FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 2001 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : WYETH NUTRITIONALS - AND - AMICUS MSF DIVISION : Chairman: Mr Flood Employer Member: Mr Keogh Worker Member: Mr. Somers |
1. Pension entitlements.
BACKGROUND:
2. The claim by the Union is that its members employed in the laboratory be allowed to revert from the current Final Pay Pension Plan to the former Career Average Pension Plan. The Company has rejected the claim.
The Company changed from the Career Average Plan to the Final Pay Plan in 1987 as it believed that the high rate of inflation at the time could erode the purchasing power of the pensions benefit. A number of workers changed to the Final Pay Plan although some choose to remain in the Career Average Plan. All new employees after 1987 had to join the Final Pay Plan. Those who remained in the Career Average Plan had the choice to change to the Final Pay Plan in the future but workers could not revert from the Final Pay Plan to the Career Average Plan.
The Union believes that the Final Pay Plan has not been as beneficial as the Career Average Plan. It also claims that the workers were not properly informed in 1987 as to the impact of the changeover from one Plan to the other. The Company's case is that as it is impossible to predict the rate of inflation it is very difficult to say which is the better Plan. The main difference, according to the Company, is that the Final Pay Plan is capped at 40 years (originally 33 years). The Career Average Plan has no service cap, making it more beneficial for workers with potential service in excess of 40 years. Overall, the Company maintains, there is very little difference between the 2 Plans.
The dispute was referred to the Labour Relations Commission and a conciliation conference took place. As the parties did not reach agreement, the dispute was referred to the Labour Court on the 10th of December, 2002, in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 5th of March, 2003, in Limerick.
UNION'S ARGUMENTS:
3. 1. The workers who consented to change to the Final Pay Plan in 1987 were not adequately informed on the long-term benefits of the 2 Plans.
2. Workers who agreed to change Plans as per the Company's wishes were actually disadvantaged as those who stayed in the Career Average Plan had the option of staying in that Plan or changing to the Final Pay Plan in the future.
3. Benefits between members of the 2 Plans should be equalised.
4. If there is no real difference between the Plans, as the Company claims, then workers should have the option to join either Plan.
COMPANY'S ARGUMENTS:
4. 1. The Company introduced the Final Pay Plan in 1987 in good faith. The idea was to move to a Pension Plan which had the advantage of funding a guaranteed benefit irrespective of the rate of inflation in basic salary or any cut back in state benefits.
2. The Company is satisfied that employees were given adequate information in 1987 to enable them to make an informed choice on the 2 Plans. The fact that a total of 71 workers still remain in the Career Average Plan confirms this.
3. All workers, post 1987, joined the Final Pay Plan as part of their contracts of employment. There is no justification for retrospectively altering such contracts.
4. The Union's claim would allow workers to choose the most beneficial Plan at retirement time. Such a concession would present the Company with an unknown pension liability into the future.
RECOMMENDATION:
The Court is satisfied that the changes to the pension plan in 1987 by the Company were well intentioned and arose as a result of the climate of inflation that then existed.
It is clear that the relevant merits or benefits of the two options available - Career Average Plan or the Final Plan - were dependent on the economic conditions that would subsequently prevail.
The Court is satisfied, based on the information supplied, that the employees were given the information necessary to enable them to decide between the two schemes. The number of employees who changed and those who did not would seem to confirm this position.
The Court, therefore, does not recommend concession of the Union's claim in this case.
The Court also finds no basis for conceding the Union's claim in relation to those employed post January 1987, as their contracts clearly stated that they were in the Final Pay Plan.
Signed on behalf of the Labour Court
Finbarr Flood
11th March, 2003______________________
CON/MB.Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Ciaran O'Neill, Court Secretary.