Labour Court Database __________________________________________________________________________________ File Number: CD94200 Case Number: LCR14523 Section / Act: S26(1) Parties: TARA MINES - and - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION;TECHNICAL ENGINEERING AND ELECTRICAL UNION;MANUFACTURING SCIENCE FINANCE;UNION OF CONSTRUCTION ALLIED TRADES AND TECHNICIANS;AMALGAMATED ENGINEERING AND ELECTRICAL UNION |
Dispute concerning (1) the improvement of the Pension Scheme (2) the improvement of an Income Continuance Plan
Recommendation:
The Court has considered the submissions of the parties and the
additional oral evidence presented at the hearing. While it does
not find that a clear-cut case has been established that the
pension scheme is substantially out of line with appropriate
standards in comparable employments, the Court nevertheless
considers that there is merit in some of the Unions' arguments.
Having regard to the elements of normal earnings, the Court
considers that there is a reasonable case to be met for an
improvement in the level of pensionable salary so as to cushion to
some additional degree the drop in income when a worker goes on
pension. The Court has noted that there are very significant
differences between the cost of this type of improvement as
claimed by the Company and as claimed by the Unions. Therefore,
the Court does not suggest an increase of any particular amount
but recommends that the parties negotiate on the issue. It is
essential to the negotiations that the actuarial assumptions of
both parties be available for scrutiny, and that both parties
accept that substantial additional contributions would be
necessary to fund the enhanced benefits
There is a growing trend in pension schemes for some form of
periodic enhancement of pensions and the Court recommends that
this issue be also negotiated between the parties and on a similar
basis.
In making this recommendation, the Court has taken account of the
historical profitability of the business, the present difficulties
in the industry and the substantial costs involved in any changes
in the present scheme. The Court does not consider that aspects
of self-financing should be precluded from the negotiations.
Other aspects of the claim should be put in abeyance until these
major aspects have been resolved.
INCOME CONTINUANCE PLAN
Having considered the submissions of the parties along with the
documentary and oral evidence presented at the hearing, the Court
has not found grounds substantiating the Unions' claim that it was
the original intent of the I.C.P. to provide, for pension
purposes, an increase 5% p.a. in the notional salary of workers
being paid under the I.C.P.
The Company proposal to adjust, for pension purposes, the notional
salaries of workers on the I.C.P. in line with wage adjustments
for their grade or category seems to the Court to be a reasonable
and equitable approach to the situation. Provided that the
adjustments arising from this proposal are back-dated, the result
should be that workers with the same service, whether they worked
the full period or were on I.C. for part of it, will have the same
pension. Accordingly the Court recommends acceptance of the
Company proposal on this basis of the full back-dating.
Division: Mr Heffernan Mr McHenry Mr Walsh
Text of Document__________________________________________________________________
CD94200 RECOMMENDATION NO. LCR14523
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
PARTIES:
TARA MINES
(REPRESENTED BY THE IRISH BUSINESS AND EMPLOYERS CONFEDERATION)
AND
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
TECHNICAL ENGINEERING AND ELECTRICAL UNION
MANUFACTURING SCIENCE FINANCE
UNION OF CONSTRUCTION ALLIED TRADES AND TECHNICIANS
AMALGAMATED ENGINEERING AND ELECTRICAL UNION
SUBJECT:
1. Dispute concerning (1) the improvement of the Pension Scheme
(2) the improvement of an Income
Continuance Plan
BACKGROUND:
2. 1. The improvement of the Pension Scheme
The Company's Pension Scheme is a defined benefit scheme
and it was introduced in 1980 and 1983 for salary and
hourly paid employees respectively. Of 750 workers in
the Company, 585 are contributing to the scheme. In
1990, a Pan-Union Committee was formed to investigate
improvements to the pension plan. The Company and the
Committee have been meeting since 1991.
2. In November, 1992, the Committee presented the following
claims to the Company concerning changes sought in the
pension scheme:-
(1) Indexation
(2) Earnings for pension purposes to include shift and
bonus pay
(3) Reduction in pension age
(4) Pension to be based on pensionable salary over 10
years
(5) Lump sum to be available after 20 years service
(6) For accident/illness cover Unions want pension to
be based on credited service to 65 years of age.
The Company rejected the claims on the basis of the
cost.
3. Accrual of benefits under the Income Continuance Plan
The Income Continuance Plan was introduced for workers
at the same time as the pension scheme. The Unions'
claim is for workers on income continuance to have their
notional salary increased by 5% per annum from the date
of disablement.
4. The plan provides as follows:-
(a) An income benefit equal to 75% of plan salary at
the time of disablement.
(b) Pension premium allocation which is equal to each
worker's current premium under the pension plan.
(c) After income benefit has been paid for 52 weeks it
will commence to escalate at 5% compound per annum.
5. In response to the Unions' claim the Company proposed
that the rules be amended to provide for such pensions
to be related to pensionable salary at normal pension
date. This rate to be based on the grade of job
category held by the worker at the time of going on
disability. The Unions rejected the Company's proposal.
