Labour Court Database __________________________________________________________________________________ File Number: CD88346 Case Number: LCR11920 Section / Act: S20(1) Parties: AN FORAS FORBARTHA - and - IRISH TRANSPORT AND GENERAL WORKERS' UNION |
Claim for an improvement in the financial terms of the voluntary redundancy/early retirement scheme, for approximately 180 professional technical and administrative employees.
Recommendation:
6. The Court having considered all the submissions from the
parties concerned in this case and noting the overall impact of
the terms of the Government's Voluntary Redundancy/Early
Retirement Scheme on the various categories of employees involved
can see no grounds upon which it could recommend any alteration to
the various options, in isolation.
The Court accordingly does not recommend concession of the claim.
Division: Ms Owens Mr Shiel Mr Walsh
Text of Document__________________________________________________________________
CD88346 RECOMMENDATION NO. LCR11920
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
SECTION 20(1)
PARTIES: AN FORAS FORBARTHA
DEPARTMENT OF FINANCE
AND
IRISH TRANSPORT AND GENERAL WORKERS' UNION
SUBJECT:
1. Claim for an improvement in the financial terms of the
voluntary redundancy/early retirement scheme, for approximately
180 professional technical and administrative employees.
BACKGROUND:
2. In September, 1987, the Government decided to abolish an Foras
Forbartha. The new Board which was appointed to implement the
decision, offered voluntary redundancy/early retirement terms to
staff who wished to avail of the scheme. The terms offered, are
those which apply generally throughout the public service, are
divided into five categories (details already supplied to the
Court) and are based on length of service and PRSI contribution
status. All staff in the Institute with class A social insurance
are offered the package of terms contained in categories 1, 2, 4
and 5. Category 3 is confined to established civil servants and
other public sector employees who are on modified PRSI status and
is not applicable to the Institute staff. Category 4 is
subdivided into two options A and B, and is based on length of
service and PRSI contribution status, irrespective of rate of
contribution. Category 4 option B and category 3 are appropriate
to people with at least five and less than 40 years' service, and
provide for the immediate payment of a lump sum and pension. The
majority of staff concerned have a minimum of five and less than
forty years' service.
3. The Union claims that category four option B is considerably
less favourable financially than category three, and would result
in inequity in terms of the lump sum and subsequent pension, to
employees on full contribution rates of PRSI. The Institute,
insists that no exception is being made of staff and that there is
no discrimination in terms of the package being offered to
employees. The terms offered by the Institute are those now on
offer throughout the public service. Despite negotiations at
local level no agreement was reached. The Union sought the
services of the Conciliation Service of the Labour Court but the
Institute did not wish to participate. The dispute was referred,
under Section 20 of the Industrial Relations Act, 1969 to the
Labour Court on the 4th May, 1988 for investigation and
recommendation. A Labour Court hearing took place on the 9th
June, 1988. The Union, subsequent to the hearing made a further
written response to the submissions made by the Department of
Finance.
UNION'S ARGUMENTS:
4. 1. The main difference between category 4, option B, and
category 3 are: category 3 makes provision for a credit of
added years, seven years where service of 20 years or more is
involved, and pro rata for shorter service. In respect of
category 4, option B, no credit is given and furthermore
pensions are subject to a co-ordination clause. Provided that
certain stringent conditions are met, a supplementary pension
may be paid to compensate for the effects of co-ordination.
2. The value of the package offered by An Foras Forbartha
varies in respect of category 3 and category 4, option B, and
is illustrated in the case of a person with 27.7 years service
in the public service. A considerable part of this service
was given in another part of the public service where modified
PRSI contribution is paid. Table A (details supplied to the
Court) outlines the lump sum and pension payable to this
person under category 4, option B. i.e. what is available to a
full PRSI contributor, and what this person would receive if
he/she were a modified PRSI contributor. The outcome
demonstrated by this example is that the full PRSI contributor
receives a higher lump sum than the modified contributor.
However, the pension payable to the full contributor is
significantly less per annum (approximately £1,500) if the
supplementary pension is received and £3.500 less if it is not
received. The person concerned moved to An Foras Forbartha
from a technical post in the Civil Service, and there has been
considerable movement in both directions, and it has always
been the Union's understanding that these persons' terms of
employment or retirement would not be adversely affected. In
order to qualify for the supplementary pension the full PRSI
contributor must meet stringent conditions, while no
conditions are attached to the substantially greater pension
payable to the modified contributor. There are also
disadvantages in relation to full-time/PRSI contributors in
the area of unemployment benefit.
