Labour Court Database __________________________________________________________________________________ File Number: CD94384 Case Number: LCR14710 Section / Act: S26(1) Parties: IRISH FERTILIZER INDUSTRIES - and - MANUFACTURE SCIENCE FINANCE |
Inclusion of shift-rate for pension purposes.
Recommendation:
This dispute arose from conflicting interpretations as to what
payments should be included when calculating pension entitlements.
The Union submits that the claimants who work a shift rota system
which is compulsory are entitled to have the shift premium taken
into account for pension purposes.
The Company argues that the claimants are day workers who are paid
additional amounts for working additional hours which is the
equivalent to an overtime arrangement and therefore excluded by
the rules of Pension Scheme.
The Pension Scheme is in operation since 1971 and this problem has
not surfaced until a few years ago. The Pension Scheme is
contributory and the Court has verified that the allowances in
question are paid gross. Separate pension statements clearly show
the deduction of pension contributions on basic pay. The Company
with some justification highlighted the cost of conceding the
claim. In 1990 the financial position had deteriorated to such an
extent that the Company's cost base had to be restructured and
included significant redundancies to bring the Company into a
stabilised financial position. The losses to date are significant
by any standard and have yet to be reduced. Management further
submits that the claim is contrary to the terms of both Clauses 4
and 6 of the P.C.W.
Taking all aspects of the claim into account, and in particular
the past history of the Company, the Court has concluded that to
recommend concession of the Union's claim (which it considers to
have merit) at this time would be contrary to Clause 4 of the
P.C.W. which specifically refers to pensions and the capacity of
an enterprise to absorb additional costs involved in improvement
to Pensions Schemes.
The Court further recommends that during the period from now to
the expiration of the P.C.W. the parties should jointly address
the financial implications to the Pension Scheme of any extension
of benefits.
Division: Ms Owens Mr Keogh Mr Rorke
Text of Document__________________________________________________________________
CD94384 RECOMMENDATION NO. LCR14710
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
PARTIES:
IRISH FERTILIZER INDUSTRIES
AND
MANUFACTURE SCIENCE FINANCE
SUBJECT:
1. Inclusion of shift-rate for pension purposes.
BACKGROUND:
2. The dispute before the Court concerns the Union's claim for
the inclusion for pension purposes of a premium payment which
the five workers concerned receive in respect of working
nights and weekends on a regular basis as part of a cover
agreement.
The workers are employed by the Company at its factory in
Arklow as instrument technicians. They are employed as day
workers, and also provide a cover system for the factory
which involves working nights and weekends.
There are two categories of employees in the Company i.e.
permanent shift workers and day workers. Shift workers are
paid a shift premium of one-third of basic pay which is
included as part of their annual salary for pension purposes.
Local level discussions took place but no agreement was
reached. The dispute was referred to the Labour Relations
Commission. A conciliation conference took place on 27th
June, 1993. As no agreement was reached the dispute was
referred to the Labour Court by the Labour Relations
Commission on 19th July, 1994 in accordance with Section
26(1) of the Industrial Relations Act, 1990. A Labour Court
hearing took place on 8th September, 1994.
UNION'S ARGUMENTS:
3. 1. The cover rota system has been in operation for almost
10 years and is not a voluntary system. It is
compulsory for the workers to work the rota system.
2. The comprehensive Company/Union agreement states:- That
the basic conditions pertaining to regular shift working
apply in the case of part-time shift working and that
any additional entitlements, holidays etc., apply pro
rata in relation to the period of part-time shift
working.
3. Permanent shift workers in the Company have their shift
premiums included for pension purposes. Similar
conditions on a pro rata basis should apply to the
workers concerned for the period they operate on shift.
4. The workers have been rostered for shift work for
approximately 26 weeks per year for almost 10 years. In
the circumstances the Company's claim that this is not
shift work is unacceptable to the Union.
COMPANY'S ARGUMENTS:
4. 1. There are two categories of employees in I.F.I. i.e.
permanent shift workers and day workers. These
categories have different conditions of employment in a
number of respects. The technicians, who are the
subject of this claim, are day workers, not permanent
shift workers and have the conditions of employment of
day workers.
2. Clause 1.1 of the Company's Comprehensive Agreement
covers pensions and refers to the pension booklet for
contributions and benefits (details supplied to the
Court). The pension booklet, reflecting the pension
scheme rules defines Annual Salary for pension purposes.
This definition specifically excludes "variable
emoluments" and "overtime".
3. The method of compensation for instrument technicians
for on-call and night cover is set out in an Agreement
dated August, 1991 (details supplied to the Court).
Clause 9 of that Agreement sets out the details of
compensation which is clearly based on a calculation of
additional hours or rates, not on a shift premium. In
this way it is equivalent to an overtime arrangement,
which is specifically excluded from "Annual Salary" in
the pension scheme rules.
4. In the Agreement "Plant Cover for instrument
technicians" made as recently as 1991, no reference is
made to "shift" or "shift payment". The Agreement was
not made as a shift agreement - nor was the issue of
pension raised at that time. Clause 13 of that
Agreement states that "no further payments, time off,
etc., other than those listed above will be made in
respect of this arrangement".
5. Concession of this claim would breach the clear
distinction between permanent shift allowance (which is
pensionable), and the other arrangements throughout the
Company for cover, overtime, on-call, call-out, etc.,
which are nor pensionable and are outside the rules of
the pension scheme.
6. This claim is prohibited under Clause 4 of the Programme
for Competitiveness and Work.
7. Concession of the claim would lead to other claims by
other workers in irregular working patterns whose
compensatory payments are not pensionable.
RECOMMENDATION:
This dispute arose from conflicting interpretations as to what
payments should be included when calculating pension entitlements.
The Union submits that the claimants who work a shift rota system
which is compulsory are entitled to have the shift premium taken
into account for pension purposes.
The Company argues that the claimants are day workers who are paid
additional amounts for working additional hours which is the
equivalent to an overtime arrangement and therefore excluded by
the rules of Pension Scheme.
The Pension Scheme is in operation since 1971 and this problem has
not surfaced until a few years ago. The Pension Scheme is
contributory and the Court has verified that the allowances in
question are paid gross. Separate pension statements clearly show
the deduction of pension contributions on basic pay. The Company
with some justification highlighted the cost of conceding the
claim. In 1990 the financial position had deteriorated to such an
extent that the Company's cost base had to be restructured and
included significant redundancies to bring the Company into a
stabilised financial position. The losses to date are significant
by any standard and have yet to be reduced. Management further
submits that the claim is contrary to the terms of both Clauses 4
and 6 of the P.C.W.
Taking all aspects of the claim into account, and in particular
the past history of the Company, the Court has concluded that to
recommend concession of the Union's claim (which it considers to
have merit) at this time would be contrary to Clause 4 of the
P.C.W. which specifically refers to pensions and the capacity of
an enterprise to absorb additional costs involved in improvement
to Pensions Schemes.
The Court further recommends that during the period from now to
the expiration of the P.C.W. the parties should jointly address
the financial implications to the Pension Scheme of any extension
of benefits.
~
Signed on behalf of the Labour Court
21st March, 1995 Evelyn Owens
F.B./M.M. ____________
Chairman
Note
Enquiries concerning this Recommendation should be addressed to
Mr. Fran Brennan, Court Secretary.