place itself in a position to respond to the changing and growing demands of the customer. Arising from significant changes in competitive forces in Ireland since the 1980s, the company claims that it faces increased competition from a number of new sources, in addition to the arrival of a multitude of international retailers. Dunnes Stores believes that it is imperative that it achieves increased flexibility in order to respond to the greater competitive challenge.

The history to the issues leading up to the strike in 1995 and Labour Court hearing are summarized in table 5.1. The issues in the dispute were classic ones arising from atypical working, with the company seeking maximum flexibility, including some innovative methods such as zero hours contracts. Zero hours contracts represent a situation where workers are not guaranteed any minimum number of hours of work per week. These can be seen as a response to the Worker Protection (Regular Part-time Employees) Act 1991, which required employees to normally work a regular eight hours per week in order to be covered by the legislation. The hearing took place during a national strike which closed down all of Dunnes Stores outlets in the Republic of Ireland. At the Labour Court hearing both sides advanced their respective positions as outlined in table 5.2. For comparative purposes, this table also contains details of the Labour Court recommendation. The strike was called off on foot of the Labour Court recommendation. Following MANDATE's request for clarification and subsequent acceptance of the Labour Court's recommendation there followed a period of uncertainty. The chairman of the tribunal which had been set up to attempt to improve industrial relations, Paddy Moriarty, resigned, blaming Dunnes Stores, and there was disagreement between Dunnes and MANDATE over the implementation of the local bargaining clause 3 of the PESP. In addition the 200 full-time jobs did not materialise, the 15 hour minimum working week was not implemented and hours of work were not being notified to workers in advance. This came to a head at a meeting of MANDATE officials in the spring of 1996 when four options were reviewed. These were to accept the company's offer to forget about clause 3, refer back to the Labour Court or take industrial action to secure clause 3. The union officials decide on the latter course of action, which took effect on 2 September 1996. This strike lasted until 14 September 1996 and resulted in the settlement terms outlined in table 5.3. A number of points follow from the settlement. It is clear that although the elements of the Labour Court settlement departed from the eventual settlement terms, notably in relation to the establishment of an Industrial Relations Tribunal and the creation of 200 six-day roster jobs, the Court's recommendation was influential in ending the strike.

Table 5.1. Outline history of Dunnes Stores -- MANDATE dispute

Table 5.3. Settlement terms of 1996 strike in Dunnes Stores

Issue		Settlement terms		Comparison with 1995 Labour Court recommendations
Payment of 3% PESP exceptional clause		Agreed with back-pay to 4 Sept. 1995, within 3 weeks of work resuming Full union cooperation with new technology and associated work practices		Direct discussions to take place
Pension		Meeting to take place within 2 weeks of return to work on introduction of new scheme for all full-time and part-time staff		Could be progressed at a later date
Procedural agreement		Company guidelines on management-union business replaced by problem resolution agreement (copy in appendix 2) No reference to a Tribunal		Establishment of internal industrial tribunal
Staffing levels		400 new jobs to be created on a 7-day roster Company maintained 6-day roster (excluding Sunday work) not viable Extra 200 jobs created as a quid pro quo		200 new full-time jobs to be created on a 6-day (excluding Sunday from normal working) roster
Source: Letter from Andrew Street, Director, Dunnes Stores, to Owen Nulty, General Secretary, MANDATE, 9 September 1996.

The eventual settlement terms can be seen as residing within the spirit of the Labour Court recommendation despite the earlier unwillingness of Dunnes Stores to implement the Court's recommendations. This "reality anchor" phenomena has previously been noted by Wallace and O'Shea (1987) in relation to the breach of procedural agreements in unofficial strikes. In this instance the Labour Court's recommendation, although not originally accepted, served to pull the parties back to the realities of the situation and formed the basis for an eventual settlement. That settlement is not, however, a permanent one and in Autumn 1997, there continued to be disagreement between the company and the union over the conditions of Sunday working in the pre-Christmas period. This is the case despite the existence of a further Labour Court recommendation on the issue following a hearing by the Court held on 8 December 1996 which Dunnes Stores did not attend. The Labour Court on this occasion recommended payment of double time plus a day's leave as part of its recommendation to solve a dispute over Sunday working in the pre-Christmas period. Dunnes Stores again rejected the recommendation and as a result strike action was threatened in November 1997 by the three unions.

