FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 2001 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : GALILEO IRELAND LIMITED - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Ms Jenkinson Employer Member: Mr Carberry Worker Member: Mr O'Neill |
1. 1. Non members of the Irish Airlines Pension Scheme to have unrestricted access to a 'Mirror Image' Defined Benefit Scheme that the Company proposes to create.
2. Retention of travel concessions for members of staff of Galileo Ireland after the Company was taken over in September, 2002.
BACKGROUND:
2. Timas Limited, trading as Galileo Ireland Limited, is an IT Solutions provider for the global travel market. The Company provides electronic distribution service through its computerised reservation systems. In September 2002, Galileo International acquired the Company from Aer Lingus. The Company employs 52 staff, 30 are members of the Irish Airlines Pension Scheme (IAS), 13 of whom are members of the Union.
The Company require the employees to join a defined contribution scheme similar to that in its sister company, RCI International, from 31st March 2003.
The staff also enjoy limited travel concessions with Aer Lingus which the Company propose to terminate 2 years after the acquisition date.
The Union rejected the proposals. The dispute was the subject of conciliation conferences under the auspices of the Labour Relations Commission. As agreement was not reached, the dispute was referred to the Labour Courton the 6th of February, 2003 in accordance with Section 26(1) of the Industrial Relations Act,1990. A Labour Court hearing took place on the 5th of March, 2003.
UNION'S ARGUMENTS:
PENSION SCHEME:
3. 1. The Union is willing to accept the offer of the defined benefit "mirror" scheme but access must be available to non IAS members both now and in the future.
2. A "closed" scheme could result in a heavy financial burden as scheme members either retire or leave. The inclusion of the non IAS employees and future employees will maintain the viability of the scheme and provide an affordable contribution for all parties.
3. The Company insistence on refusing access to non IAS and future staff is designed to make the "mirror" defined benefit scheme unattractive and force staff into the RCI alternative benefit scheme.
TRAVEL:
1. The travel concession is a valuable condition of employment which benefits members and families.
2. Since there is no change of employer there is no justification for the removal of this condition of employment.
COMPANY'S ARGUMENTS:
PENSION SCHEME:
4. 1. The Company is not willing to set up a "mirror" defined benefit scheme as it only relates to IAS members who are losing the benefit of their current defined benefit scheme and the majority of these members want to take up the offer of compensation and join the RCI plan.
2. The RCI plan provides an appropriate level of benefit with the advantage to workers of a considerably lower level of contribution on their part.
3. Following a comprehensive investigation by the Company Actuary the Company concluded that the establishment of such a scheme would not be cost effective.
4. When combined with the offer of compensation for IAS members the RCI plan provides a more secure benefit. There is a good likelihood that it will deliver a higher level of benefit than would be provided by the "mirror" defined benefit scheme.
TRAVEL:
1. The travel concession was not a term or condition of employment. The concession was granted by Aer Lingus and as such was outside the direct control of the Company.
2. In circumstances where Aer Lingus has discontinued this concession the Company is also unable to continue with the concession.
RECOMMENDATION:
Access to Pension Scheme
Having considered the submissions on both sides the Court recommends that those employees who are party to this claim who express a wish to become members of the "mirror" defined benefit scheme (as outlined in Lane Clark and Peacock letter dated 20th December 2002 Appendix 6 of the Union submission) should be granted access to the scheme. In all the circumstances of this case, the Court does not support the claim for access to the scheme for future employees.
The Court has examined the detail of the Company's offer to introduce a defined benefit scheme in line with the IASS scheme compared to the RCI defined contribution scheme plus enhanced compensation. The Court is of the view that the former scheme is not in keeping with a normal defined benefit scheme as the scheme involves equal contributions from both the member and the company. Therefore, the liabilities for members of the scheme going forward are not comparable to a normal defined benefit scheme. The Company's actuaries pointed out to the Court the possible positive and negative aspects associated with the "mirror" schemeviz a vizthe defined contribution scheme:-
"mirror" scheme option
- no guarantee of increases in pension benefit for pensioners,
- possibility of variation in contribution costs and in pension benefits
- company to carry the expenses of the scheme
- lump sum death in service of 1x basic salary
defined contribution scheme option
- uplift of transfer value to allow for future salary increases,
- compensation payment to take account of possible future service (whether or not the employee remains with the company until retirement)
- no guarantee of pension benefits,
- increased employer contribution to 7%
- reduced employee contribution with an option to avail of AVC's,
- company to carry the expenses of the scheme,
- lump sum death in service of 4x basic salary.
The Court recommends that those employees who have not yet signed an option should be afforded a further opportunity to have professional pension advice and expertise on the details of the options. The Court recommends that the parties should ensure that all claimants have had an opportunity to exercise their options within a period of three weeks.
Travel Concession
The Court has considered the Union's claim for the continuation of the Aer Lingus flight benefit travel concession. The Court recommends that the Company's offer to continue the benefit for a period of two years should be amended to:-
- continuation of the Aer Lingus flight benefit travel concession for two years
or - acceptance of a lump sum to the equivalent of two years the value of the benefit
Signed on behalf of the Labour Court
Caroline Jenkinson
21st March, 2003______________________
CMCM/JBDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Carmel McManus, Court Secretary.