Labour Court Database __________________________________________________________________________________ File Number: CD88861 Case Number: LCR12185 Section / Act: S20(1) Parties: IMPERIAL CHEMICAL INDUSTRIES (I.C.I.) IRELAND LIMITED - and - MANUFACTURING SCIENCE AND FINANCE |
Claim by the Union for the equalisation of pension benefits for a worker.
Recommendation:
5. Having regard to the fact under U.K. revenue regulations the
Company had no option but to provide a different pension scheme
and that the worker concerned accepted the amended scheme when
introduced, the Court does not therefore consider the Union's
claim to be well founded. The Court does not therefore recommend
concession of the Unions claim.
Division: Mr O'Connell Mr McHenry Mr O'Murchu
Text of Document__________________________________________________________________
CD88861 RECOMMENDATION NO. LCR12185
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
SECTION 20(1)
PARTIES: IMPERIAL CHEMICAL INDUSTRIES (I.C.I.) IRELAND LIMITED
(REPRESENTED BY THE FEDERATED UNION OF EMPLOYERS)
and
MANUFACTURING SCIENCE AND FINANCE
SUBJECT:
1. Claim by the Union for the equalisation of pension benefits
for a worker.
BACKGROUND:
2. The worker concerned in this claim commenced employment with
the Dublin sales office of I.C.I. Export Limited on 21st April,
1952. On 1st April, 1964, I.C.I. Ireland Limited was incorporated
to carry on the business of I.C.I. in Ireland. Employees of
I.C.I. Export Limited were transferred to the new Company. On 1st
January, 1966, I.C.I. Ireland Limited established its own pension
fund in order to comply with Company policy and British revenue
regulations. Employees of the earlier incorporated Company held
pensions in the I.C.I. Home Fund. With the establishment of the
I.C.I. Ireland Pension Fund employees were given the option of:
(a) Refund of pension contributions to the Home Fund or,
(b) Deferred pension on normal retirement date.
The worker concerned in this dispute opted for option B. In 1974
the Company altered the pension fund to a State integrated one, in
that the pensionable salary would be salary less 1.50 times the
single rate State pension as on 1st of January of each year.
Employee contributions remained 5% of pensionable salary. In 1982
the Union carried out a comparison between the arrangements for
the Irish pension scheme and those applying in Britain. The Union
contends that this examination revealed a substantial shortfall in
benefit with regard to the Irish pension scheme. The Union are
claiming that the worker opted for option B on the clear
understanding that the benefits accruing under the new pension
scheme would be the same as those under the old pension scheme and
that the shortfall should be made good by the Company. The
Company rejected the claim, stating that it was acting totally in
accordance with its agreement with the worker. No agreement could
be reached at local level. On 1st November, 1988 the matter was
referred to the Labour Court by the Union under Section 20(1) of
the Industrial Relations Act, 1969. The Union agreed to be bound
by the Courts decision. A Court hearing took place in Dublin on
1st December, 1988.
UNION'S ARGUMENTS:
3. 1. The main difference between the two pensions is that the
British one gives recognition for pre-State integrated
service. I.C.I. Ireland treats all service as being State
integrated. This has important financial consequences for the
worker, who was employed by the Company from 1952 to 1974, the
year when State integration was implemented.
2. The worker was mislead into leaving the U.K. Home Fund
under false pretences, and he is entitled to claim the
substantial shortfall in benefit from the Company. It is not
reasonable to suggest that the worker could have taken a
refund of his pension contributions in 1966, as this was not a
viable option. The worker agreed to the arrangement on the
new pension scheme on the basis of assurances that the same
benefits would apply. Members of higher management were able
to remain in the old scheme, so there is no justification for
victimising this worker. The Union requests the Court to
recommend in its favour.
COMPANY'S ARGUMENTS:
4. The worker is being treated in an identical manner to 40 other
former I.C.I. Ireland and previously I.C.I. Export employees
who have retired between 1st January, 1966 to date. A further
12 employees in this category have yet to retire and will be
treated in an identical manner. The worker is also being
treated in a similar manner to other former I.C.I. Export
employees in other countries, where separate national
companies and pension schemes were established.
2. An Irish pension based on Irish earnings cannot be related
to a British pension for the following reasons:
(a) The British salary is stg #19,018.65 (IR #22,442) or 12%
less than is paid to the worker. He cannot therefore use
his Irish salary and a U.K. pension entitlement.
(b) In 1966 the accrual rate in the Irish scheme was 1/70 as
against 1/75 in the U.K. scheme.
(c) Pensionable salary in Ireland was based on the average of
the last 5 years as against 6 years in the U.K.
(d) I.C.I. Ireland employees formerly received a profit share
scheme which was consolidated into pay for pension
purposes. This consolidation did not apply to U.K.
employees.
3. U.K. revenue regulations would preclude the worker from
being a member of a U.K. pension scheme while in the
employment of an Irish registered company, where that pension
was related directly to the Irish employment.
Reference: U.K. Income Tax Act, 1952
Section 379 (3) (d) (iii).
4. The best practice in pension schemes in Ireland and U.K.
provides for pensions based on years of service by 1/60 up to
a maximum of 40/60. In the case of the worker he qualifies
for 36 7/12 years + A.V.C.'s; to give him a total pension of
#16,227. To concede to the worker's claim would put his
pension in excess of the Revenue limit allowable (details
supplied to the Court).
5. In 1969, I.C.I. Ireland Limited published a booklet for
all employees, setting out the rules of the I.C.I. Ireland
Limited pension scheme. The worker did not raise his claim at
that time. In the light of all the reasons outlined the Court
is urged to reject the claim.
RECOMMENDATION:
5. Having regard to the fact under U.K. revenue regulations the
Company had no option but to provide a different pension scheme
and that the worker concerned accepted the amended scheme when
introduced, the Court does not therefore consider the Union's
claim to be well founded. The Court does not therefore recommend
concession of the Unions claim.
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Signed on behalf of the Labour Court
_________________________
John O'Connell
9th January, 1989 Deputy Chairman
P.F./J.C.