FULL RECOMMENDATION
SECTION 81(4), PENSIONS ACTS, 1990 - 2004 PARTIES : PHILLIPS-MEDISIZE IRELAND LIMITED (FORMERLY MEDISIZE IRELAND LIMITED) (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - NOREEN GIBBONS (REPRESENTED BY SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION) DIVISION : Chairman: Ms Jenkinson Employer Member: Mr Murphy Worker Member: Mr Shanahan |
1. Appeal under the Pensions Acts 1990-2004.
BACKGROUND:
2. The Employer appealed the Equality Tribunal's Decision to the Labour Court in accordance with Section 81(4) of the Pensions Acts, 1990-2004 as amended on the 12th October, 2011. The Court heard the appeal on the 23rd March, 2012, the earliest date suitable to the parties.
DECISION:
This is an appeal by Medisize Ireland Limited against the Decision of the Equality Tribunal in relation to alleged discrimination against the Complainant on the grounds of marital status in terms of Section 66(2) (b) of the Pensions Acts 1990–2004 (the Acts).Ms Noreen Gibbons submitted acomplaintofdiscrimination alleging that her employer breached the provisions of Section70 ofthe Actsin relationto the occupational benefitshereceived underthe Company's Income Continuance Plan.
For ease of reference the parties are now given the same designation as they had at first instance. Hence Medisize Ireland Limited will be referred to as ‘the Respondent’ andMs Noreen Gibbonswill be referred to as ‘the Complainant’.
The Equality Officer held:
"The respondent diddiscriminate against the complainantonthemaritalstatus ground pursuant to Section66(1)(a) and 66(2)(b) and in terms of Section70ofthe Actsin
relation to rules of the Income Continuance Plan".
By virtue of section 22 of the Social Welfare (Miscellaneous Provisions) Act 2004, as amended by section 66 of the Employment Equality Act 2004, sections 79, 83 and 84 of the Employment Equality Act are incorporated into the Pensions Acts. In essence section 22 incorporates the provisions in relation to the making of a claim of discrimination under the Employment Equality Acts into the Pensions Acts.
Preliminary Issue
The Respondent’s Objection to the Court’s Jurisdiction
At the outset of the hearingTerry McNamara, IBEC representative on behalf of the Respondent,put forward a preliminary objection to the Court’s jurisdiction as he submitted thatthe complaint was not referred under the correct legislation. He submitted that in order for the Court to have jurisdiction to hear this case under the Acts, the benefits conferred by the Respondent's Income Continuance plan would need to be'occupational benefits'as defined by section 65(1) of the Act of 1990. Mr McNamara submitted that this was not the case, and stated that any claim under
Part VII of the Act of 1990 as amended must be rooted in the principle of equal treatment specified in sections 69 and 70(1) of the Act of 1990. These provide as follows:
- Section69
“Subjectto the provisionsofthis Part, every scheme shall comply with the principleofequal pension treatment.”
Section 70(1)
“Subject to this Part, the principle ofequal pension treatment is that there shall be no discrimination on any ofthe discriminatory grounds (including, subject to section 68(2),indirect discrimination) in respect of any rule of ascheme."
The following definitions are contained in section 65(1) of the Act of 1990.
- " 'Scheme'means an occupational benefit scheme;
'Occupational benefit scheme'means-
(a) [relates to self-employed persons]...
(b) in relation to employed persons, any occupational pension scheme
orarrangement which is comprised in oneormore instrumentsor
agreements and which provides,oris capableofproviding, occupational benefits in relation to employed persons in any description of employment within the State, but does not include-- (i) any insurance contract made byoron behalf of an employed
person to which the employer is notaparty,or
(ii) any scheme insofarasbenefits are financed by contributions
paid by the members onavoluntary basis;"...
which sections19and29 ofthe Employment Equality Act 1998
apply), in the formofpensions, payable in cashorin kind in respect
of—
(a) termination of service,
(b) retirement, old age or death,
(c) interruptions of service by reason of sickness or invalidity,
(d) accidents, injuries or diseases arising out of or in the course ofa - (i) any insurance contract made byoron behalf of an employed
- (e) unemployment, or
(f) expenses incurred in connection with children or other dependants,
and, in the case ofamember who is an employee, includes any other
benefit corresponding toabenefit provided by virtue of the Social Welfare Acts, the Maternity Protection Act1994or the Health Acts 1947 to 2001 which is payable to or in respect of the memberas aconsequence of his employment"
In that section, Remuneration is defined as follows:
- " 'Remuneration',in relation to an employee, does not include pension
rights but, subject to that, includes any consideration, whether in cash or in kind, which the employee receives, directly or indirectly, from the employer in respect of the employment".
