FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : IFI (ARKLOW) - AND - MANUFACTURING, SCIENCE, FINANCE DIVISION : Chairman: Mr Flood Employer Member: Mr Pierce Worker Member: Mr Rorke |
1. Recognition of overtime payment for pension purposes.
BACKGROUND:
2. The dispute relates to the Union's claim for the inclusion of a weekend shift premium in salary for pension purposes. The claim concerns five workers who are employed by the Company at it's Arklow plant as instrument technicians. They are employed as day workers and also provide a cover system for the factory which involves working nights and weekends.
The claim to have premium payments for working nights, on call and weekends included in the calculation of salary for pension purposes was investigated by the Labour Court in 1995. In LCR 14710 the Court did not recommend concession of the Unions claim as it contravened the Programme for Competitiveness and Work .It did recommend that the parties try to find agreement by the end of the PCW. No agreement was reached. The dispute was referred back to the Court in 1997 and at that hearing the Company made an offer that cover and on-call payments made for Monday to Friday night work were shift premia and were therefore, eligible for inclusion for pensionable pay. The Court in LCR 15752 recommended that "the Union accept the Company's offer and that the parties commence negotiations immediately on the introduction of annualised hours to include the resolution of the outstanding issue of reckoning income for pension purposes". Subsequently, negotiations took place on annualised hours and an agreement was reached in December, 1998. The Union claimed that the agreement on annualised hours did not resolve the pensions issue. The dispute was referred to the Labour Relations Commission. A conciliation conference was held on the 20th of May, 1999. No agreement was reached. The dispute was referred to the Labour Court by the Labour Relations Commission on the 29th of November, 1999. A Court hearing was held on the 19th of January, 2000.
UNION'S ARGUMENTS:
3. 1. The Union rejects the Company's argument that weekend working is overtime. The weekend working was always fixed, regular, non-variable and rostered. It was not optional - it was a requirement for the instrument technicians to work a fixed number of weekend hours for 10.5 weeks per annum each year. At one stage when workers indicated they would not work weekends, they were threatened with dismissal.
2. The pension scheme definition of annual salary for pension purposes excludes variable emoluments and overtime. The weekend and shift premium is not variable or overtime and cannot be excluded on that basis.
3. The Company accepts that cover for Monday to Friday night work is eligible for inclusion for pensionable pay, having previously excluded these payments on the same grounds as weekend payments. The Company also includes Sunday night working a.m. for pension purposes but refuses to include other weekend working. This is inconsistent and untenable.
4. The failure to include the weekend shift premium for pension purposes means that the figure for pensionable salary used to calculate pension entitlements is approximately £3,000 less than it would otherwise be (1998 figures).
5. The annualised hours agreement has enhanced salary for pension purposes from January, 1998, as it only applies in respect of service and pension entitlements which accrue from 1st of January, 1998. The Company argues that the higher pension entitlements which will result will compensate for the refusal to include the weekend shift premium in pensionable salary up to 1998. However, the Company also acknowledges that it will take eleven years for annualised hours to fully compensate for the loss. Many if not all the claimants will not be working in the Company in eleven years' time. One will be leaving in two years' time and the loss in future pension income will therefore be permanent. Also in the event of the death of a worker within the eleven year period, the pension benefits to his family/estate will be less than it would be if the weekend premium is included.
6. The Union rejects the Company offer that the position may be reviewed in the light of possible future surpluses arising in the pension fund. Such surpluses may not arise or may not be sufficient. There will be no obligation on the pension committee to address the problem, even if it is deemed that a sufficient surplus has arisen.
COMPANY'S ARGUMENTS:
4. 1. The Company accepted and implemented LCR 15752 in relation to the introduction of annual hours working at the plant. The Company believes that because the technicians' salary has been significantly improved, this in turn, satisfactorily addresses the aspiration for improved pension.
2. In 1994, when the group initiated the claim, the Company's pension provisions would only meet 49% of their expectation. Because the Company now recognises shift premium for pension purposes and also because" annual hours" is now in place, 88% of the group's expected pension benefits is now payable. To go beyond this, at this time, will fuel the expectations of other groups to gain recognition of what they perceive as rostered overtime to be included for pension purposes.
3. For all employees on annual hours, there is two tier funding of pension benefits. This is because the Company does not have the resources to fully backdate the annual hours' salaries. The Company now projects that the current annual hours' salary and two tier funding of pension benefits will yield exactly what the group originally claimed in about 11 years. Therefore, four of the group will have their original pension benefit aspirations met, if not exceeded, by the time they are scheduled to retire. Two of the group will not ,purely because their remaining service is too short.
4. Annual hours working was agreed between MSF and the Company in December, 1998. From the instrument technicians' point of view, it was an excellent deal in that 4 of the group now have a better salary than they had income in the year before annual hours working. In addition, their work pattern is now less onerous than it was before. The Company too is satisfied with the outcome in that the system is working exceptionally well from a factory operation perspective.
5. The Company has recognised the concerns of all categories of employees on annual hours and has indicated that it will not oppose a proposal to apply any surplus in the pension scheme to back fund part of annual hours salaries provided it meets with the pension scheme trustee approval. The Company has consistently stated that it is not in a position to fund from its own resources the back funding of annual hours salaries. The Company's last estimate for this was £10 million.
6. The Company has also stated that it will not take advantage of the surplus on the pension fund beyond maintaining the Company's standard rate of contribution.
7. The Company has agreed to the freezing of the pre-annual hours salary used in pension benefit calculations as being based on 5 of the group working the system. Currently, 6 work the night cover system, so the onus to work nights and weekends is less significant now than at the start of 1998. However, this in no way, dilutes the recognition of part-time shift entitlements for pension purposes.
8. The Company is experiencing difficult trading conditions. In common with the whole industry, it reported a financial loss for the year 1997/98, and will report a poor performance in its last financial year. It is not in a position to make any further concessions on this claim. An ongoing mechanism exists by which the capability of the pension fund to be back funded for annual hours can be reviewed. This is the most constructive means to match the workers' expectations.
RECOMMENDATION:
The Court's recommendation in 1998 (LCR 15752) was clearly made in the belief that the outstanding issue "reckoning income for pensionable purposes" could be dealt with as part of an agreement on annualised hours. While it is clear from the information before the Court that the annualised hours agreement has improved the potential pension of the claimants, it is acknowledged by both sides that there was no agreement on completion of the annualised hour negotiations that the issue before the Court in 1998 had satisfactorily been dealt with.
It was accepted by the Company that when they negotiated the annualised hours agreement, the Union made it clear they intended taking their claim, for weekend shift hours working to be reckonable for pensionable purposes, back to the Court.
Given this situation, the Court is faced with a claim that it has already indicated had merit, coming back for consideration, the parties having failed to address the issues as recommended in 1998.
In all the circumstances of this case, the Court recommends concession of the Union's claim, that the particular weekend working hours being fixed, regular, non-variable, rostered and weekly, should be included for pensionable calculations.
Signed on behalf of the Labour Court
Finbarr Flood
3rd February, 2000.______________________
TOD/BCChairman
NOTE
Enquiries concerning this Recommendation should be addressed to Tom O'Dea, Court Secretary.