The Dunnes Stores case is illustrative of the difficulties to which atypical work can give rise. Dunnes Stores had a record of trying to marginalize trade unions and had frequently refused to utilize the industrial relations machinery supplied by the State. The catalyst for increased union activity, and employee militancy, arose directly from the increased application of flexible working and the reductions in the terms and conditions of employment associated with this development. The approach of Dunnes Stores can be contrasted with that of another main multiple stores operation, Power Supermarkets Ltd (PSL) which, until recently, owned and operated the nationally known brand names. They negotiated with MANDATE and other unions and reached agreement with them through direct negotiations. In the terms of industrial relation theory they adopted a pluralist approach while Dunnes adopted a unitarist approach. In both situations, however, the nature of collective bargaining takes place within a traditional adversarial framework and is almost exclusively distributive in nature. There is no vision of the possibility for engaging in bargaining for mutual gains and integrative bargaining strategies seem absent. The agreements between PSL and MANDATE, however, reflect concerns similar to those present in the eventual Dunnes Stores settlement. These similarities are the basis on which Sunday work will take place, special payment for the Sundays immediately preceding Christmas and the creation of a number of full-time jobs being examples. Absent from the PSL negotiation was the issue of zero hours contracts as these had not been features of PSL employment policies. This similarity of issues, arising in both sets of employment (Dunnes and PSL) demonstrates the pressures for atypical working irrespective of whether an employer adopts a pluralist or unitarist approach to the management of their industrial relations. The underlying pressures are the contemporary shopping patterns in Ireland combined with competitive forces within the industry.

Dunnes have been noted in the Irish retail trade for trading on the basis of value to the customer. Given the particular market strategy of "better value" there was an incentive for them to resist pluralist regulation mechanisms in order to gain a competitive advantage based on lower wage costs. Absolute wage levels in Dunnes are not below that of PSL and, in fact according to the MANDATE spokesperson, Dunnes wages have slightly exceed those of PSL. Dunnes have, however, sought to gain a wage cost advantage by pushing the issue of flexible working, in particular numerical and temporal flexibility, to a new level, and suffered a reaction identified in the introduction to this report of "an increase in the complexity of the employment relationship with consequent problems for the management of that relationship". The pluralist strategy adopted by PSL enabled them to avoid any similar level of overt conflict. This demonstrates that there are practical limitations on the extent to which managers can unilaterally push flexibility. The response of the union can be seen as an attempt to compensate for a lack of willingness by the Government to regulate on zero hours contracts, Sunday working, and the extent of part-time working. The union strategies are to try to limit the negative impact of numerical flexibility by seeking to negotiate an increase in the number of core jobs, to have appropriate compensation paid in the area of temporal flexibility and to make Sunday work voluntary for current staff. The union has not sought, however, to try prevent employers opening on Sundays, nor to prevent late night shopping, although certain religious leaders have expressed their disapproval of Sunday working and have advocated that it be restricted.

What is most noticeable in the case of both PSL and Dunnes is the absence of any significant union concern relating to functional flexibility. Although certain concessions were required in return for the payment of the 3 per cent local bargaining clause in Dunnes, this was non-controversial. The MANDATE spokesperson who was interviewed indicated that apart from occasional individual grievances, functional flexibility was accepted as the norm in the retail sector and was not an issue. This reflects the absence of skilled trades and associated demarcation in the retail sector.

