FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 2004 SECTION 13(9), INDUSTRIAL RELATIONS ACT, 1969 PARTIES : DIAGEO KILKENNY - AND - A WORKER (REPRESENTED BY TECHNICAL ENGINEERING & ELECTRICAL UNION) DIVISION : Chairman: Ms Jenkinson Employer Member: Mr Murphy Worker Member: Mr Nash |
1. Appeal Of Rights Commissioner's Recommendation R-042120-Ir-06/Di
BACKGROUND:
2. The claim by the Union on behalf of the Worker is to have his apprenticeship years and temporary years of service included for pension purposes, consistent with agreements and the practice in the employment over many years. The total time of the period concerned is 9 years and 4 months. The Worker served his apprenticeship with the Company from September 1993 to December 1998. Following completion of the apprenticeship he secured employment elsewhere for two years. In July 2000 the Worker was again employed by the Company on a fixed -term contract, which was renewed on two occasions before he was made permanent in November 2004. The Worker has been a member of the Company's contributory Defined Benefit Pension Scheme since November 2004. In September 2005 the Worker sought to have his apprenticeship years and temporary service included for pension purposes. The Company's position is that the Worker was not under a contract of employment with the Company until 2000. The Company offered a buy back of 18 months as a final offer.
The matter was referred to a Rights Commissioner for investigation and Recommendation. On the 21st November, 2006 the Rights Commissioner issued his recommendation as follows:
"It is at the Company's discretion that an employee is afforded the opportunity to buy back previous service for pension entitlement purposes. While I believe the Company should have communicated to representatives the change in how it would view applications to buy back service in the future, I do not believe that deviation from good industrial practice could result in a recommendation that alters the respondents right to exercise its discretion. I therefore find against the claimants complaint and recommend that he reconsider the 18 months buy back previously offered by the respondent."
On the 16th April, 2007 the Union appealed the Rights Commissioner's Recommendation to the Labour Court in accordance with Section 13(9) of the Industrial Relations Act, 1969. A Labour Court hearing took place on the 6th November, 2007.
UNION'S ARGUMENTS:
3. 1 The Union believe that the Rights Commissioner erred in his Recommendation for a number of reasons. The Worker has a contractual right to pension buy back under the terms of the Company and Union Collective Agreement. It is not at the Company's discretion for employees to buy back service.
2 It was confirmed to the Union by the Company HR Manager that the Company acknowledged that the 1977 Collective Agreement remains extant. The terms of the Pension Scheme form part of this Agreement and cannot be altered unilaterally. The change to the pension scheme is not merely a communication matter.
3 The Worker is entitled to be treated no less favourably than his colleagues. The Worker should have his 9 years and 4 months pension entitlement restored on the funding agreement that has applied in accordance with both agreement and custom and practice.
COMPANY'S ARGUMENTS:
4. 1 The opportunity to buy back years towards pension is not a term or condition of employment. The Company has absolute discretion in this matter. There is no obligation on the Company to offer this benefit to its employees either within the confines of legislative requirements or otherwise.
2 The Company adheres to strict guidelines on the buy-back of temporary years service to ensure consistent and fair treatment of employees. Any interference with these guidelines would mean substantial increases in costs to the Company and would have the potential of reversing decisions that have been fairly applied and accepted by the individuals in question.
3 Changes in recent years in terms of the administration, funding and costs associated with pensions are substantial. The fact that the Company structures and processes have also substantially changed for the sake of consistency and due process means that the Company has a much greater obligation and awareness to ensure that it makes fair and equitable decisions than previous years.
DECISION:
The claim before the Court concerns the Union’s appeal of a Rights Commissioner’s recommendation, which found against the worker‘s claim to recognise his Apprenticeship years and temporary service for pension purposes.
The Union was of the view that the worker’s claim to buy back service was consistent with agreements and practice in the Company for many years. Furthermore, it quotes from the K2 Rationalisation Agreement 2000, which provided for temporary and casual service to be bought back in order to augment pension benefits under the Scheme. An extract from a presentation given by Management on the Agreement read:
- “How to increase your Pensionable Service
- Service prior to being made permanent:
Casual service prior to being made permanent can be added to your actual and therefore will increase your pensionable service.”
- Service prior to being made permanent:
The Company referred the Court to Clause 16 of the pension scheme, which provides for the buy back of pre-membership years of service. This provision is subject to the Board of the Company using its discretion and to the payment of additional contributions.
Clause 16:
Augmentation of Benefits
Subject to the payment of such additional contributions if any as the Trustees on the advice of the Actuary shall require the Board may subject to the provisions of Clause 18A augment and /or extend any benefit payable under the Scheme and/or provide benefits for former employees not previously admitted to membership of the Scheme and/or for persons who would have derived a benefit from the Scheme by reason of their relationship to or their dependency on such former employees had such former employees been previously admitted to membership PROVIDED ALWAYS that any such augmentation or extension of the benefits of an individual to or in respect of whom a lump sum benefit has already been paid whether in commutation of pension or otherwise shall be in the form of non-commutable pension only.
The rules of the Scheme states that to be a member of the Scheme, an employee must have attained 18 years of age and be in permanent employment.
Management took the view that the discretionary element of the scheme allowed it to set its own rules on the issue of buy back and consequently in September 2004, it set down guidelines on the operation of that discretion in order to ensure fairness and consistency and to take account of the changing pensions market. Prior to the setting of the new guidelines the discretionary element was adopted in a more flexible manner and consequently craftsmen may have had their years of apprenticeship covered by the buy back provision, however, since September 2004, there are formal procedures for calculating the pre-membership service.
The Company pointed out that under the new guidelines, the worker was entitled to buy back 18 months notional service, within a time frame of three years. This offer was made to him in April 2006 and was rejected.
Management denied that the K2 Rationalisation Plan of 2000 and the Continuous Improvement Plan provided for buy back of temporary /casual service. It stated that the K2 Rationalisation Plan provided the option of early retirement terms to those who volunteered to leave the Company under the plan. This Plan offered employees up to 10 added years for pension purposes similar to the Plan 2000 agreement in the Dublin Brewery. It submitted that the option to buy back years of service in this case, cannot be viewed in the context of the K2 package but has to be considered within the context of the Company’s pension scheme, and thereby within the terms of the September 2004 guidelines. In any event the claimant herein was not in employment at this time. Management submitted that the detail quoted by the Union from the presentation made to employees in advance of the K2 Plan being finalised was to ensure that they had an understanding of the likely impact of volunteering for redundancy on their pension.
Management stated that the Continuous Improvement Plan, which was agreed in December 2004, provided voluntary terms for those workers who opted to depart the business and outlined pension options for those over 50 years and those under 50 years.
Neither agreement provided for the inclusion of temporary or casual service for pension purposes for “leavers” or “stayers”.
Having considered the submissions of both parties and the supplemental information sent to the Court by both sides, the Court is satisfied that the K2 Rationalisation Plan of 2000 nor the Continuous Improvement Plan provide an option to buy back temporary or casual service. The Court is satisfied that in the case of existing employees the only provision to buy back pre-membership service lies under the Augmentation Clause in the Company’ Pension Scheme and the new guidelines set in September 2004.
Therefore, the Court concurs with the Right’s Commissioner’s findings and recommendation and dismisses the worker’s appeal.
Accordingly, the Court decides that the Company offer to the worker of 7th April 2006 to buy back 18 months of notional service should be reinstated.
The Court so decides
Signed on behalf of the Labour Court
Caroline Jenkinson
17th December, 2007______________________
DNDeputy Chairman
NOTE
Enquiries concerning this Decision should be addressed to David P Noonan, Court Secretary.