Labour Court Database __________________________________________________________________________________ File Number: CD8872 Case Number: LCR11769 Section / Act: S67 Parties: IRISH FERTILIZER INDUSTRIES - and - GROUP OF UNIONS |
Dispute concerning the indexation of Contributory Pension Schemes.
Recommendation:
11. The Court having considered the submissions made by the
parties, accepts that the Group of Unions were fully entitled to
expect that the proposals presented by top management regarding
the indexation of pensions had prior Board authorization.
Accordingly the Court recommends that the Company should endorse
the offer made to the Pensions Committee as outlined in its letter
to the Committee of the 6th October, 1986.
Division: Mr Fitzgerald Mr Collins Mr O'Murchu
Text of Document__________________________________________________________________
CD8872 RECOMMENDATION NO. LCR11769
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
SECTION 67
PARTIES: IRISH FERTILIZER INDUSTRIES
and
GROUP OF UNIONS
SUBJECT:
1. Dispute concerning the indexation of Contributory Pension
Schemes.
BACKGROUND:
2. All employees of the Company (612) are members of the two
Contributory Pension Schemes. When both schemes were introduced -
one in 1965 and the other in 1972 - there was no provision made
for indexation of pensions.
3. Since 1979 a Pension Committee has been in operation to deal
with pension issues within the Company. The review of pensions
has been the subject of ongoing discussion with the Committee,
including the question of indexation.
4. In 1979 the Minister for the Public Service gave approval to
index link pensions on the basis that there would be a
contribution from employees. In January, 1980, the Company
commenced additional funding of 5.5% towards indexation. The
Company's contribution from then on was 11.5% . In November,
1986, the Company deducted an extra .50% in respect of members of
the No. 572 Scheme (the annual date of renewal. The renewal date
for the other Scheme is 1st January.
5. Negotiations between the Pension Committee and Management
continued on a number of pension issues and in September, 1986,
the Company wrote to the Pension Committee outlining its position
on the question of indexation. The letter stated inter alia that
upon the membership agreeing to increase their contribution by .50%
the Company would fund the difference required, as recommended by
the Actuary, to provide for indexation in line with the C.P.I.
and that the Company contribution would be subject to the maximum
level that it was then funding. The Company agreed to insert a
clause in the Trust Deed outlining how the pension increases would
be determined each year.
6. Following a meeting held between the parties at which the
Pension Committee sought clarification of certain items the
Company subsequently wrote to the Committee in October, 1986,
stating -
"It is the Trustees' intention that your pension will increase
in line with C.P.I. each year during the course of payment.
The percentage increase will be determined each year relative
to the increase in C.P.I. and the advice of the Actuary".
In December, 1986, the Pension Committee wrote to the Company
confirming the membership's acceptance of the Company's proposals
on indexation.
7. The situation was put to the Board of the Company in February,
1987. On advice from its Finance Committee the Board rejected the
arrangements on indexation agreed between Management and the
Committee and instead approved the following proposals -
(i) The indexation of a guaranteed rate of 3% per annum be
applied to Scheme Pensions.
(ii) That current ex-gratia increases to Pensioners payable
by the Company, be consolidated into the Scheme.
(iii) That employees contribute 0.5% per annum.
(iv) That the Company contribution for indexation be waived
for the time being.
These proposals were put to each individual employee by letter and
rejected by them. The Board subsequently withdrew the offer.
8. The Unions sought discussions with Management and a meeting
was held at which no progress was possible. The matter was
referred to the Conciliation Service of the Labour Court on 13th
July, 1987. A Conciliation Conference was held on the 8th
January, 1988, - earlier dates were cancelled by the parties. As
no agreement was possible both parties agreed to a referral to the
Labour Court for investigation and recommendation. A Court
hearing was held on 3rd March, 1988.
UNION'S ARGUMENTS:
9. 1. As far as the Committee were concerned they were dealing
with the highest level of management in the course of the
negotiations on the revision of the Schemes. There were a
number of occasions, during these discussions, when the
personnel representing the Company had to seek approval
before putting forward any firm proposals, and this was
understood by the Pensions Committee.
2. However, when the proposals were put forward by the
Company on 19th September, and subsequently clarified on 6th
October, there was never any question but that these
proposals were being put forward as being on offer, and
available to the members of the Schemes. The subsequent
advice from the Company that a different proposal had been
approved by the Board was incomprehensible, and placed a
question mark over the Company's entire handling of the
matter.
3. In a letter from the Personnel Manager to the Secretary
of the Pensions Committee, the question of indexation was
linked with the completion of the Comprehensive Agreement - a
cost cutting plan which was put forward by the Company and
which has now been accepted. However, the Company now have
the Comprehensive Agreement, but the members of the Schemes
have not got the indexation they were promised.
COMPANY'S ARGUMENTS:
10. 1. The Pension Committee was elected by the Pension Scheme's
membership to negotiate with the Company on Pension matters.
They sought to have agreements reached whereby negotiations
with Management would be final, but were clearly informed by
the Company Managing Director, that the Board of the Company
and the appropriate Government Ministers would have to
approve any agreement reached in negotiations.
2. The Pension Committee were therefore clearly aware that
adjustments to Pension Scheme entitlements having financial
implications for the Company, would require Board approval.
The Agreement reached between the Management and the Pension
Committee, on indexation of Pensions, is not final and could
not be final until it had Board approval.
RECOMMENDATION:
11. The Court having considered the submissions made by the
parties, accepts that the Group of Unions were fully entitled to
expect that the proposals presented by top management regarding
the indexation of pensions had prior Board authorization.
Accordingly the Court recommends that the Company should endorse
the offer made to the Pensions Committee as outlined in its letter
to the Committee of the 6th October, 1986.
~
Signed on behalf of the Labour Court
30th March, 1988 Nicholas Fitzgerald
M.D./P.W. Deputy Chairman