2. Functional and temporal flexibility in the manufacturing

industry: The Avonmore case

This case was abstracted largely from material provided by the management of Avonmore and supplemented with the account of a SIPTU shop steward and the interview with Dan Millar of TEEU. In the Avonmore case the possibility of mutual gains looms large in both union and management accounts of their approach to the management of change. Both union and management approved of the introduction of Total Productive Maintenance (TPM). For management, the gains related to internal employees being able to adapt existing plant more effectively than outside engineers, for major gains in productivity. Productivity was also increased by the introduction of team working as in the production of lactose powder, with an the increase in output from 240 tons to 300 tons per week from teams addressing the problems of production in those areas.

Change also came about from the introduction of an annual hours system for plant operators. This was negotiated with SIPTU, the representative union for general workers in the Whey Plant, in January 1996 and resulted in the following benefits for both sides of the employment relationship:

Management

-- Elimination of overtime;

-- Payment for results rather than attendance (encourages throughput in "normal" time);

-- Increased sense of involvement;

Union members

-- More sociable work system (eliminated Sunday working and call outs);

-- Salary system installed, which retained earning levels while eliminating overtime;

-- Enhanced pension which was now based on enhanced salary and no longer on basic pay;

-- Only a limited number (about 25 hours in total per annum) of 170 reserved hours worked;

-- Greater sense of involvement.

The documentation provided by the Avonmore management and SIPTU refers to the creation of partnership. However this cannot be taken uncritically, as a union official we spoke to in connection with the Avonmore case said that he saw little evidence currently of partnership in Avonmore. He was referring to reported plans for large-scale redundancies in the company following a merger with Waterford Foods. It is likely that these redundancies will be achieved in the way normal in Irish industrial relations by the negotiation of redundancy payments well in excess of the terms of the Redundancy Payments Acts to achieve redundancies on a voluntary basis. It is also worth noting that the agreement on the introduction of annual hours also involved voluntary redundancies paid above the statutory norm.

3. The Aughinish Alumina case

The introduction of annual hours was also mentioned by the TEEU representative, Dan Millar, in the interview conducted for this study. He outlined the case of Aughinish Alumina in which he had been involved in a major restructuring negotiation (table 5.4). Aughinish have a major alumina plant in Askeaton on the Shannon estuary in county Limerick in Ireland. The plant was threatened with being mothballed when a restructuring plan was formulated and carried out over a period of time. This involved the introduction of team-working, total preventive maintenance (TPM), a de-layering of the organizational structure but most noticeably the introduction of annual hours, which was also a feature of part of the Avonmore case. This created significant mutual benefits and was the basis for the eventual agreement which tackled the over-manning and other problems. Perhaps most revealing was the emphasis which the TEEU spokesperson put on what he termed "an adult basis of doing business" or "adult discussions". In Avonmore he felt the Company had been poorly prepared for this and it was only one manager who saw the opportunities. In Aughinish he stressed the benefits deriving from a course based on the book "Getting to YES", which lasted over a whole week and involved managers and workers moving into a hotel together. This he saw as being essential to enable a move away from the adversarial way of doing business and into a more "adult" way of relating to one another.

5.4. Outline of Aughinish Alumina case from the

perspective of TEEU

Issues		Action taken		Benefits/losses
Emergence of third craft (the instrument technician) in addition to traditional electrician and fitter		Merging of electrician and electrical technician work		Reduced manning on shifts Company paid IR£50.00 on top of PESP
Bad industrial relations -- "unthinking things happening"		Week-long course for management and workers based on book "Getting to YES" (i.e. involving principled negotiating and integrative bargaining)		Improved relationships allowed "adult discussions"
Overmanning/cost base out of line with competition Threat of company being mothballed Existence of overtime culture		Negotiation with TEEU for introduction of annualized hours together with team working and total preventive maintenance De-layering of organizational structure		Increases in output of alumina of about 40% - plant designed for 800,000 tons now produces about 1.4 million tons Workforce reduced from 800 to 420 -- "involved some pain" Enhanced salary and pension Only a small number of the 200 reserved hours (about 20) actually need to be worked
Company's current attitude		Views of new North American manager		Future uncertain Benefits gained may be disrupted
Source: Interview with Dan Millar, Assistant General Secretary of TEEU, on 6 October 1997.

