FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1); INDUSTRIAL RELATIONS ACT; 1990 PARTIES : COCA COLA BOTTLERS (IRELAND) LIMITED (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Ms Jenkinson Employer Member: Mr Keogh Worker Member: Mr O'Neill |
1. Improvements in pension/life assurance/income continuance scheme.
BACKGROUND:
2. The Company is engaged in the bottling and distribution of soft drinks. It has a nationwide distribution service and its main production site is based in Dublin. It employs approximately 500 full-time workers throughout its distribution, sales and administration operations.
The dispute concerns a claim for improvements in pension scheme provisions on behalf of about 250 workers employed in Dublin (200), Cork (38) and Galway (13). For historical reasons there are a number of different pension schemes in operation at present in the Company. The majority of the workforce are members of a scheme which provides for a pension of 1/40th of pensionable salary at age 65 (maximum of 20 years) less the single State pension (pensionable salary being defined as basic pay plus any fixed level of bonus), death-in-service of 4 times annual basic salary and income continuance of 50% of pensionable salary for long-term disability. The annual cost of the scheme, £266,000, has been met by the Company. Following the Union claim for improvements in the scheme, the dispute was the subject of two conciliation conferences, under the auspices of the Labour Relations Commission, arising from which a set of proposals was prepared covering 8 areas in dispute, as follows:-
- Pensionable pay: To equal basic rate + average weekly bonus, to a maximum of £118 per week, calculated on the basis of a normal working week exclusive of overtime elements but including earned bonus, flexibility bonus and attendance bonus. The maximum of £118 to be adjusted in line with percentage basic wage increases;
Income continuance: To be calculated at 50% of the new pensionable pay calculation;
Life cover: To be calculated at 4 times the new pensionable pay calculation;
Integration: Clarification will be sought by the Company, from the pension company involved, on the payment of a pension contribution on the element of a single person's Social Welfare pension deduction and will be clarified at local level subsequently;
Former
temporary staff: The Company to look favourably on the inclusion of credit for back service, provided there are no additional costs to the Company. Precise details to be finalised with the Union;
Contribution rates: To be 8.9% for the Company and 4% for the employees;
Review process: The new scheme cannot be reviewed or re-negotiated until the expiry date of P2000, i.e., July 2000. In the event of a review, such a process to include a review of contribution levels of both parties. There is no commitment to improve the scheme in the future.
Maximum
participation level: Both parties to agree to meet locally to decide the minimum participation level required to operate the new scheme.
The Company' position is that there are increased costs associated with the non-payment by the employees of the 4% o4 the Social Welfare element and if the Company was to agree to its non-payment then the contribution on the remaining salary could have to increase to 5% to allow the scheme to be properly funded. This was unacceptable to the Union. The dispute was referred to the Labour Court, on the 6th of January, 1999, in accordance with Section 26 (1) of the Industrial Relations Act, 1990. The Court carried out its investigation on the 29th of April, 1999, the earliest date convenient to both parties.
UNION'S ARGUMENTS:
1. The definition of pensionable earnings should include shift pay, the normal minimum bonus of £150 for Operative and Despatch Staff or the average commission of £350 for the Distribution Staff.
2. Regarding Social Welfare integration, the Union is seeking the off-setting of a proportion of the single person's Social Welfare pension, at 1/45th per year of service, to a maximum of 45/45ths. A person with full pensionable service with the Company would lose the full Social Welfare, a person with 1/2 pensionable service, would only lose 1/2 their single person's Social Welfare element.
3. The increase sought on Life cover from 4 times basic pay to 4 times annual earnings is reasonable in the circumstances.
4. Regarding income continuance, the 50% cover as at present should be increased to 66 and 2/3rds% without any offset against Social Welfare payments.
5. The current accrual rate of 1/40th should be maintained under the proposed new scheme for service in excess of 20 years, with the maximum service increased from 20 years to 26 and 2/3rds years, thereby yielding a 2/3rds pension.
6. The individual entitlement to join the scheme should be within one year of joining the Company and being permanent, having attained the age of 18.
7. The retirement age should be gradually reduced from 65 to 60. In the interim, individuals be allowed to retire at 60 or as soon thereafter as appropriate without any discounting of service clocked up.
COMPANY'S ARGUMENTS:
1. The Company has sought to improve the benefits available to employees with improvements in the Company pension scheme. It has offered further improvements to the scheme following representations from the Union.
2. In negotiations at both local level and conciliation in July, 1998, it seemed that progress could be made, as the Union was willing to reduce its additional claims and the Company was willing to concede on a number of issues.
3. The Company's position remains that, provided that the proposal of July, 1998, forms the resolution of the issue, it is prepared to consider a further move on the integration issue, conditional on the employee contribution level being adjusted to offset this to some extent.
4. In relation to the contribution to the State element of pensionable salary, the net cost to individual employees of their contribution is relatively small (weekly £1.86 net at the higher tax level). Given the enhanced value of the additional benefits available in return, the Company believes that the proposed changes are very good value for the employees.
5. The Company intends to continue to operate a defined benefit scheme and, therefore, assume responsibility for underwriting the scheme, any additional costs going forward while the employees' contribution level will remain fixed.
RECOMMENDATION:
The Court considered the written and verbal submission of the parties. The Court is of the view that a lot of confusion exists as to the application of the new pension scheme offered to the workers. Following conciliation, a proposal on a new pension scheme was put forward in July, 1998. While this was accepted by the Company, the Union rejected it. The Court recommends that this proposal should be accepted by both sides, subject to the following amendments:
Employees age 21 and over should be eligible to join the scheme subject to an agreed service qualification;
- Income continuance should be calculated as 66 and 2/3rds% of pensionable salary less single person social welfare benefit;
- Members' contribution should be 4% of pensionable pay;
The Court recommends that, before balloting on this recommendation, the following steps should be carried out:-
- The new scheme should be professionally drafted in the form of a guide for employees and every effort should be made to explaincomprehensively,in everyday language, all details of the proposed scheme;
- Details of assimilation onto the new scheme should be given to all employees who opt to join the new scheme and who were already covered by the old scheme. This exercise should be carried out professionally.
If there are any outstanding issues following these steps they may be referred back to the Court for adjudication.
Signed on behalf of the Labour Court
Caroline Jenkinson
9th June, 1999.______________________
MK/BC
Deputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Michael Keegan, Court Secretary.