Northern Beers Limited

Northern Beers Limited

Introduction

Northern Beers Ltd is a large national brewing company with a number of breweries in the North of England, one of these is at Longsight, Manchester. This particular brewery was previously the production centre for an old established family firm, which was taken over by Northern Beers ten years ago. Northern Beers had rationalised its brewery and distribution arrangements, and this had led to several closures. However, the decision had been taken to retain and modernise the Longsight brewery. As part of the drive to reduce unit labour costs, a production incentive scheme was introduced at Longsight five years ago. A further decision, in keeping with the general rationalisation, was to close the bottling lines at Longsight and to concentrate the bottling of beer at other centres. This left production at Longsight as exclusively keg beer.

The closure of the bottling lines at Longsight had an effect on the production workers’ incentive scheme. This led to an unresolved dispute about the bonus payments. The basis of the production bonus scheme had always been basically to divide the barrelage of beer produced by the number of production workers. The production workers were paid their bonus, which was over and above their basic rate, on a weekly basis. The bottling lines were labour intensive, compared with the production of keg beer. This meant that when the bottling lines were closed the average barrelage of those workers engaged directly on production increased. The Union view was that their remaining workers should therefore receive an increase in their bonus. The management view was that this would be quite inappropriate, as the working arrangements for the remaining production workers were exactly the same as before. They had removed the bottling line details, concerning men employed and production achieved, from the bonus calculations. Management had then recalculated the bonus so as to leave the payments for the remaining men undisturbed. The union, however, insisted that the old basis of calculations should have been retained.

History of The Dispute

1. Some bottling had been closed down in the Autumn. The bonus calculations had not been altered on account of these closures. This had had the effect of increasing the weekly bonus of the remaining production workers by £15.30.

2. The main closure had taken place the following January – when all bottling at Longsight finished. The bonus had been recalculated from that date.

3. The management view was that had the bonus calculations not been altered at all, the remaining production workers would have had an increase of £66 per week. As it was they had received the increase of £15.30 because of the autumn closures, which was effectively for nothing. The union estimate of ‘lost bonus’ was that their members had been deprived of an increase of between £48 and £60 a week since the January.

4. It had taken some time for the production workers to appreciate that the basis of the calculations had been altered. This was for a number of reasons including the fact that bonus was paid retrospectively and January was the slackest time of the year.

5. According to the union, there had been an oral request by the Branch Chairman, John James, for a meeting to discuss the matter in February. There were concurrent discussions about other pay issues but the alteration of the bonus had been raised at a meeting in June and again at a meeting at the end of August. It was only at that stage that weekly figures concerning bonus figures were issued by the Company.

6. At a further meeting held in September it had been stated on behalf of the company that there had been an agreement with John James (who had by that time left the company) for the bonus calculations to be altered. This was denied by the other union representatives who had checked on that point with John James. There was no record of either an agreement or of discussions with John James on this point.

7. According to the company the point of difference concerning the bonus calculations had not been raised during the annual pay negotiations. These negotiations had resulted in a 10% uplift in bonus from 1st May. As far as the company was concerned the difference was first raised after the annual pay negotiations – even though the change had been implemented with effect from 1st January.

8. The run down of labour on the bottling lines had been affected by natural wastage, transfer and voluntary redundancy.

The Union View

1. The company had unilaterally, without either consultation or negotiation, altered the basis of the bonus scheme calculations. Ever since the scheme had been introduced variations had been jointly agreed.

2. There had been an expectation on the part of the men that the bonus earnings would rise as a consequence of the closure of the bottling lines.

3. There was a ‘status quo’ clause in the disputes procedure, which meant that there should be no changes without prior negotiation.

4. Had the company been prepared to negotiate with the union on the effect of the closure of the bottling lines on the bonus calculations, it may well have been possible to reach a compromise agreement. However, the failure of the company to negotiate an amendment meant that the original agreement still stood and that the men were entitled to have their bonus earnings calculated on the unrevised basis.

5. The union’s acceptance of the bottling line closures was, in practice, a productivity agreement. Payment of increased bonus to the remaining production workers was the price to be paid for the acceptance of this self-financing arrangement.

6. The union were quite sure that John James had raised the question of the bonus payments with management in February. This was not just because of what he had told them, but because of the pressure that was put on him at the time to raise the matter.

The Management View

1. Ever since the bonus scheme had been introduced it had been understood that any major changes in production methods would necessitate changes in the bonus calculations. Various changes had previously been made – to protect the earnings levels and to ensure that the scheme did not ‘get out of hand’. The men had never objected to changes before, presumably because they had always had the effect of preventing their bonus from falling.

2. The closure of the bottling lines was such a major production change that it was unrealistic to leave the calculations unaltered. The production arrangements that these calculations related to simply did not exist any more. Unless the scheme was recalculated, the effect of the bottling line closures would have distorted not only the incentive scheme but the whole of the wages structure. This would have led to numerous repercussive wage claims.

3. The production workers had already received an increase of £15.30 for no extra effort or change in working methods. For them to expect a further benefit was an expectation which was both unjustified and unrealistic.

4. The company had to have regard to the economic viability of the Longsight plant – particularly in view of the record of brewery closures within the company.

5. The management had always been, and still were, prepared to negotiate with the union concerning self-financing productivity increases.

6. Management conceded that there had been discussions with John James about the bonus prior to May. As far as they were concerned though, these discussions were only about the likelihood of there being a general increase in bonus rates as part of the annual pay deal and the possibility of self-financing productivity improvements. The closure of the bottling line was not seen as a self-financing deal. There had been no agreement to that effect and in any case there had been no contribution by the remaining production workers.

Brief for Syndicates

Assume that you are at the last stage of the dispute procedure; there being no stages beyond local level. Assume also that is late November of the year in question.