4. 3. To achieve equity the following option could be made
available to staff. A credit of added years equivalent to
what is available to modified PRSI contributors would be
allowed. This would be used in the calculation of lump sum
(retirement gratuity) and pension. Pensions payable to the
Institutes staff would not be co-ordinated, therefore no
supplementary pension would be required. In return any
redundancy benefit and unemployment benefit received would be
deducted from lump sums and pension entitlements. In the
event of a full PRSI contributor becoming entitled to a
contributory retirement/old age pension, at the maximum
personal rate, the occupational pension would be co-ordinated
as provided for in the superannuation scheme. This would not
affect the credit of added years.
4. Employees now find themselves in the extraordinary
position whereby because they have paid full contribution
rate, the value of the package available to them is in many
cases considerably inferior to what would be available had
they paid the modified rate of PRSI. It seems unfair that
people who paid more will receive less, and the contradiction
is amplified by the realisation that in normal circumstances
their pension entitlements would be at least as good and in
certain circumstances better than those available to modified
PRSI contributors. This inequitable position is exacerbated
by the abolition of An Foras Forbartha, and consequently the
absence of a choice for workers to continue in their present
employment.
5. The Union wishes to respond to the submission of the
Department of Finance and refutes that Department's argument
(paragraph 5 of its submission) that full PRSI contributors
are not being less favourably treated than employees who pay a
modified rate of PRSI. It is shown by examples (details
supplied to the Court) that the terms available under category
4 option B are significantly less favourable than those
available under category 3. The majority of staff in the
Institute would find the terms available under category 3 more
favourable.
6. The imbalance arises because modified PRSI contributors
are compensated by a credit of added years as they do not
qualify for unemployment benefit etc. - benefits for which
they have not paid. At the same time full PRSI contributors
have reduced pensions because they qualify, or under some
circumstances might qualify, for benefits for which they have
paid. This reduction in pension arises because of the
co-ordination of pensions of full PRSI contributors and
stringent conditions attached to the payment of supplementary
pensions. The reduction of pensions in this way, under
present circumstances, is an arbitrary and unilateral
decision.
4. 7. The argument against the rules governing the payment of
supplementary pensions is not based solely on the grounds that
full PRSI contributors are penalised if they re-enter the
labour market while modified PRSI contributors are not
(paragraph 7, Department's submission). It is also based on
the application of the co-ordination rule and the conditions
imposed for qualifying for a supplementary pension even where
the recipient is unemployed.
8. In paragraph 2 of the Department's submission reference is
made to the need to take account of the expectations of staff
under their superannuation schemes. In paragraph 2.4 of the
ITGWU submission the high level of mobility of staff between
AFF and the Civil Service and Local Government is referred to.
Such movement would not have occurred had those concerned
thought their conditions of service or retirement, under any
circumstances, would have been adversely affected.
Accordingly, the less favourable terms available to the staff
of AFF, under category 4, option B, of the package would not
have been expected. The detailed application of the existing
terms are contrary to reasonable expectation.
9. In paragraph 10 of the Department's submission it is
stated "It would be impossible to confine any concession
solely to An Foras Forbartha." While it is not claimed that
the situation of AFF staff is unique, AFF is one of the few
public service bodies to be abolished. This results in the
choices available to AFF staff being less than those
prevailing elsewhere. Because of the high level of
specialisation redeployment of staff are less than those
generally available. There is provision for special treatment
of people in the public service whose posts are being
abolished (details supplied to the Court).
10. In paragraph 8 of the Department's submission reference
is made to the fact that the financial provisions of the
scheme were the subject of discussion with the ICTU in the
context of the negotiations which culminated in the Programme
for National Recovery. The General Secretary Designate of the
ICTU, has made it clear that the terms of voluntary
redundancy/early retirement in the public service were never
negotiated with Congress. During discussions on voluntary
redundancy in the context of the Programme for National
Recovery Congress representatives sought clarification, in a
side meeting with the Department of Finance, on how the terms
offered by the Government to workers in the health services
would apply to manual workers in local authorities. The
issues referred to the Court were discussed in recent months
by the ICTU and the Department of Finance. These discussions
were unsatisfactory and led to a request for this hearing.