Pension rights are defined as follows.
- " 'Pension rights'meansapension or any other benefits flowing from an occupational pension scheme".
Mr McNamara stated that the Income Continuance Scheme in issue in this complaint was not a pension or other benefit flowing from an occupational pension scheme. It was a payment made through the Respondent's payroll and flowed from an insurance policy, not a pension scheme. It was "remuneration" within the meaning of theEmployment Equality Act 1998.
Therefore, Mr McNamara contended that the principle of equal treatment contained in sections 69 and 70(1) of the Act of 1990 cannot apply and the Labour Court can have no jurisdiction to hear the instant complaint.
Mr McNamara told the Court that the Respondent's Income Continuance Plan is financed by an insurance policy taken out withIrish Lifeinsurance company. After a period of 6 months’ disablement, and subject to the outcome of an appropriate medical consultation confirming the disablement, a sum of money is paid out by the insurer to the Respondent. This sum is in turn paid by the Respondent to the employee concerned through the payroll and is subject to income tax, PRSI and other statutory deductions. This sum is "remuneration" within the meaning of section 2 of theEmployment Equality Act1998 and he maintained is not a"pension, payable in cash or in kind".
To substantiate his contention Mr McNamara referred to a review conducted by the Pensions Board into the position and regulation of Income Continuance Plans and the report which was issued in 2003 found as follows:-
- “These documents stated explicitly that the contract was between the
insurance company and the employer,rather than with each individual
employee. They also stated that any benefit would be payable to the
employer who would then pay the employee in accordance with the
contractual arrangement with the employee through the regular payroll
system.
The interaction between income continuance plans and associated pension plans described above has raised the query as to whether the regulation of income continuance plans should be within the remit of the Pensions Board or the DETE. We do not consider that it is appropriate that it should be within the remit of the Pensions Board ... Income continuance plans are established and administered by undertakings authorised under the EC (Life Assurance) Framework Regulations, 1994 (the "Framework Regulations'). They are insurance products. The competent authority for these products, under the Framework Regulations, is the DETE.”
Finally, on this point Mr McNamara submitted that the Labour Court, in deciding whether an income continuance plan comes within the definition of an "occupational benefits scheme" should have due regard for the opinion of the statutory body which is given the statutory responsibility to"monitor and supervise the operation of the Pensions Act"in relation to that issue.The Pensions Board has asserted that income continuance plans do not"come under its strict remit'and he contended that it follows that'occupational benefits'as defined by section 65(1) of the Act of 1990 excludes benefits deriving from an income continuance plan.
Union’s Response to Preliminary Objection
Ms Fidelma Carron, SIPTU, on behalf of the Complainant,responded to the preliminary objection. She stated that the complaint was correctly referred under Part VIIof the Acts,and thereforethe Court has jurisdiction to hear this case.Section 65 of the 1990 Act as amended by Section 22 of the Social Welfare (Miscellaneous Provisions) Act 2004 defines an occupational benefit scheme as:
- "any scheme orarrangement which is comprisedinone ormore instruments or agreements and which provides,oris capable ofproviding,occupationalbenefitsto employed orself-employed personsbutdoes not include-any insurance contractmade by oron behalf of anemployed person to which the employer isnotaparty, or (ii)any scheme inso faras benefitare financedby contributionspaidbythemembersona voluntary basis….”
occupational benefits. In addition, the Company is a party to the insurance contract and it is therefore an Occupational Benefit Scheme.
Ms Carronstated that OccupationalBenefits were defined in Section 65(1) of the 1990 Act as amended as:
- "occupationalbenefits" means any benefits, inthe form of pension or otherwise, payable in cash
or inkind in respect of-- (a) termination of service
(b) retirement, old age or death
(c)interruptions of service by reason of sickness or invalidity, "
- (a) termination of service
invalidity.
