BEFORE THE ARBITRATOR
IN THE MATTER OF
PROFESSIONAL AND MANAGERIAL STAFF UNION (PMSU) OF ICU
Alex Poku-Acheampong, Solicitor Secretary, Aluworks Ltd, Tema, on behalf of Aluworks Ltd.
Solomon Kotei, Deputy General Secretary (Admin.) ICU on behalf of PMSU of ICU
Fuel Allocation to Senior Staff
Aluworks Ltd (hereinafter called the Employer) and the Professional and Managerial Staff Union of ICU, (hereinafter called the PMSU) have a legal relationship regulated by Collective Agreement (CA). The Company has since October, 1985 been providing fuel to members of PMSU who commute to work with their cars. In 2002, a fuel allocation of 45 gallons (202.5 litres) per month was agreed with PMSU. The Employer, as a cost-cutting measure is proposing a reduction in the quantity of fuel allocated to PMSU members.
PMSU’s contention is that such a reduction will amount to a worsening of their condition of service as agreed in the CA.
The negotiations between the Employer and PMSU ended in deadlock and the National Labour Commission (NLC) was asked to start Mediation proceedings. Mediation was unsuccessful and matter was referred to Voluntary Arbitration.
Mr. Austin A. Gamey was appointed the sole Arbitrator.
The Arbitrator and the disputing parties held preliminary meetings at the office of Gamey & Gamey Academy of Mediation (GGAM) on 16th October, 2006 at which ground rules, secretarial and other arrangements were agreed.
The offices of GGAM were agreed to as the venue for the hearings.
The arbitration hearings took place on 30th October, 2006.
OPENING PRESENTATIONS BY THE DISPUTING PARTIES
Position of the Employer
The Employer’s submission is summarized as follows:
(a) In recent years, Motor Running Expenses have been exceeding the budgeted figures. In the first half year of 2005, the budgeted figure was ¢1.476 billion but the actual figure was ¢2.163 billion. By the end of December, 2005 ¢4.6 billion was spent as against the budget of ¢3.2 billion. About 65% - 70% of Motor Running Expenses was the cost of fuel allocated to staff who use their own cars to work.
(b) The Employer’s fuel bill over the years were given as:
(c) As a way of reducing the Motor Running Expenses, the Employer decided to reduce the quantity of fuel allocated to managers and PMSU members and withdraw completely the facility extended to the junior staff; a junior staff with a car was allocated 100 litres per month.
Senior and sectional managers have sacrificed 50 and 30 litres per month respectively.
(d) PMSU members were asked to sacrifice 22.5 litres per month initially.
The total fuel package for PMSU members comprises
(i) Fuel allocation - 202 litres per month
(ii) Maintenance allowance - ¢520,000 per month
(iii) Kilometer allowance - ¢520,000 per month
(e) The Employer’s contention was that these cost reduction measures were necessary in view of the declining fortunes of the company. This fact was buttressed by the following:
Whilst labour cost has been going up, dividend for shareholders has been going down.
The figures stated below give a clear picture of the state of affairs
Further to the above Company’s profit After Tax and return on equity have been going down as indicated below.
PROFIT AFTER TAX
RETURN ON EQUITY
Additionally, financing cost for metal and other inputs kept on rising as shown by the Net Interest Expense/(Income) table below:
NET INTEREST EXPENSE/(INCOME
In 2000, there was a net interest income of about ¢11 million (= ¢0.011 billion). However, from 2001 upwards interest expense started increasing as shown, and reached the highest of ¢7.970 billion in the year 2003 when VALCO was completely shut down and the company had to import virtually all of its metal requirements.
(f) The cost reduction measures were necessary to keep the Company going and save the jobs of employees. Since the inception of the company, the Employer had not undertaken any redundancy exercise apart from the case of the canteen, where the facilities were outsourced with the loss of eleven (11) jobs.
(g) Cars of managers which were replaced regularly after every 5 years were being replaced after 8 years.
(h) The Employer added that other financial indicators such as net margin/turnover had been reducing
(i) The Employer has now requested PMSU to sacrifice only 11.25 instead of 22.5 litres per month.
PMSU in its submission stated as follows:
(i) The Employer should be commended for adopting cost cutting measures; however, the effort should be extended to all areas of the company’s operations and not just fuel
(ii) Fuel costs included lubricants cost and therefore the Employer could not claim that employees’ use of fuel was responsible for the high expenses
(iii) There should be a breakdown of fuel use for operational cars as well as that for managers, senior staff and juniors
(iv) Managers were given relatively new cars which consume less fuel
(v) PMSU members had to be content with cars that are between 12 and 18 years old and consequently consumed a lot of fuel
(vi) PMSU members reported early and closed late and were already making sacrifices on behalf of the Employer. Most of them lived in places far away from the factory premises and needed all the fuel they could get
(vii) PMSU members did not use all the fuel allocated and were therefore saving the Company cost of fuel
(viii) The audited reports of the Employer did not show any evidence that the Company was financially distressed. On the contrary, the financial figures indicated that things were looking bad for the Company
(ix) A decision to salvage the worsening condition of the company should be consistent with the law. The Collective Agreement (CA) sought to protect arbitrary decisions in Article 5.5
(x) PMSU produced evidence purported to show that hydraulic oils OSO 46 Blassia 68 and kerosene were being wasted through leakage. Average loss per month of OSO 46 was 208 litres and Blassia 68 was 360 litres.
