FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : IRISH SUGAR PLC - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION AMALGAMATED ENGINEERING AND ELECTRICAL UNION TECHNICAL, ENGINEERING AND ELECTRICAL UNION DIVISION : Chairman: Mr Flood Employer Member: Mr Pierce Worker Member: Ms Ni Mhurchu |
1. Improvements in pension scheme.
BACKGROUND:
2. The dispute before the Court concerns the Unions' claim on behalf of approximately 400 workers employed by Irish Sugar and Erin Foods Limited. The workers concerned are members of Irish Sugar PLC Manual Workers Pension Scheme.
The scheme which was established in 1984 provides for up to 40/80 of pensionable pay on retirement less 1/40th of the single person's State pension (deducted for each year of service after 1984), plus lump-sum gratuity.
The Unions are seeking that the integration of the pension scheme with the state pension be discontinued and that the rate of clawback be changed to 1/45th. In relation to pensionable pay the Unions argue that for the period of the campaign season the calculations should be based on the 84 hours paid. Currently calculations are based on the 56 hours worked.
The second part of the claim concerns the conditions under which a worker who retires on the grounds of 'ill health' receives a pension based on actual service to date and a worker who retires due to 'disability' is given credit for actual service plus projected service to date of normal retirement. The Unions argue that there is no logic in this distinction and are seeking that projected service applies in both cases.
The dispute was the subject of a conciliation conference held under the auspices of the Labour Relations Commission. As agreement could not be reached the dispute was referred to the Labour Court on the 12th of June, 1998 under Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 15th of September, 1998.
UNION'S ARGUMENTS:
3. 1. When the scheme was introduced the impression was created that the integration process would be a temporary arrangement. The current fund has reached the stage where the last actuarial report allowed for a reduction in the employer's contribution of 12% to 9%. The staff contribution remains at 3%. Given the clear understanding in 1984 that the integration process was only a temporary measure to allow the fund to build sufficient resources it is now time to discontinue the integration approach.
2. Integration only applies from 1984 at the rate of 1/40th per year of service of the single person's state pension. Pensionable service before that date is not included. However, the amount of clawback is increasing and is becoming a growing sense of concern given that the scheme is 1/80th. Most schemes in the private sector are 1/60th with a level of integration while in the public sector the 1/80th approach with no integration is more common.
3. In most pension schemes once a member is deemed medically unfit for work then he/she qualifies for disability/ill health early retirement.
4. No mention of ill health is made within the rules of the scheme. Disabilities are described as "incapable of undertaking any form of employment by reasons of total and permanent disability of mind and body." However, in the same paragraph it goes on to cater for the contingency that the same person who is permanently disabled could make a recovery and thereby justify a review of his/her pension. In such circumstances how can any illness be deemed to be permanent. The only logical interpretation of this rule is that a scheme member is medically unfit for work.
5. In pension schemes generally, if a member is deemed medically unfit for work then he/she qualifies for ill health early retirement. The emphasis in this scheme is wrong and perceived by the members as discriminatory against those who are too ill to work but not totally incapacitated.
COMPANY'S ARGUMENTS:
4. 1. The claim for non-integration is not justified on the basis of any fair and reasonable comparison with the vast majority of schemes in the country and, in particularly, within indigenous manufacturing industry. The 24 other schemes in the Group are all integrated with the State schemes as are over 80% of schemes nationally. The cost implications of non-integration, both for the scheme in question and from knock-on claims, are unacceptable.
2. The Labour Court rejected a similar claim for non-integration by employee members of the Greencore Group Staff Pension Scheme in 1994.
3. The objective of the disability pension is to provide members who suffer permanent and total disability with a continuous stream of income, while, at the same time, giving credit for potential service up to normal retirement date. For this reason the pension is based on 60ths and no gratuity is payable.
4. In the case of ill health where an employee is not incapable, through permanent total disability, of performing some work but does not wish to continue working or the Company does not have, what could be considered, alternative lighter work, the employee can apply for an ill health pension and under Rule 10 the Company can recommend, and Trustees can grant, at their discretion, a pension and gratuity. This discretion has been exercised to the benefit of employees suffering ill health in all cases.
5. The claim regarding the disability/ill health pension arrangements would, if conceded, operate to the detriment of members and no case where the discretion has operated unfairly has been brought to the Company prior to this claim.
RECOMMENDATION:
The Court considered the written and oral submissions made by the parties.
The Court finds that the claim for improvement in the scheme is precluded under the Partnership 2000 agreement as the scheme currently in operation has not been shown to be substantially out of line with comparable employments.
In relation to the arguments on disability/ill health classification, the Court is of the view that the current flexible application of the scheme is in the best interest of the employees. Individual cases of dissatisfaction can be progressed through the procedures for adjudication, if there is no agreement.
Signed on behalf of the Labour Court
Finbarr Flood
8th October, 1998______________________
F.B./D.T.Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Fran Brennan, Court Secretary.