4. 11. In its submission the Union argued that if AFF staff
could choose to avail of the terms under either category 3 or
category 4, option B, then the inequality of treatment could
be avoided. In its submission the Department of Finance
(paragraph 6) takes the view that the provision of such a
choice would tilt the balance in favour of full PRSI
contributors. Our claim is not based on tilting the balance
in favour of full PRSI contributors. It is based on achieving
equity for our members. Full PRSI contributors are entitled
to benefits such as unemployment benefit because they have
paid the required contributions. Modified PRSI contributors
have no claim in respect of unemployment benefit for example
and would find category 4, option B, considerably less
generous in most circumstances.
12. The Union has not sought an improvement in the terms of
the voluntary redundancy/early retirement scheme. It has,
however, argued that there should be equality of access to the
terms of the package. Under existing arrangements, quite
arbitrarily, the majority of AFF staff would be significantly
disadvantaged in comparison with their colleagues in other
bodies with whom they have long established equality in
respect of pay and other employment conditions.
13. A survey of superannuation issues in the non-commercial
public sector has revealed that the staff in one public
employment where full PRSI is paid have been awarded added
years under the voluntary redundancy/early retirement scheme,
INSTITUTE'S AND DEPARTMENT'S ARGUMENTS:
5. 1. The voluntary redundancy/early retirement terms as offered
to staff in the Institute are those which apply in the public
service generally. As with all staff who are on class A
social insurance the package of terms offered to the
Institute's staff are contained in categories 1, 2, 4, and 5,
but not under category 3, which is confined to established
civil servants and other public service employees with the
same social welfare status as established civil servants, i.e.
modified PRSI status.
2. The terms are attractive. The main feature of the scheme
is that it is voluntary. No staff member has been required to
avail of it. It is there for the taking and no staff member
who has applied for it so far has been refused. To date no
less than 33 have accepted the terms and a further 17 have
applied. That is 24% of the total staff complement on 1st
September, 1987. It is 55% of the number of staff who will
not be recruited to the new environment research unit or
transferred to the local authorities.
5. 3. The voluntary context in which the scheme is operated has
been progressively enhanced by the opportunities for
redeployment in the public service which the Government is
organising for the staff who will not be in the unit or the
local authorities and who do not wish to avail of the
redundancy terms. Staff may apply for redeployment in the
Civil Service and competitions are being organised for this
purpose by the Civil Service Commission. They may also apply
for suitable redeployment in other areas of the public service
where approved vacancies occur. In all cases they will retain
their personal salaries.
4. It is not within the discretion of An Foras Forbartha to
improve or alter the terms of the voluntary redundancy/early
retirement scheme. That would be a matter for Government, and
for the Government to make an exception of this Institute
among all the bodies covered by the scheme in the public
service would be out of the question. The package is
completely voluntary and because of generous redeployment
terms any possible circumstantial pressure to accept them is
eliminated. The scheme is the same as that being offered in
other parts of the public service to staff on full rate of
PRSI contribution.
5. The current claim cannot be dealt with in isolation; it
must be considered in the context of the overall public
service voluntary redundancy scheme. The basic approach
underlying the Government decision to initiate a scheme of
voluntary early retirement in the public service is by now
well known i.e. the pressing need to bring public expenditure
under control, Government decisions in relation to various
public service schemes and programmes and the consequential
changes required in public service numbers.
6. When the financial terms of this scheme were being drawn
up it was necessary, to take account of the fact that many
public servants pay modified rates of PRSI and would not
therefore qualify for unemployment benefit, and to make the
terms sufficiently attractive to potential applicants. It was
accordingly decided that the redundancy terms should be based
largely on existing public service superannuation provisions
(details supplied to Court). Public servants on full PRSI
qualify for statutory entitlements under the social insurance
code and the Redundancy Payments Acts and have the choice of
either immediate pensions and lump sums based on their actual
service or preserved pensions and lump sums (which become
payable at 60) plus severance gratuities of 2 weeks per year
of service/subject to the aggregate of the lump sum and
severance gratuity not exceeding 2 years pay. The aim of the
scheme was to achieve equity between the various groups of
public servants and the Government are satisfied that this
objective has been met.
5. 7. Concession of the Union's claim would have wide-ranging
and costly implications. It would be impossible to confine
any concession solely to the Institute. Any departure from
the public service terms in the case of An Foras staff would
not only undermine the management position in a whole range of
public sector bodies but would also inevitably raise questions
about the Government's basic approach to reducing public
service numbers. It should also be borne in mind that the
voluntary early retirement scheme has now been operating for
about 10 months and a total of 4,500 public servants have
already accepted the terms (including 33 in the Institute).