Complaints had been made to the Employer about these losses but to no avail
(xi) Forklifts were left running, consuming fuel, because of defective batteries
(xii) Inferior quality spares were purchased leading to equipment leaking oil.
The Employer responded to PMSU submission as follows
- The company was now sourcing spare parts globally, had eliminated middlemen and was now buying good quality spares at relatively cheaper prices
- If forklifts were left running, then the operators should be held responsible
- The financial indicators such as share value clearly showed that the company’s fortune had declined. The share value had reduced over the years.
- If PMSU members were being asked to make the least sacrifice
- Lubricant costs were not included in Motor vehicle running expenses
- Breakdown of fuel cost would indicate that PMSU members would use more since there were more senior officers using cars than senior managers and sectional managers
- The Employer was grateful to PMSU for the useful suggestions about leakages but cost cutting should include reduction in fuel use in addition to any other measures.
- The problem of leakages of hydraulic oil and kerosene could have been addressed by PMSU members who were directly responsible
PMSU’s responses were as follows:
- Problems of leakage were well known to all since leaked oils were scooped from pits
- Senior staff sacrificed when the need arose – in the matter of medicals for dependants
- Commuted mileage allowance was not being paid.
CLOSING STATEMENTS BY EMPLOYER AND PMSU
The Employer’s closing statements were:
(a) The cost reduction measures were necessary to protect the interest of the employees by avoiding redundancy and ensuring regular payment of salaries
(b) Some staff used less than the allocated quantity of fuel and bought groceries in lieu of fuel
(c) If there was evidence of a negative effect on PMSU members by reduction of fuel, other measures could be adopted to cushion employees.
(d) Major negotiations were upcoming and “everything” would be on the table
(e) The junior staff had fuel allocation in the CA but they lost it at arbitration
PMSU made the following closing remarks
(i) The Employer’s interest was being protected at the regular meetings PMSU held to make useful suggestions
(ii) If the need arose for belt tightening PMSU would respond
(iii) PMSU members had converted their cars to use gas because of inadequacy of the fuel allocated
(iv) Worsening of conditions of service agreed in the CA could be the beginning of similar requests by the Employer
From the facts before me, especially the financial indicators, Aluworks is not out of the woods yet. There are indications of improvement in Company’s performance but cost cutting measures may be a necessary evil at this time.
The figures show that motor running expenses are escalating. Other categories of employees have responded to the request by the Employer by agreeing to forgo some of the fuel allocated to them. In the case of junior staff, a condition of service agreed through Administrative Arrangement has been lost at arbitration.
If companies come to hard times, it lies with the employer to take steps to consult with its employees on cost cutting measures to forestall total loss of jobs and a possible bankruptcy. The case on hand cannot be an exception, normally; employees and its union must cooperate when consulted on steps being taken to prevent the inevitable.
PMSU is not being asked to forfeit the element of fuel allocation in the total fuel package. What is being requested of them is reduction of 11.25 litres per month. This is the least sacrifice compared to the other categories of employees.
PMSU’s argument of worsening of a condition of service agreed to in a Collective Agreement would be more persuasive if they were being asked to forgo completely the fuel allocation element. This is more so when both sides are in compliance with Section 108 of Labour Act 2003, (Act 651).
PMSU had indicated that they were prepared to sacrifice if the need arose. The need is now; if not for anything but just to demonstrate their preparedness to do what the other categories of employees have done to save a situation.
PMSU should be commended for bringing to the notice of the Employer other areas where cost savings can be made. They should now make a little sacrifice and so contribute to the revitalization of an organization which is responsible for the sustenance of their members and families, and have been contributing towards the economy of the nation.
I have considered all the facts and evidence before me and make the following award which should be implemented.
The fuel allocation to members of PMSU who use cars for work should now be one hundred and ninety two (192) liters instead of the present two hundred and two and point five (202.5) liters of fuel per month.
8th November, 2006 Austin A. Gamey
Tema, Ghana Sole Arbitrator
BEFORE THE ARBITRATOR
IN THE MATTER OF
PROFESSIONAL & MANAGERIAL STAFF
UNION (PMSU) OF ICU
DATED: NOVEMBER 8, 2006