FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : L3 COMMUNICATIONS/ESSCO COLLINS LIMITED (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Ms Jenkinson Employer Member: Mr Doherty Worker Member: Mr Nash |
1. Pension Scheme
BACKGROUND:
2. The Company is a subsidiary of a large multi national US corporation which is based in Kilkishen, Co. Clare. It was established 30 years ago and currently has 30 Employees producing communication systems, microwave components, avionics and ocean systems, space and wireless products. The Union are seeking an improvement in the Company's contribution into the Defined Contribution Pension Scheme, while the Company is happy with the current arrangement as they say it is already favourable with comparable company Pension Schemes in the region.
The dispute 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 5th September, 2008 in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 4th February, 2009.
UNION'S ARGUMENTS:
3. 1. The current arrangement is substantially out of line with other schemes in comparable companies that have a defined benefit pension in place for their employees.
2. The Union recognises that the Company has moved on this question substantially over the past number of years since the claim was first tabled, but still needs to do more in order that the Workers are adequately provided for in their retirement.
3. The Union is aware of the current difficulties facing pension funding providers and as many of the workforce are reaching retirement age there is no time to delay in increasing both the percentage and ratio of both Employer and Employees contributions.
COMPANY'S ARGUMENTS:
4. 1. The Company rejects this claim, at a time when its experiencing a major downturn in business due to competition from low cost countries like China, the Middle East and the U.S.A. whose Dollar devaluation has also impacted negatively on the order book.
2. The Company in order to survive must remain competitive as they are depending on the parent company in the U.S.A. to fill its order book in the face of aggressive global competition.
3. The terms of the Pension Scheme have been favourably increased over the past three years and the Company cannot now consider any further cost increasing improvements as they would be precluded under the terms of 'Towards 2016'.
RECOMMENDATION:
The matter before the Court concerns a claim by the Union for an improvement in the Company’s pension scheme. The Company provides a Defined Contribution Scheme with 3% employer contribution and 3% employee contribution. The employer increased the contribution rate to 4% with effect from 1st January 2006 and 5% with effect from 1st January 2007.
The Union sought further increases in the employer contribution and sought a 2:1 contribution ratio.
Having considered the position of both sides, the Court recognises that the employer has already made improvements in the level of contributions to the pension scheme. However, the Court recommends that where an employee, on an individual basis, wishes to increase their own level of pension contribution, then the Company should match it on a percentage basis, up to a maximum employer contribution of 7%, i.e.
-if the employee opts to pay 4% then the employer contribution should be increased to 6%,
-if the employee opts to pay 5% then the employer contribution should be increased to 7%.
The Court so recommends.
Signed on behalf of the Labour Court
Caroline Jenkinson
2nd March, 2009______________________
JFDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to John Foley, Court Secretary.