In response to the Respondent’s assertion regarding the opinionofthe Pensions Board
on income continuance plans, Ms Carron held that section 65 as amended by the Social Welfare (Miscellaneous Provisions) Act 2004 gives a clear definition of the meaning of Occupational Benefit Schemes and Occupational Benefits. She submitted that the 2003 Report predated the 2004 Act and any recommendations it made would have undoubtedly been considered when drafting the legislation. Since the recommendations were disregarded by the legislators it could not be regarded in any way as binding on the Court. She referred to a statement made Mr Paul Kenny, Pensions Ombudsman,
before the Joint Committee on Social and Family Affairs on Tuesday, 25th July, 2006 :-
- "Income continuance plans because they are called "occupationalbenefit schemes" arethe subject of Part7of the Pensions Act, whichdeals withdiscrimination -
originally only sex discrimination. By default, income continuance plans are regulated as far as discriminationisconcerned and are now subject to the nine grounds of discrimination in the new Part7of the Pensions Act introduced in 2004 by the Social Welfare (Miscellaneous Provisions) Act 2004. Therefore, one cannot discriminate on grounds of marital status, membership of the Traveller community, sexual orientation and the other grounds in terms of an income continuance plan."
BACKGROUND
The Respondent has aninsurance policy withIrish Lifewhich provides for an Income Continuancein the event of disablement. Income continuance benefit is calculated at:
- • 66 2/3% of salary at date of disablement;
• less Stateillness or disability benefit entitlement i.e. single rate for a
single person and married rate for a married person.
The Complainant’s case is that she was denied any benefit under the Plan as the Respondent calculated her social welfare benefit at the married person’s rate. While she is married she was not entitled to the adult dependent rate as her husband was working and consequently she suffered by the application of a notional deduction based on her marital status and not on her actual Social Welfare benefit.
On 4thMay 2008 the Complainant wrote to the Respondent indicating that she was dissatisfied with the benefits being allocated to her under the Respondent's disability plan.On 24thJune 2008 the General Manager met with the Complainant’s brother to discuss the issue. Confirmation ofhow income continuance is calculated was sent by letter dated 3rdJuly 2008 to her brother.
The complaint was filed with the Equality Tribunal on 19thDecember 2008. The case was heard by the Equality Tribunal on 20 May 2011 and a Decision issued on 6thSeptember 2011 in favour of the Complainant.
Summary of the Respondent's Case
The Respondent disputed the contention that ithad discriminated against the Complainant on the basis of her marital status. To substantiate its contention it referred to the fact that theComplainant had not named a comparator in her complaint to the Equality Tribunal.Furthermore, it contended that the Complainant was fully aware of the benefits of the scheme and she returned the document confirming her acceptance of the terms of the Income Continuance Plan on 16thNovember 2007.
The Respondent explained that in calculating income continuance entitlement the Respondent'sIncome Continuance Planutilised a pre-determined social welfare benefit in assessment of claims.This assumes a level of Social Welfare disability/illness benefit which in no way discriminates on the grounds of marital status. It stated that there are various factors other than marital status which affect an individual's social welfare benefit. Hence the deduction used will not always truly reflect what an individual actually receives from Social Welfare.
The Respondent stated that the Decision of the Equality Tribunal
- "to change the rulesofthe Income Continuance Plan to reflect the actual disability benefitabeneficiary under the plan receives, rather than applyinganotional married rate of disability benefit, in order to comply with the principle of equal pension treatment”
could not be carried out by the Respondent, as according to experts in the field it would be"uninsurable".
Summary of the Complainant’s Case
In response to the Respondent's point that the Complainant has not named a comparator in her complaint to the Equality Tribunal Hearing, the Complainant stated that the Respondent did not dispute that a pre-determined deduction based on marital status was used in the calculation of benefits under the Income Continuance Plan. The kernel of the Complainants complaint is that in applying a rate of social welfare deduction based on her marital status rather than the actual rate of deduction, the complainant is disadvantagedvis a vissingle person in similar circumstances.
The Complainant provided copiesof Benefit Statements (Sept 1993, 1995 & 1997) which showed that the Respondent had not always used a married person's social welfare entitlement in the calculation for the Income Continuance Plan. The Complainant was not informed nor made aware of any changes to the policy. In response to the Respondent’s statement concerning the fact that the Complainant had signed the letter as requested confirming her acceptance of the terms under the Company's Income Continuance Plan, the Complainant submitted that the letter confirms that her claim was admitted and gives details of the amount thereof. There was no copy of the terms of the Company's Income Continuance Plan attached to the letter.Importantly, the Complainant was not made aware of nor informed that there has been any changes to the terms of the Plan.
