PWD1643

The Complainant was originally employed by Bord Failte and her employment was subsequently transferred to Tourism Ireland a North South Body established in 2002 under the Good Friday Agreement, which was given effect by the British Irish Agreement Act 1999 (the 1999 Act). As part of that transfer she entered into a pension scheme in which she paid a contribution rate of 1.5% of salary in return for retirement benefits set out in the scheme.

In 2014 she was notified by the Respondent that the terms of the pension scheme had changed and that the contribution rate had increased to 7.35% of salary. The retirement benefits changed also. The effect of this change was to increase her pension contributions from €96.07 per month in March 2015 to €470.72 per month in April 2015. She submits that she did not consent to that change and/or authorise the increased deduction from her salary. Instead she notified the Respondent, in writing, that she was not authorising the increased deduction. Nevertheless Tourism Ireland proceeded to make the deduction. She submits that the deduction was accordingly not lawful and amounts to an infringement of the Act.

Section 5 of the Act in relevant part states

• 5.—(1) An employer shall not make a deduction from the wages of an employee (or receive any payment from an employee) unless—

  (a) the deduction (or payment) is required or authorised to be made by virtue of any statute or any instrument made under statute,

  (b) the deduction (or payment) is required or authorised to be made by virtue of a term of the employee's contract of employment included in the contract before, and in force at the time of, the deduction or payment, or

  (c) in the case of a deduction, the employee has given his prior consent in writing to it.

The Complainant submits that section 5(1) of the Act provides that deductions from wages are unlawful unless sections 5(1) (a), (b) or (c) of the Act apply.

She submits that the impugned deduction is not required by or authorised to be made by virtue of a statute or any instrument made under statute. She submits that the Respondent is a private company incorporated under the Companies Act 1963 as amended and is not and cannot act as a department of state or as a local authority. Accordingly she submits that its arrangements with its employees are subject to normal contract law and are not mandated by statute or statutory instrument. She submits that as an employee of a private company her membership of the pension scheme is the subject of a normal employment contract and is not mandated by statute or by statutory instrument.

She submits that it therefore follows that the deduction is not saved by section 5(1)(a) of the Act.

She further submits that the impugned deduction is neither required nor authorised to be made by virtue of a term of her contract of employment included in it before, and in force at the time of, the deduction or payment. She submits that it therefore follows that the deduction is not saved by section 5(1) (b) of the Act.

She further submits that she did not give her prior consent in writing to the deduction. Indeed she submits that she expressly objected to the impugned deductions in correspondence issued in January 2015. She submits that it follows that she has not given her prior consent within the meaning of the Act and that as a consequence the Respondent cannot rely on section 5(1)(c) in support of the deduction.

Respondent’s Case

The Respondent submits that the Court does not have jurisdiction to hear the complaint. It refers to the definition of wages in the Act which it submits excludes “any payment by way of a pension, allowance or gratuity in connection with the death, or retirement or resignation from his employment, of the employee or as compensation for loss of office.

It submits that as this complaint relates to a pension-related deduction it does not come within the definition of wages as set out above.

It submits that the Complainant is a member of the Core North South pension scheme and must pay the lawfully determined contribution rates set out in the scheme. It acknowledges that these have increased but submits that they are nevertheless lawful and have been determined in accordance with law and have lawfully amended the terms of membership of the scheme.

It submits that the Complainant opted to remain in the core scheme while on notice that the contribution rates would increase as a result of the changes lawfully made to the scheme.

It submits that section 3 (j) of the Company’s Memorandum of Association protects the terms and conditions of employment of staff on transferring to the new body. It submits that the Complainant has enjoyed and continues to enjoy that protection. It further notes that any dispute in this regard shall, in accordance with section 3(j) “be determined by the Irish Minister of Finance or the Minister of Finance and personnel in Northern Ireland as may be appropriate”.

It further submits that section 3(l) of the said Memorandum of Association empowers the Minister for Public Expenditure and Reform to set the “remuneration, grading, numbers and other conditions of service of its chief executive officer and other staff with the approval of the North South Ministerial Council and the Finance Ministers , pay such pensions, allowances or gratuities or provide and maintain such pension scheme as may be so determined.

It submits that the Minister has maintained such a pension scheme which the complainant has opted to join and remain a member of.

