FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1); INDUSTRIAL RELATIONS ACT; 1990 PARTIES : IRISH ALE BREWERIES - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION AMALGAMATED TRANSPORT AND GENERAL WORKERS' UNION DIVISION : Chairman: Mr Duffy Employer Member: Mr McHenry Worker Member: Ms Ni Mhurchu |
1. Pension scheme improvements.
BACKGROUND:
2. The Union's claim is on behalf of 200 workers in the Company, which is part of the Guinness Ireland Group (GIG). The claim covers 5 issues as follows:
(1) Pensionable Earnings
At present, pensionable pay in the Company is reckoned as basic pay. The Union's claim is that 80% of actual earnings (including rostered overtime etc.) should be regarded as pensionable pay.
(2) & (3) Improved Pension Factor from 1/60th to 1/54th, plus Retirement Age
The 2 issues are linked. The Unions believes that the retirement age should be reduced from 65 years to 60. Because of the potential loss of 5 years' service, the accrual rate should change from 1/60th to 1/54th.
(4) Integration of State Pension
The Company at present integrates the State Pension by reducing pensionable pay by 1.5 times social welfare at the single rate. The Unions want this changed to 1/40th of a single person's social welfare per year of service.
(5) Death in Service Benefit
The Unions are seeking an increase in the death in service benefit from 2 years' pensionable pay to 4 times annual earnings.
The dispute was referred to the Labour Relations Commission and a conciliation conference took place on the 8th of February, 1999. As the parties did not reach agreement, the dispute was referred to the Labour Court on the 22nd of March, 1999, in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 4th of May, 1999.
UNIONS' ARGUMENTS:
1. Pensionable Earnings
The present scheme of 2/3 of basic pay being included for pension purposes is actually closer to one half or one third of actual earnings. The GIG scheme includes 80% of actual earnings, and the Company scheme should equal this.
2. & 3. Improved Pension Scheme from 1/60th to 1/54th, plus Retirement Age
Because of constant rationalisation, most people now retire before age 65. This process will continue into the future as the job is both mentally and physically very stressful. If workers are not to lose out on 5 years' pensionable service, they should either be given credit for their remaining years beyond 60, or the pension factor should be changed from 1/60th to 1/54th.
4. Integration of State Pension
The 1.5 x Social Welfare integration is a huge penalty on the eventual pension drawn from the occupational scheme. Every increase in the State pension results in the actual occupational pension being reduced. 1/40th of a single person's social welfare per year of service would be some improvement on the current scheme.
5. Death in Service Benefit
It is vitally important that workers are covered satisfactorily in terms of their spouse and children. One way of doing that would be to improve the death in service benefit from 2 x pensionable earnings to 4 x annual earnings.
COMPANY'S ARGUMENTS:
At the conciliation conference, the Company offered to negotiate pension changes under its current change programme (K2). The Unions declined the offer. GIG operates one pension for all personnel, and is satisfied that its scheme is not out of line with comparable employments.
Since the 1st of January, 1997, all new employees make a contribution of 5% of pensionable pay to the GIG scheme. Of the workers involved in the claim, 140 are non-contributory and 61 are contributory. The cost to the Company would be £69 million in back funding and £4.54 million per year.
1. Pensionable Pay
In the GIG Dublin site, employees work on annual time contracts (ATCs). Total income is calculated as basic pay and a work pattern allowance (WPA). A large portion of the WPAs qualify for pension purposes. Under K2, the Company proposes to introduce ATCs with an element of pensionable WPAs to the provincial breweries, including the workers in the current claim. The Company believes that this part of the claim is premature and that the Union should wait until K2 is completed.
2. & 3. Improved Pension Scheme from 1/60th to 1/54th, plus Retirement Age
This element of the claim is not the norm in Irish industry. A recent survey show that the retirement age in 83% of Irish schemes is 65 years. Reducing the retirement age and increasing the accrued rate to 1/54th would result in a huge cost to the Company.
4. Integration of State Pension
Integration of the State pension is the norm and occurs in 74% of Irish companies. To remove the integration would cost the Company £31 million in back funding.
5. Death in Service Benefit
The overall level of benefits paid is fair and equitable. The GIG pension scheme also provides for a spouse pension scheme of 50% of the employees' expected pension at normal retirement age. There are also benefits for dependent children.
RECOMMENDATION:
The Court is obliged to consider the admissibility of the present claim, having regard to the provisions of clauses 4 and 6 of the Agreement on pay and conditions of employment between the Irish Congress of Trade Unions and Employer Organisations associated with Partnership 2000.
Clause 4 only permits the processing of claims for improvements in pension schemes where they are substantially out of line with appropriate standards in comparable employments. Having reviewed the submissions made by the parties and the other information provided, the Court is not satisfied that the pension scheme which is the subject of the present claim comes within the terms of that Clause. In these circumstances, the claim is precluded by Clause 6 of the Agreement, and the Court could not recommend its concession.
The Court notes the Company's proposal that, in the context of re-structuring, and the possible introduction of an annualised hours agreement, the definition of pensionable pay could be brought into line with that applicable in the case of an associated company. The Court recommends that this approach be pursued further between the parties.
Signed on behalf of the Labour Court
Kevin Duffy
23rd June, 1999.______________________
CON/BCDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Ciaran O'Neill, Court Secretary.