6. The disputes were referred to the Labour Relations
Commission and three conciliation conferences were held
between 2nd June and 26th November, 1993. No progress
was possible and the two disputes were referred to the
Labour Court on 6th April, 1994, under Section 26(1) of
the Industrial Relations Act, 1990.
UNIONS' ARGUMENTS:
3. 1. The improvement of the pension scheme
The workers regard the present pension scheme as not
being sufficient to provide a benefit which has
reasonable relativity to a normal week's pay. The
scheme excludes all bonus and shift earnings and deducts
the state pension.
2. The Unions' claim is fully in accord with Clause 4 of
the Programme for Competitiveness and Work (PCW). The
Company has been highly profitable and is one of the
best performers of the Outokumpu Group. Industry
surveys show the Company's scheme is substantially out
of line with similar schemes in comparable employments.
3. The workers are prepared to share in the increased
funding which would be necessary. Delays in
implementation adds a greater cost to both parties. The
Unions are seeking that bonus pay be immediately
included in calculations and a 4% indexation of the
scheme's pension benefits. The Unions are also seeking
that the other elements of the claim be the subject of
immediate negotiations.
4. Accrual of benefits under the Income Continuance Plan
The Unions are not seeking an improvement to the plan
but the application of terms and benefits as originally
agreed. The Unions have actuarial opinion in support of
their position (details supplied) and as a result are
seeking that the pay for the calculation of pension
benefits, escalates at 5% per annum in line with the 5%
premium escalation per annum. This will allow the life
assurance and pension benefits to accrue as originally
intended.
COMPANY'S ARGUMENTS:
4. 1. The improvement of the pension scheme
Concession of the Unions' claim would cost the Company
#8 million annually over and above the current costs
carried by the Company. The extra costs cannot be
approved by the Company in view of the poor state of the
mining industry and the Company's requirement for the
foreseeable future to radically cut costs across the
board.
2. Due to a combination of low metal prices and high
treatment charges for both zinc and lead, 1993 was one
of the worst years for the Company in recent times. The
Company made a loss in 1993 at a time when full
production was achieved but sales revenues were at an
all time low.
3. The workers' pension benefits are not substantially out
of line with appropriate standards in comparable
employments or pension schemes in general. The Company
cannot be expected to absorb the substantial cost
involved with conceding this claim having regard to the
economic, commercial and competitive circumstances
applying to the Company's operation.
4. Accrual of benefits under the Income Continuance Plan
The Company's offer would put the claimants on the same
rates of increase as those remaining in employment.
This improvement to the plan would have a cost
implication and the Company has agreed to fund this
extra cost.
RECOMMENDATION:
The Court has considered the submissions of the parties and the
additional oral evidence presented at the hearing. While it does
not find that a clear-cut case has been established that the
pension scheme is substantially out of line with appropriate
standards in comparable employments, the Court nevertheless
considers that there is merit in some of the Unions' arguments.
Having regard to the elements of normal earnings, the Court
considers that there is a reasonable case to be met for an
improvement in the level of pensionable salary so as to cushion to
some additional degree the drop in income when a worker goes on
pension. The Court has noted that there are very significant
differences between the cost of this type of improvement as
claimed by the Company and as claimed by the Unions. Therefore,
the Court does not suggest an increase of any particular amount
but recommends that the parties negotiate on the issue. It is
essential to the negotiations that the actuarial assumptions of
both parties be available for scrutiny, and that both parties
accept that substantial additional contributions would be
necessary to fund the enhanced benefits
There is a growing trend in pension schemes for some form of
periodic enhancement of pensions and the Court recommends that
this issue be also negotiated between the parties and on a similar
basis.
In making this recommendation, the Court has taken account of the
historical profitability of the business, the present difficulties
in the industry and the substantial costs involved in any changes
in the present scheme. The Court does not consider that aspects
of self-financing should be precluded from the negotiations.
Other aspects of the claim should be put in abeyance until these
major aspects have been resolved.
INCOME CONTINUANCE PLAN
Having considered the submissions of the parties along with the
documentary and oral evidence presented at the hearing, the Court
has not found grounds substantiating the Unions' claim that it was
the original intent of the I.C.P. to provide, for pension
purposes, an increase 5% p.a. in the notional salary of workers
being paid under the I.C.P.
The Company proposal to adjust, for pension purposes, the notional
salaries of workers on the I.C.P. in line with wage adjustments
for their grade or category seems to the Court to be a reasonable
and equitable approach to the situation. Provided that the
adjustments arising from this proposal are back-dated, the result
should be that workers with the same service, whether they worked
the full period or were on I.C. for part of it, will have the same
pension. Accordingly the Court recommends acceptance of the
Company proposal on this basis of the full back-dating.
~
Signed on behalf of the Labour Court
28th July, 1994 Kevin Heffernan
J.F./D.T. _______________
Chairman
Note
Enquiries concerning this Recommendation should be addressed to
Mr. Jerome Forde, Court Secretary.