It submits that the Complainant was presented with a new contract of employment dated 19 April 2002 which states “a statement of your superannuation entitlements is set out in Schedule 1. It submits that Schedule 1 gave the Complainant an option to join the “Core” scheme which she exercised. It submits that the terms of that scheme provide that the Administrator may vary” the salary of the applicant, whether the contributions levels in this scheme differ from those which she paid under the reserved rights scheme”.

It submits that the Core Scheme which the Complainant elected to join has been amended on 7 occasions since 2002. It submits that the most recent relevant amendment was effected in 2013. It submits that amendment provides for a restructuring of the scheme in line with the Hutton programme of public service pension reform. It submits that those reforms included a change to the contribution rates. It submits that those changes were the subject of discussions with the relevant trade unions which resulted in proposals from the LRC dated 24 April 2014. It submits that those proposals formed the basis for an amendment to the collective agreement with the trade unions. It submits that the amended agreement gave staff the option of remaining in the Core scheme or of reverting to the Reserved Rights membership scheme. It submits that this discharged its obligation to the Complainant to provide her with terms and conditions of employment no less favourable than those in place when she transferred to Tourism Ireland.

It submits that it was made clear to all staff that the contribution rates would take effect for members who remained in the Core scheme. It submits that the Complainant did not exercise a choice to remain or revert to the Reserved Rights Scheme. Accordingly she by default remained in the Core scheme and had the increased contribution rate applied to her. It submits that this does not amount to an unlawful deduction within the meaning of the Act.

It submits that operating the pension scheme amounts to the implementation of a statutory provision and that any deduction made consequent upon that implementation is a statutory deduction within the meaning of the Act.

Finally it submits that the Complainant, by joining the Core Scheme, accepted the full terms of that scheme as amended from time to time. It submits that this amounts to a contractual authorisation of deductions from salary associated with the continued membership of the scheme.

The Law

Wages have the following meaning for the purposes of the Act

• “wages”, in relation to an employee, means any sums payable to the employee by the employer in connection with his employment, including—

  (a) any fee, bonus or commission, or any holiday, sick or maternity pay, or any other emolument, referable to his employment, whether payable under his contract of employment or otherwise, and

  (b) any sum payable to the employee upon the termination by the employer of his contract of employment without his having given to the employee the appropriate prior notice of the termination, being a sum paid in lieu of the giving of such notice:

  Provided however that the following payments shall not be regarded as wages for the purposes of this definition:

  (i) any payment in respect of expenses incurred by the employee in carrying out his employment,

  (ii) any payment by way of a pension, allowance or gratuity in connection with the death, or the retirement or resignation from his employment, of the employee or as compensation for loss of office,

  (iii) any payment referable to the employee's redundancy,

  (iv) any payment to the employee otherwise than in his capacity as an employee,

  (v)) any payment in kind or benefit in kind.

• 5.—(1) An employer shall not make a deduction from the wages of an employee (or receive any payment from an employee) unless—

  (a) the deduction (or payment) is required or authorised to be made by virtue of any statute or any instrument made under statute,

  (b) the deduction (or payment) is required or authorised to be made by virtue of a term of the employee's contract of employment included in the contract before, and in force at the time of, the deduction or payment, or

  (c) in the case of a deduction, the employee has given his prior consent in writing to it.

Agreement on Transfer of Staff to Tourism Ireland

A agreement governing the transfer of staff to Tourism Ireland was concluded in March 2002. It is headed Final Report of the Joint Facilitators 8 March 2002. It is relevant to the matters before the Court. In relevant part it states

• Tourism Ireland Superannuation Scheme Appendix 3 in relevant part states

  The Body/Agency has no pension scheme in place at present but it is hoped that one will be introduced in the near future. Subject to Revenue limits, it is envisaged that the scheme will comply with the framework set out in the Annex which has already been approved by the North/South Ministerial Council and Finance Ministers.

  Once a scheme comes into effect, all newly recruited employees will automatically become participating members. Those recruited before the scheme comes into effect will automatically have their service in the period from taking up post to the scheme coming into effect treated as reckonable service for pension purposes subject to the payment of the necessary contributions for that period.

  Participating members will be required to contribute at the rate of 1.5% of their salaries. Contributions are deducted before tax is calculated so, under current taxation arrangements, contributors automatically receive full income tax relief at the highest rate they pay.

