Labour Court Database __________________________________________________________________________________ File Number: CD9311 Case Number: LCR14034 Section / Act: S26(1) Parties: PFIZER PHARMACEUTICALS (CORK) - and - TECHNICAL, ENGINEERING AND ELECTRICAL UNION |
Dispute concerning pension fund.
Recommendation:
5. The Court has considered all of the views put forward by the
parties.
The Court does not consider there are grounds for inclusion of
overtime earnings for pension calculations. Accordingly the Court
rejects the claim of the Union.
The Court so recommends.
Division: MrMcGrath Mr Keogh Mr O'Murchu
Text of Document__________________________________________________________________
CD9311 RECOMMENDATION NO. LCR14034
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
PARTIES: PFIZER PHARMACEUTICALS (CORK)
and
TECHNICAL, ENGINEERING AND ELECTRICAL UNION
SUBJECT:
1. Dispute concerning pension fund.
BACKGROUND:
2. The Company's plant at Ringaskiddy manufactures a range of
high quality pharmaceuticals in bulk form. At present, 233 people
are employed, of whom 24 are craft-workers. The plant operates on
a continuous basis with approximately 105 workers employed on
shiftwork. The usual shift pattern is a continuous four-shift
system which attracts a shift premium of one-third of basic pay.
The workers concerned in this claim are craft day-workers.
All permanent employees are covered by the Company's Irish Pension
Scheme. Prior to 1992 the workers' pension contribution was 3% of
salary in excess of #2,000. Final pensionable pay included basic
pay, annual bonus and service pay.
In January, 1992, the Company announced that with effect from 1st
January, 1992 the pension scheme would be non-contributory and
that shift premia would be included in pensionable pay. The Union
claims that the Company in implementing changes to the pension
scheme created an anomalous situation for craft day-workers
vis-a-vis shift-workers and submitted a claim for the inclusion of
the overtime earnings of the workers concerned for pension
purposes. The Company rejected the claim.
The matter was referred to the Labour Relations Commission.
Conciliation conferences were held on 19th August, 1992 and 2nd
December, 1992 but no agreement was reached and the matter was
referred to the Labour Court on 2nd December, 1992. The Labour
Court hearing took place in Cork on 25th February, 1993.
UNION'S ARGUMENTS:
3. 1. The Company acted unreasonably and without regard for the
views of craft-workers when implementing changes to the
pension scheme.
2. The Company acted in response to an industrial relations
problem to improve the pension benefits for shift-workers.
Influencing the trustees to change the rules of the scheme in
order to comply with the Company's requirements is in breach
of the 1990 Pensions Act.
3. The funds of the scheme had a surplus in excess of the
basic funding requirements.
4. It is an established practice in cases where surpluses
arise in the basic funding requirement and where the surplus
is being used to bring about improvements in benefits such
improvements should be the subject of negotiations between the
employer and the unions.
5. No consultation or discussion took place between the
management and unions when the Company decided to make the
scheme non-contributory.
6. If the funds of the scheme allow for improvements in
benefits, there should be an equitable disbursement of the
benefits.
7. The workers concerned are entitled to similar improvement
in pension benefits to the shift-workers. There is no valid
reason why the structured weekly overtime earnings should not
be included for pension purposes.
COMPANY'S ARGUMENTS:
4. 1. The existing pension arrangements provide a comprehensive
range of benefits for all employees. Pension benefits for the
workers concerned are adequately provided for. There is no
case for making further improvements.
2. The union's claim for the inclusion of overtime earnings,
has no merit having regard to established practice in
industry. The inclusion of shift premia, is a practice
applied in a significant number of pension schemes.
3. All employees benefitted from the ending of employee
contributions and the inclusion of shift premia is consistent,
in that it applies to all shift-workers of whatever position.
4. Of the craft group of 24, 4 are employed on shiftwork and
will benefit directly, while 9 others will also benefit
through an arrangement whereby they take turns to work on
shift (spending about 5 months on shift each year).
5. The concession of this claim would lead to counter claims
for the inclusion of overtime for pension purposes for all
employees. The cost would be prohibitive since it is
estimated that the capital cost for past and future service
could be as high as #3.8 million.
6. The overtime earnings of shift-workers are not included
for pension purposes.
7. It is not unreasonable that shift premia be included for
pension purposes, overtime earnings would involve a totally
different concept because it is discretionary, fluctuating and
subject to the needs of the business.
8. All employees were consulted before the changes were made.
The company carried out comprehensive consultations without
regard to status, and undertook a careful study of good
practice. It is true that the improvements were not
negotiated through the union group, but the views of all
employees had been invited.
9. The Union's claim that craft workers paid higher
contributions than production operators but now have less
benefits is not valid. A day craft worker will still have a
higher pension than a day work operator because his
pensionable pay is higher. A shift craft employee also will
have a higher pension than a shift operator for the same
reason.
10. The scheme is a balance of cost scheme; the variable is
the contribution to be made by the employer. The scheme is
well-financed at present, which means that with the benefit of
hindsight, the company has contributed more than was necessary
to provide the benefits.
11. There is no justification for the Union's claim. The
Company could not, under any circumstances, accept the
inclusion of overtime earnings for pension calculations.
RECOMMENDATION:
5. The Court has considered all of the views put forward by the
parties.
The Court does not consider there are grounds for inclusion of
overtime earnings for pension calculations. Accordingly the Court
rejects the claim of the Union.
The Court so recommends.
~
Signed on behalf of the Labour Court
Tom McGrath
____________________
22nd April, 1993. Deputy Chairman
F.B./J.C.
Note
Enquiries concerning this Recommendation should be addressed to
Mr. Fran Brennan, Court Secretary.