FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : NORWICH UNION - AND - MANUFACTURING, SCIENCE, FINANCE DIVISION : Chairman: Mr Duffy Employer Member: Mr McHenry Worker Member: Ms Ni Mhurchu |
1. Dispute concerning pension terms.
BACKGROUND:
2. The dispute concerns a worker who commenced employment in 1967 with Norwich Union in the UK. The worker was employed as an Inspector (now Senior Broker Consultant). He transferred to Ireland in 1977. The worker availed of early retirement in 1996. The Union is seeking the re-calculation of the worker's pension entitlements in order to enhance his benefits. Pensions for sales staff in the Company were calculated on the basis of salary alone up to 1977. Following negotiations with the Union it has agreed to also take account of commission earnings for pension purposes relative to service from that date, i.e., January, 1977. The formula used in the calculation of pensionable salary is the average of the previous three years from overriding commissions. This was the arrangement offered to and accepted by the worker. The Union claimed that the average calculations should be based on his full service. The Company rejected the claim. The dispute was referred to the Labour Relations Commission and a conciliation conference was held on the 28th August, 1997. Agreement was not possible and the dispute was referred to the Labour Court by the Labour Relations Commission on the 7th of October, 1997. A Court hearing was held on the 1st of December, 1997.
UNION'S ARGUMENTS:
3. 1. The worker concerned was under considerable pressure to deliver business in the early nineties, but they were extremely difficult years for the life and pensions market. The worker's health suffered considerably. He came under threat of disciplinary action arising from Company allegations of reduced productivity. Consequently the worker availed of early retirement, however, he was not satisfied with the basis for calculation of terms. Overriding commission, which formed a substantial part of the worker's salary had reduced significantly. As the calculation for pension purposes is the average of overriding commission over the previous three years (June , 1992 to June, 1995 in the worker's case) this impacted severely as his commission sales had dropped significantly over that period.
2. Another consultant/broker who previously retired had all service included for calculating his pension (details supplied to the Court). The worker concerned should also have all his years of service allowed for pension purposes.
3. The years 1992-1995 were not 'average'. Therefore it was extremely unfair to the worker to average overriding commissions over those years. The Union is prepared to accept the average best of three over the preceding ten years. This happens in other companies.
4. There is a facility for augmentation and escalation at the employer's discretion subject to the aggregate pension not exceeding the maximum pension.
5. In the most recent agreement on Transformation/Rationalisation in the Company, in the event of there being an 'involuntary' severance/retirement, an improvement of 22% on the 1994 agreement terms was accepted. The Union accepts that this agreement is self-contained, however, it is illustrative.
6. The worker's pension terms and entitlement's should be augmented, either by way of improved pension, or the payment of an additional lump sum.
COMPANY'S ARGUMENTS:
4. 1. The Union's claim that all the worker's service with the Company should be reckonable for pension purposes relating to overriding commission is clearly untenable. Sales staff at the worker's level (excepting one) who have retired have had their pension entitlements calculated according to the agreed formula.
2. The worker raised the issue at discussions leading up to his early retirement and his argument was rejected. The worker subsequently accepted the terms that were offered to him. The worker accepted the package including the severance lump sum. It is disingenuous of the worker, having accepted the package then agreed, to have his Union seeking to reopen discussions now.
3. There was a genuine clerical error by the personnel department, in the case of the worker who had all service included in the calculation of his pension entitlements for commission purposes. The error only came to light after the package had been accepted by the individual. The Company felt obliged to honour the figures which had been provided. Many other sales staff have retired since then. They have all accepted the terms agreed in 1977. The Union does not contest the bona fides of this agreement. The overall package paid to the worker above mentioned was inferior to that provided to the claimant (details supplied to the Court).
4. The Staff Pension Plan has not been funded to meet the specific benefit claimed. It has been funded to meet the terms as agreed in 1977. Concession of the claim, were it to create a precedent, could have funding implications for existing members.
RECOMMENDATION:
The Court is satisfied that the pension entitlement of the claimant was properly calculated in accordance with the terms of the pension scheme agreed between the Company and MSF. There is no provision in that scheme for the calculation of overriding commission for pension purposes other than by reference to earnings in the three years prior to retirement. The claim for an alternative form of calculation, even as a once off exceptional measure, is not, in the Court's view, sustainable.
With regard to the augmentation and escalation provision of the composite trust deed of the scheme, the Court notes that this provision is exercisable by the employer at its absolute discretion. In these circumstances it would be inappropriate for the Court to make a recommendation as to how that discretion might be exercised in any particular case.
The Court, therefore, finds no basis on which the claim as made should be conceded. It notes, however, the willingness of the Company to contribute to expenses incurred by the claimant in pursuing this matter.
In these exceptional circumstances, and on the strict understanding that it will have no precedent value, the Court recommends that the Company offer the claimant an ex-gratia payment of £750 in full and final settlement of all claims arising from or relating to his retirement.
Signed on behalf of the Labour Court
Kevin Duffy
5th December, 1997______________________
T.O'D./D.T.Deputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Tom O'Dea, Court Secretary.