Labour Court Database __________________________________________________________________________________ File Number: CD8774 Case Number: LCR11233 Section / Act: S67 Parties: T. SHEILS & CO. LTD. - and - ITGWU |
Claim, by the Union on behalf of 7 workers, for the continuation of a Pension Scheme.
Recommendation:
9. In view of the severe difficulties being encountered by the
Company, the Court is of the view that, it is necessary, however
undesirable, to introduce economies.
The Court accordingly recommends that the claimants accept that
the Pension Scheme be suspended during the current difficulties
and renewed as soon as circumstances allow.
The Court considers this option to be the most desirable in the
circumstances. However, if the claimants are not prepared to
accept this recommendation, then Option B, which has already been
accepted by some of the employees in the firm, should be
implemented instead, with payments made on 1st June and 1st
September, 1987.
The Court so decides.
Division: Ms Owens Mr McHenry Mr Walsh
Text of Document__________________________________________________________________
CD8774 THE LABOUR COURT LCR11233
CC86370 INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
RECOMMENDATION NO. 11233
PARTIES: T. SHEILS & COMPANY LIMITED
(Represented by the Society of the Irish Motor Industry
and
IRISH TRANSPORT AND GENERAL WORKERS' UNION
Subject:
1. Claim, by the Union on behalf of 7 workers, for the
continuation of a Pension Scheme.
Background:
2. In 1979, the Company introduced a non-contributory Pension
Scheme, incorporating a death in service benefit. In early 1986,
the Company informed the Union that it could no longer afford to
fund the Scheme and that it would have to be replaced by a
contributory Scheme. This was rejected by the Union and on 21st
February, 1986, the matter was referred to the conciliation
service of the Labour Court.
3. At a conciliation conference on 16th April, 1986, at which the
Automobile General Engineering and Mechanical Operatives Union,
who represent other workers in the Company, were present, the
Union here concerned asked if the Scheme could be cashed in and if
so, how much would it yield. The conference was adjourned to
enable the Company to get this information. At a resumed
conference, on 3rd September, 1986, the Union was informed that
the Scheme could not be cashed in but would be frozen for each
individual till he reached retirement age. The Company explained
that it is going through an extremely difficult period and as a
result cannot afford to fund the Scheme, which costs approximately
#24,000 per annum. The owner of the Company and his son have
already pulled out of the Scheme to try and reduce costs. The
Union argued that it could not accept a Scheme, with a 2%
contribution, which yields less than half of the benefits of the
non-contributory Scheme.
4. Following discussions the Company put forward 3 options for
consideration by the Union:-
OPTION A
Replacement of existing non-contributary Pension Scheme
with the contributary Pension Scheme.
Contribution 2% of wages per week
Pension Half of Pensionable Salary
Death In Service 2 years Salary
OPTION B
Payment of #250 on Friday 12th September, 1986, and a
further payment of #250 on Friday 12th March, 1987.
These payments to be made in respect of agreement to
terminate both the existing Pension and Death in Service
Schemes.
OPTION C
Payment of #150 on Friday 12th September, 1986, and a
further payment of #150 on Friday 12th March, 1987.
These payments to be made in respect of agreement to
terminate the existing Pension Scheme but retaining Death
in Service Benefit.
Under Options B and C the Pension Benefits which have
been paid up prior to termination of the Pension Scheme
will be protected.
5. The Union subsequently rejected these options, although option
B was accepted by the members of the Automobile General
Engineering and Mechanical Operatives Union, and on 2nd February,
1987, the matter was referred to the Labour Court, for
investigation and recommendation. A Court hearing took place on
22nd April, 1987, in Limerick.
Union's arguments:
6. (i) Since the Company first announced its decision on the
Scheme, there has been a considerable reduction in the
workforce and the members of another union have opted
out of the Scheme. For these reasons, the Union can
see no justifiable reason as to why the Company cannot
continue to fund the Scheme for the small number of
workers left.
(ii) The Union considers it unreasonable to expect the
workers to accept a new Scheme, which will cost 2% of
their wages and yield half of the benefits of the old
Scheme.
(iii) The Union believes that the cost of the Scheme is less
than the figure indicated by the Company. Whilst, the
Union recognises that the Company is going through a
difficult period, it believes that the Company is
unlikely to close, since it is an old established and
well known firm in the area.
Company's arguments:
7. (a) The Company has suffered substantial trading losses,
in every year from 1982 to 1986, totalling over
#250,000, and has only been kept afloat by an
injection of funds from the sale of personal assets of
the directors.
(b) The Company is aware that the loss of the Scheme is a
serious blow to the employees. However, it must be
measured against the possible closure of the Company
and consequent loss of all the jobs.
(c) The pursuit of this claim, the Company believes,
displays a remarkable failure, on the part of the
Union, to appreciate the true enormity of the problems
facing the Company. If the Company is to survive,
further cost reductions will be required so that its
costs will be less than its income. This cannot be
done with the level of cost of the Scheme.
Addendum:
8. During the Court hearing the Company in an effort to solve the
matter, presented two further options for consideration by the
Union:-
OPTION D
The employees might wish to forego some agreed portion of
wage increases to fund the Pension Scheme.
OPTION E
The Pension Scheme could be suspended rather than
cancelled during the current difficulties and renewed at
some later stage when changed circumstances allow.
After consultation with it's members, the Union rejected these
proposals.
RECOMMENDATION:
9. In view of the severe difficulties being encountered by the
Company, the Court is of the view that, it is necessary, however
undesirable, to introduce economies.
The Court accordingly recommends that the claimants accept that
the Pension Scheme be suspended during the current difficulties
and renewed as soon as circumstances allow.
The Court considers this option to be the most desirable in the
circumstances. However, if the claimants are not prepared to
accept this recommendation, then Option B, which has already been
accepted by some of the employees in the firm, should be
implemented instead, with payments made on 1st June and 1st
September, 1987.
The Court so decides.
~
Signed on behalf of the Labour Court
8th June, 1987 Evelyn Owens
B.O'N./P.W. Deputy Chairman