Determination
Preliminary objection
The Court of Justice European Union had ruled inBarber v Guardian Royal Exchange Assurance[1990] ECR 1-1889 that benefits underoccupational pension schemescome within the scope of pay. Council Directive 1986/378 EC as amended by Directive 2006/54/EC (recast Directive) specifically provides for the implementation of thePrinciple of Equal Pension Treatmentin occupational social security schemes. The effect of the legislation was to prohibit anydiscriminationon the basis of sex in respect of any matter relating to anoccupational benefit schemeand in relation to the manner in which an employer affords employees access to anoccupational benefit scheme.
In 2004, the Pensions Act was amended by the insertion of a new Part VII which expands the grounds on whichdiscriminationin anoccupational benefit schemeis prohibited in accordance with thePrinciple of Equal Pension Treatment.
Every occupational benefit scheme must comply with the Principle of Equal Pension Treatment. The Principle of Equal Pension Treatment is that there may not be discrimination between persons on any of the discriminatory grounds specified in the Act. The principle also applies to access to, as well as the exercise of any discretion under, an occupational benefit scheme.
The Court is satisfied that the benefits conferred by the Respondent under its Income Continuance Plan come within the definition of'occupational benefits'as defined in section 65(1) of the 1990 Act and come within theprincipleofequal pension treatmentas provided for under sections 69 and 70(1) of the Act of 1990.“Occupational Benefit” as defined includes a payment for “interruptions of service by reason of sickness or invalidity” It is clear that the Scheme in issue provides such a benefit.
“Occupational Benefit Scheme” is defined in the Acts as a scheme or arrangement to provideoccupational benefitsto employees and the self-employed persons. The Court is satisfied that the definition covers occupational pension schemes and also includes other arrangements such as permanent health insurance.
Therefore,the Court fully accepts that the Complainant’s alleged contravention concerning the Respondent’s Income Protection Plan comes within the scope ofPart VIIof theActsandthe Court has jurisdiction to hear this case.
Substantive Case
The Court notes that changes were made to the Plan a number of years prior to the Complainant’s complaint which changed the Plan from one where deductions reflected the single person’s Stateillness or disability benefits to one where pre-determined deductions were based on the beneficiary’s marital status.
The Court is satisfied that the Complainant has established facts from which it can be inferred that the management/ operation of the Respondent’s Income Continuance Plan after these changes were made was in breach of theprinciple of equal treatment as its application of a deduction ofStateillness or disability benefit entitlement at a single rate for a single person and married rate for a married person was soley related to the marital status of the worker.
Therefore, the Court finds that thecomplaintofdiscrimination on the groundof
maritalstatus is well-founded andconcurs with the findings of the Equality Officer’s finding that the Respondentdiscriminated against the Complainantonthemarital
status ground pursuant to Section66(1) (a) and 66(2) (b) and in terms of Section70 ofthe Actsinrelationto rules ofthe Income Continuance Plan.
The Court notes that since January 2012 the Respondent has changed its scheme todeduct a pre-determined rate based upon the previous year’s Stateillness or disability benefit at the single rate for all employees and accordingly is of the view that it has complied with that part of the Equality Officer’s Decision which directed the Respondent“to change the rules of the Income Continuance Plan to reflect the actual disability benefit a beneficiary under the Plan receives, rather than applying a notional married rate of disability benefit, in order to comply with the principle of equal pension treatment.”The Respondent informed the Court that confirmation of this amendment to the scheme was given to the Union.
Furthermore, the Court concurs with the direction of the Equality Officer to the Respondent to comply with Section 81 of the Acts to level-up the benefit paid to the Complainant commencing on 4th May 2006 for the various periods she qualified for benefit from that date under the Income Continuance Plan.
The Court varies the Equality Officer’s direction in respect of the changes to be made to the Income Continuance Plan and accepts that the changes made by the Respondent since January 2012 are non-discriminatory. The Respondent’s appeal fails in part.
The Court so Determines.
Signed on behalf of the Labour Court
Caroline Jenkinson
26th April, 2012______________________
JFDeputy Chairman
NOTE
Enquiries concerning this Decision should be addressed to John Foley, Court Secretary.