FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 2004 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : AER LINGUS - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION IRISH MUNICIPAL, PUBLIC AND CIVIL TRADE UNION DIVISION : Chairman: Ms Jenkinson Employer Member: Mr Doherty Worker Member: Mr Nash |
1. Revision of Pension Scheme.
BACKGROUND:
2. Aer Lingus operates a Pension Scheme for its staff in conjunction with Aer Rianta. In 2000/2001 discussions were ongoing with the Union on the introduction of a separate new Pension Scheme for Aer Lingus. Following 9/11/2001, discussions on the Pension Scheme in the context of preparations for an IPO came to a halt and started on the Company Survival Plan (SP). The Survival Plan took precedence and pension discussions were put on the back burner.
In 2002 the Unions revised the Pension discussions. An issue arose as to whether the current scheme is a defined benefit scheme or not. This issue was resolved by the Irish Pensions Board. The Union have again raised the question of a new or revised scheme. The matter could not be resolved at local level and was the subject of a conciliation conference under the auspices of the Labour Relations Commission. As agreement was not reached, the dispute was referred to the Labour Court on the 30th July, 2004 in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 2nd February, 2005.
UNION'S ARGUMENTS:
3.1 In 2000/2001 the Company and the Union were engaged in negotiations on the terms of a new pension scheme "subject to the enactment of legislation". A provision is contained in the Aer Lingus Act, 2004 for a pension scheme.
2. Improvements sought by the Trade Unions in 2000/2001 were well founded and the Company acknowledge that a series of improvements were required to bring the new scheme into line with best practices. It was implicit in this approach that it was acknowledged that the benefits of the existing multi-employer scheme are out of line with best practice.
3. These principles continue to apply in 2004. The Company is extremely profitable having a projected cumulative profit in the region of €250m since the crisis year of 2001.
4. The union are seeking a recommendation that:
- the Company re-engages in the negotiations abandoned in 2001;
- that the negotiations take place in the context of the authorisation given to the Company in the Aer Lingus Act, 2004 to establish a new scheme.
- that the starting point for the negotiations be the position the parties got to in May 2001.
COMPANY'S ARGUMENTS:
4.1The Irish Airlines General Employees Pension Scheme is not substantially out of line with appropriate standards in comparable employments. In fact as a Defined Benefit Scheme, the benefits paid to its members exceed those generally available to staff in comparable employments i.e. in the Irish economy and in competitor airlines.
2. The Company must reduce its costs in order to survive in an intensely competitive environment.
3. The Union's claim represents an increase to the Company's operating costs and this is not compatible with the Company's requirement to reduce costs in order to survive.
4. This claim is cost increasing and as such is not precluded under the terms of Sustaining Progress.
RECOMMENDATION:
The dispute before the Court concerns the Union's claim for a replacement of the existing pension scheme and the re-engagement of negotiations on this issue, which had taken place in the context of preparation for an IPO in the period pre September, 11th 2001.
The Company oppose the claim on the basis that it is precluded under the terms of Sustaining Progres, coupled with the current entitely different economic circumstances prevailing in the Company, in the aviation sector worldwide and in the pension business.
The Court notes that a new piece of legislation enacted in 2004 provides for the holding, transfer, disposal, exchange and the sale of share in Aer Lingus Group Public Limited Company by the Minister for Finance and provides for matters relating to superannuation schemes of that Company and its subsidiaries.
The Court notes Section 9 (i) of the Aer Lingus Act, 2004, which states:-
"Aer lingus may establish one or more than one scheme for the granting of superannuation benefits to or in respect of such employees or former employees of Aer Lingus as it thinks fit (in this section referred to as a "New Scheme") and any such scheme shall be carried out by Aer Lingus in acordance with its terms".
While acklowledging that an IPO is not envisaged at the present time, and that the current environment differs greatly than that which prevailed in 2001, the Court recommends that as the negotiations were abandoned in 2001, that the parties should now re-engage in discussions on the Company's pension scheme with a view to reviewing current pension benefits within the Company.
Signed on behalf of the Labour Court
Caroline Jenkinson
14th February, 2005______________________
JB/Deputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Jackie Byrne, Court Secretary.