FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : SHANNON AEROSPACE LTD (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Mr Duffy Employer Member: Ms Cryan Worker Member: Ms Tanham |
1. Pension Scheme Changes
BACKGROUND:
2.
This case concerns a dispute between Shannon Aerospace Ltd and SIPTU in relation to proposed Pension Scheme changes. The Company is proposing to close its DB Scheme and introduce a Defined Contribution (DC) Scheme. The dispute was not 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 matter was referred to the Labour Court on the 16th December, 2013 in accordance with Section 26(1) of the Industrial Relations Act 1990. A Labour Court hearing took place on 14th January, 2014.
UNIONS ARGUMENTS:
3 1 A DC Scheme is not acceptable to the Union as the DB Scheme is a condition of the worker's employment. The workers are not agreeable to the proposed changes.
2 The scheme's actuary has calculated that the current level of contribution to the DB Scheme should be adequate to maintain the minimum funding standard and Risk Reserve requirements for the next five years and that a further two percent contribution would sustain it for another 10 years. In these circumstances the DB Scheme should continue.
COMPANY'S ARGUMENTS:
4 1 The Company cannot sustain the costs associated with the DB Scheme. A DC Scheme is appropriate in the circumstances and should be accepted by the workers.
2 The Company expects that the DB Scheme will experience funding difficulties in the future which the Company will be unable to address. There is an opportunity now to negotiate the terms of a DC Scheme share the minimum funding standard surplus and further enhance transfer values.
RECOMMENDATION:
The parties are in dispute concerning a proposal by the employer to close its defined benefit pension scheme and replace it with a defined contribution scheme. The Union are opposed in principle to the closure of the scheme. While the scheme is not currently in deficit the employer believes that it is not viable in the long term. It believes that it is prudent to wind up the scheme at this time and transfer its assets to a newly constituted defined contribution scheme.
While there have been several meetings between the parties on this matter there has been no real engagement on the detail of the Company’s proposal. The Company proposes to cease contributing to the defined benefit scheme with effect from 3rdFebruary 2014.
The Court heard submissions from the parties in joint session and it also met with them in side session in order to explore possible avenues through which the resolution of the dispute could be advanced. Arising from its engagement with the parties the Court recommends as follows: -
1. The parties should enter a process of negotiation on the Company’s proposal on a without prejudice basis and without any implication that ultimate agreement will eventually be reached on those proposals as currently formulated.2. In these negotiations the parties should explore the possibility of providing a compensatory arrangement in the event of agreement being reached.
3. Those negotiations should be conducted in good faith on both sides within the process of collective bargaining established within the employment.
4. The negotiations should commence as soon as practicable after acceptance of this recommendation. They should continue for a period not exceeding two months from the date of their commencement.
5. If agreement is not reached within the time frame referred to at 4 above outstanding matters may be referred back to the Court.
6. During the currency of these negotiations and while further adjudication by the Court is awaited, the Company should continue to fund the existing defined benefit scheme and the status quo should be maintained on both sides.
Signed on behalf of the Labour Court
Kevin Duffy
17th January, 2014______________________
CO'RChairman
NOTE
Enquiries concerning this Recommendation should be addressed to Clodagh O'Reilly, Court Secretary.