Annex 4 Superannuation: Confirmation of Entitlements of Staff Designated to Transfer

This Annex consists of a letter from the Assistant Secretary Department of Finance to Ms Margaret Hayes Secretary General Department of Tourism, Sport and Recreation. In relevant part it states

• Clause 3(j) of the Memorandum of Association of Tourism Ireland Limited, dated 7^thDecember 2000, provides that “Superannuation arrangements for transferred staff will not be less favourable than those to which transferred staff were subject immediately before their transfer and any dispute relating thereto shall be determined by the Irish minister for Finance or the Minister for Finance and Personnel in Northern Ireland.

  I confirm that the memorandum of association of Tourism Ireland has been approved by the North-South Ministerial Council and by the Minister for Finance and by the Minister for Finance and Personnel.

  I also confirm that these arrangements will apply to transferred staff, while employed by Tourism Ireland Limited, from the date of their transfer.

In relevant part this consists of a note to Mr Jim O’Neill of Tourism Ireland from Mr Dennis Walsh, Department of Finance and Personnel and Mr Seamus O’Dwyer Department of Finance and is dated 28 February 2002. It states

• We can confirm that the proposed pension scheme for TIL staff will have the same benefits and contribution structure as that proposed for the North/South Implementation Bodies as approved by North/South Ministerial Council and the Finance Ministers.

  We can also confirm that the proposed scheme for TIL will be unfunded, and benefits will be paid from public funds, agreed annually in the normal way as part of the Estimates processes North and South.

  The scheme will be approved by the NSMC, Finance Ministers North and South, and the Inland Revenue and Revenue Commissioners, and can only be amended with the approval of each. It will continue(even if TIL ceases to perform the public services for which it was established) except where the NSMC and Finance Ministers North and South approve alternative arrangements to meet the liabilities of the scheme.

  We can confirm that designated staff who transfer from Bord Failte and NITB to TIL will retain the superannuation benefits that applied to them, as appropriate, under the Bord Failte or NITB superannuation schemes, immediately prior to transfer, including entitlements secured by prior service with other public service/sector bodies. These benefits will apply to these staff immediately on transfer and thereafter, unless they subsequently exercise a right to opt for membership of the proposed Core Scheme, in accordance with the scheme rules.

The Complainant’s Contract of Employment April 2002 in relevant part states

• “Your transfer is to be on terms and conditions no less favourable than those which you enjoy with Bord Failte immediately prior to transfer.”

  The details of many terms and conditions of your employment are set out in the Staff manual which is part of the Collective Agreement concluded with the recognised trade unions in Tourism Ireland (Attachment 1). References in this statement to the Staff manual are to the staff manual as amended and updated from time to time”

  Your terms and conditions of employment will be as outlined in this statement together with the collective agreement concluded with the recognised trade unions under the auspices of the joint facilitators. Your terms and conditions will remain in force unless they are amended by the terms of a future collective agreement concluded with the trade unions recognised to negotiate on behalf of the staff of Tourism Ireland Limited. …..Should any change be agreed, this will be confirmed in writing within one month of it taking effect.”

Having examined the extensive written and oral submissions of the parties to this dispute the Court finds as follows

The Court finds that a pension deduction is not a payment by way of a pension within the meaning of the Act and accordingly finds no merit in the Respondent’s submission that the matter is outside the scope of the Court’s jurisdiction. The Court finds that the impugned deduction is a matter that falls to be dealt with under section 5 of the Act and is therefore properly before it for decision.

Regarding the pension deduction the Court finds that it is common case that the Respondent made a deduction from the Complainant’s salary, that she submits was unlawful, within the meaning of the Act.

Section 5 of the Act provides that a deduction from the wages of an employee is unlawful unless it is saved by sections 5(1) (a), (b) or (c). The Complainant submits that none of these subsections apply in this case. The respondent submits that the deduction was made in compliance with sections 5(1) (a), (b) and (c).

If the deduction was not saved by all or any of those sections then it is not lawful for the purposes of the Act.

