Labour Court Database __________________________________________________________________________________ File Number: CD94420 Case Number: LCR14635 Section / Act: S26(1) Parties: IRISH COUNTRY MEATS - and - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION |
Income Continuance Scheme.
Recommendation:
The Court has fully considered all of the issues raised by the
parties. The Court finds that Income Continuance is provided for
workers through insurance-based schemes.
These are liable to change in accordance with the cover insurance
companies are prepared to provide.
In the case before the Court, cover in accordance with the
original scheme is no longer available.
The Court takes the view that the scheme on offer should be
accepted.
The benefits of the scheme should be reviewed at the annual
renewal date, with a view to maximising the benefits available to
the staff, taking account of costs involved.
The Court so recommends.
Division: Mr McGrath Mr McHenry Ms Ni Mhurchu
Text of Document__________________________________________________________________
CD94420 RECOMMENDATION NO. LCR14635
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
PARTIES:
IRISH COUNTRY MEATS
(REPRESENTED BY THE IRISH BUSINESS AND EMPLOYERS CONFEDERATION)
AND
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
SUBJECT:
1. Income Continuance Scheme.
BACKGROUND:
2. The Company, which is part of the Avonmore Group, is a pig-
processing plant based in Rooskey, Co. Roscommon, employing
between 400 and 500 workers.
In 1982, the Company introduced an income continuance
(disability benefit) scheme in conjunction with, but separate
from, a pension scheme. The scheme was arranged through the
Irish Life Insurance Company. It provided benefit subject to
medical certification, after 26 weeks illness, of 2/3 pay
less Social Welfare benefit up to date of retirement, death
or recovery, the benefit increasing at 5% per annum. The
scheme was wholly funded by the employer.
In 1990, the Company notified all members of the scheme that
there would be a reduced disability benefit (i.e. 2/3 of
salary less twice the flat-rate Social Welfare disability
benefit, with benefit increasing at 3% per annum). The
changes brought about were dictated by the insurance company,
who initially had sought a 6-fold increase in the original
premium. (The changes arose due to the high level of claims
at the Rooskey plant). Under the Group Policy contract
between Irish Life and the Company, the insurer reserves the
right to vary the premia payable and benefits under the
scheme.
The Union claims that the Company is obliged to maintain the
original level of cover, regardless of cost. The dispute was
referred to the Labour Relations Commission and a
conciliation conference was held on the 27th of July, 1994,
at which agreement was not reached. The dispute was referred
to the Labour Court in accordance with Section 26(1) of the
Industrial Relations Act, 1990. The Court investigated the
dispute on the 14th of November, 1994.
UNION'S ARGUMENTS:
3. 1. The benefits outlined in the 1982 plan were part of a
package (pension scheme/income continuance scheme) and
should not have been unilaterally amended by the
Company.
2. The difficulties the Company have encountered in
relation to the underwriting of the terms of the
agreement should not affect workers' benefits. The
Union's/Workers' agreement is with the Company, not with
the insurer.
3. Changes in the scheme now mean that none of the workers
will benefit from the scheme as the Company has wrongly
defined salary as basic pay.
Salary should be defined as:-
Basic pay plus production bonus plus shift premium,
where applicable.
4. The scheme was as much part of the workers' remuneration
as pay or annual leave entitlement and should not have
been changed without agreement from the workers.
COMPANY'S ARGUMENTS:
4. 1. The insurance company acted within its rights under the
contract with the Company. In 1982, when the benefit
scheme was introduced, it was expressly subject to the
terms of the policy.
2. There have been similar cases in other Companies
(details supplied) where the employer has had to reduce
the level of benefit under Income Continuance/Salary
Protection Plans, where the insurance companies have,
under their rights in the contracts, changed the terms
of cover.
RECOMMENDATION:
The Court has fully considered all of the issues raised by the
parties. The Court finds that Income Continuance is provided for
workers through insurance-based schemes.
These are liable to change in accordance with the cover insurance
companies are prepared to provide.
In the case before the Court, cover in accordance with the
original scheme is no longer available.
The Court takes the view that the scheme on offer should be
accepted.
The benefits of the scheme should be reviewed at the annual
renewal date, with a view to maximising the benefits available to
the staff, taking account of costs involved.
The Court so recommends.
~
Signed on behalf of the Labour Court
19th December, 1994 Tom McGrath
M.K./M.M. _______________
Deputy Chairman
Note
Enquiries concerning this Recommendation should be addressed to
Mr. Michael Keegan, Court Secretary.