4. The Allegro case

Not all experiments with annual hours are successful. This is demonstrated by a strike occurring in October 1997 in the Allegro company over the introduction of annual hours. The basic elements of this case, which were compiled from a report in a national evening newspaper, are summarized in Table 5.5. It illustrates how annual hours and flexibility can go wrong and become the subject of dispute. This case indicates that while annual hours have the potential to deliver mutual benefits this is not always the case and it depends on the specifics of each case whether mutual benefits are derived from their introduction. Furthermore there are limitations to the use of annual hours, as indicated in the interview with Jim Fitzgerald, Assistant Secretary, Department of Finance, who indicated that it would be difficult to limit the amount of reserved hours to be worked by the police or prison officers, given the nature of their work. This removes one of the chief options for mutual gains inherent in the annual hours concept.

Table 5.5. Outline of Allegro case

Issue		Current situation		Proposed changes by Company
Wages		Average £22,000 per annum		Reduction £3,000 to £4,000 Lump-sum compensation of 1.5 year's equivalent of loss
Promotion		Seniority main criteria		Suitability main criteria
Overtime		Large amounts		To be eliminated
Flexibility		Jobs specified		Liable to be assigned to any job on attendance
Implementation of annual hours				Concern at number of hours to be worked
Source: Report in Evening Herald, 17 Oct. 1997.

5. The Analog Devices BV/SIPTU case

The final case discussed here relates to Analog Devices BV 6 inch wafer fabrication facility and is compiled from a collective agreement supplied by IBEC. The agreement was negotiated with SIPTU in 1994 and provided for total flexibility. This agreement, which is seen as a leading edge agreement in Ireland, contains the elements outlined in Table 5.6. It is a break from the traditional form of procedural regulation where the maintenance of the status quo is the normal quid pro quo for a union agreeing to observe procedures, up to, and including, referral to the Labour Court, before engaging in industrial action (Hawkins, 1978; Wallace, 1989). This agreement would seem to deal exclusively with functional flexibility and represents an innovative way of addressing this issue. It is worth noting, however, the key commitment on the part of the company to "pay a highly competitive rate of pay combined with an attractive array of benefits" as a significant concession to the workforce. This requirement may limit the extent to which such an agreement might act as a template for further collective agreements, i.e. may only be appropriate to leading edge companies. In addition, the agreement is prescriptive in nature and no follow-up empirical research indicates how the agreement is working in practice. (It is not uncommon for differences to exist between the way in which agreements are meant to operate and the way in which they actually operate in practice.)

Table 5.6. Analog devices-SIPTU agreement on flexibility (October 1994)

Employee/union commitments	Company commitments
Highest level flexibility with no limitations or restrictions Acceptance of continuous change	Competitive rate of pay and attractive array of benefits Development of all employees to greatest extent
All employees involved in process and maintenance breakdowns	Commitment to quality of working life approach and employee involvement
Commitment to TQM and Quality Improvement Teams (QIP)	Positive role of union recognized
Union support of Company Business Plan	Participative role in Company Business Plan

6. Recognition dispute in Elan Corporation Plc Athlone

The influence of the Analog/SIPTU agreement as a template for union recognition is also likely to be limited by the unwillingness of the vast majority of American companies to recognize a trade union. For some time concerns over flexibility have been among the main reasons stated by employers as to why they are unwilling to recognize a trade union. This is demonstrated most starkly in a recognition dispute which was the subject of a Labour Court recommendation dated 26 April 1996 (LCR15150). The dispute involved SIPTU and Elan Corporation Plc in Athlone. As part of its claim for recognition, SIPTU offered the following clause in a draft agreement the union sent to the company:

Total flexibility is recognized as vital to the continued existence of the business. It is understood that the need for a multi-skill working environment is, by the very nature of Elan's business, essential for its success and future competitiveness. Flexibility is without limits or restrictions.

Despite this offer on the core issue of flexibility, but the company maintained their position not to recognize a trade union, and to date the union has been unable to gain recognition.

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