FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 13(9), INDUSTRIAL RELATIONS ACT, 1969 PARTIES : SHANNON DEVELOPMENT (REPRESENTED BY THE IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Mr Flood Employer Member: Mr McHenry Worker Member: Mr O'Neill |
1. Appeal against Rights Commissioner's Recommendation No. 604/97.
BACKGROUND:
2. The appeal concerns one worker who was employed with the Company, in a number of positions, from 1964 to early 1997, when he availed himself of the Company's early retirement scheme. A dispute arose regarding a claim by the worker for a special allowance of £2,000 to be included in his salary for pension purposes. Following a series of discussions in 1995, between the Company and the worker, it was confirmed by letter from the Company that the allowance "would now be paid as part of basic pay". The Company, subsequently, reversed that decision and the additional money continued to be paid as a supplement. The Union claimed, on behalf of the worker, that the Company had had ample opportunity to examine all the implications of the inclusion of the allowance in basic pay and that the written undertaking given should be binding. The Company's position was that it was clear that the allowance was a special one and not reckonable for pension purposes and that the worker had been informed of the Company's change of heart very shortly after it issued its letter. The Company stated that the allowance was never part of basic pay and, therefore, could not be included in calculating the worker's lump sum and pension benefits.
The matter was the subject of investigation by a Rights Commissioner who concluded that the Company's offer could not be completely ignored, even if it was withdrawn shortly after it was made. Nor, however, did he see the offer as being incapable of being withdrawn. In the circumstances he recommended that the Company should pay the worker £1,000 in full and final settlement of the dispute.
The Union appealed to recommendation to the Labour Court on the 24th of November, 1997, in accordance with Section 13(9) of the Industrial Relations Act, 1969. The Court heard the appeal, in Limerick, on the 25th of March, 1998.
UNION'S ARGUMENTS:
3. 1. The Company was in a position to examine all the implications associated with the inclusion of the supplement as part of the worker's salary, for pension purposes.
2. It is not accepted that the Company made a hasty decision in offering to have the supplement paid as part of basic pay. The discussions that took place were exhaustive and, in fact, it is the culture in the Company that there is considerable deliberation by management and, at times, consultation with Department officials before such decisions are made.
3. The Company letter to the worker was not "advising of intention" to include the £2,000 supplement as part of basic pay for pension purposes, subject to later approval by some higher power of the principles involved, as suggested by the Company in subsequent correspondence. Rather it was a clear offer and confirmation that the supplement "will be paid as part of basic pay". The worker was also advised in this letter of offer that the consolidation of pay would be processed that same month. In the circumstances this letter of offer should be honoured.
COMPANY'S ARGUMENTS:
4. 1. Under the Company's Superannuation Scheme regulations, retirement benefits are calculated as follows:-
(a) Lump sum benefits are based on retiring salary, i.e., annual
basic rate of remuneration;
(b) Pension is based on 'pensionable salary' which is retiring salary
less twice the annual equivalent of the Contributory Old Age
Pension payable to a single person.
The arrangements which pertained to the worker at his retirement in 1997 are fully in accordance with these conditions.
2. The special £2,000 per annum supplement which the worker received since 1990 never formed part of his basic pay and, as such, was never reckonable for pension purposes. There was no basis on which it could have been included in calculating his annul pension and lump sum benefits. This had been the consistent position of the Company throughout, apart from a brief period of a number of weeks when it confirmed a change. On consideration, in view of policy generally, the Company withdrew its original position within weeks and had never, in fact, implemented it. Whilst the Company argued that it should not penalised for a "mistake" which it
quickly reversed, it accepted the Rights Commissioner's recommendation that the worker's expectations for a few weeks merited some consideration. However, the Company sees no basis for conceding the claim or awarding significant compensation in respect of a brief period of departure from a long-held consistent position.
DECISION:
The Court, having considered all the information supplied, fully supports the Rights Commissioner's findings in relation to the offer made and the Company's handling of the issue subsequently.
However, the Court finds that the lump sum recommendation of £1,000 should be increased to £5,000.
The Rights Commissioner's recommendation should be amended accordingly.
The Court so decides.
Signed on behalf of the Labour Court
Finbarr Flood
27th April, 1998______________________
M.K./D.T.Deputy Chairman
NOTE
Enquiries concerning this Decision should be addressed to Michael Keegan, Court Secretary.