Section 5(1) (a)

The Complainant submits that the deduction was not required or authorised to be made by virtue of any statute or any instrument made under statute. She submits that the North/South Pension Scheme itself states that it is made by Tourism Ireland pursuant to its private corporate powers, not that it is made by some power to legislate or to pass secondary legislation. She further submits that the 1999 British Irish Agreement Act is an international agreement that does not give any body the power to legislate in this jurisdiction or the power to enact secondary legislation. She submits that the 1999 Act is primary legislation in this state that provides a power to enact secondary legislation in the form of Regulations. However she submits that the North/South pension scheme is no such regulation. She further submits that while the Agreement is re-stated in a Schedule to the 1999 Act, such a restatement does not give it power of law in and of itself. Finally she submits that the North/South pension scheme is made by the Implementation Bodies. She notes that it is made as a pension scheme, not as a regulation. She finally submits that it does not purport to allow deductions by employers from employee salary payments without consent, in contrast to proper statutory instruments.

The Court is not persuaded by these arguments.

The Court finds that Tourism Ireland alone did not establish the pension scheme at issue in this case. It was established for workers in the Republic of Ireland and Northern Ireland by all of the North South Bodies in exercise of powers conferred on them by paragraph 3.2 of Part 7 of Annex 2 to the Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Ireland establishing implementation bodies done at Dublin on the 8^thDay of March 1999; and Tourism Ireland Limited under the terms of paragraph 3(1) of its Memorandum of Association dated 7^thDecember 2000; with the approval of the North/South Ministerial Council and the Finance Ministers. Those bodies were established under the 1999 Act. All of their powers and authority are grounded in that Act. The relevant Ministers transferred all of the relevant powers previously vested in them to those bodies including the power to establish and operate pension funds. Acting on those powers the Act contains a power to transfer staff to the new bodies and to guarantee their existing terms and conditions of employment on transfer including membership of pension schemes. Such a scheme was established and was called the Core Scheme.

Employees of Tourism Ireland were, at the time of transfer to Tourism Ireland, given an option to continue in a transitional scheme that mirrored the existing superannuation scheme in place in Bord Failte, their previous employer or to transfer to the new Core Scheme under it terms and conditions of membership.

For staff that elected to transfer membership to the Core Scheme, Tourism Ireland deducted the relevant contributions from salary and paid them over to the Administrator of the Scheme. It had no independent power to vary the scheme. That power was vested in the relevant North South Bodies and subject to the approval of the relevant ministerial authorities and the NSMC who exercised them in accordance with law.

When a change in the terms of the scheme, including changes in the rate of contribution to the scheme, took effect, Tourism Ireland had no option but to deduct the contribution rates from the salary of those members of staff who joined or remained in the scheme. It was contractually bound to do so under the terms of the Collective Agreement concluded with the Unions in 2002 and under the terms of the Complainant’s contract of employment in accordance with which she joined the core scheme.

In 2014, when the contribution rates increased significantly, it gave staff an option to leave the pension scheme and join another scheme that was no less favourable than the terms of the scheme that had been in place in 2002 when the terms of the original transfer were agreed. The Complainant did not exercise the option made available to her to leave the Core scheme. She remained in the scheme and thereby became subject to its amended terms. Tourism Ireland at that point proceeded to deduct the appropriate pension contributions from her salary and pay them over to the Administrator of the Scheme. The Court finds that by so doing Tourism Ireland was acting in a manner consistent with the collective agreements in place, the guarantees that it has given the complainant and in accordance with the terms of the Contract of Employment issued to her in 2002

The Statutory Instrument Act, 1947 defines a statutory instrument as follows

“an order, regulation, rule, scheme or bye-law made in exercise of a power conferred by statute”.

That is a broad definition. In this case the North/South Pension Scheme made in exercise of a power conferred on the relevant Ministers under the 1999 Act. As such it is a scheme within the meaning of the 1947 Act and is accordingly a statutory instrument for the purpose of that Act.

The amendments to the Pension Scheme are equally statutory instruments within the meaning of that Act.

Amendment No 6 authorises a restructuring of the Pension Scheme and an alteration to the contribution rates for members. Accordingly the implementation of those amended deductions are authorised by virtue of that instrument within the meaning of section 5(1)(a) of the Payment of Wages Act, 1991.

The Complainant was notified of the increased contributions and advised of her options in that regard. The contract of employment issued to her in 2002 contained a commitment to transfer her to the North/South pension scheme when it came into being. This was honoured after that scheme came into being in 2005. The Complainant joined the scheme and started to contribute to it in accordance with its terms. Those terms changed however in 2014. The Complainant did not exercise an option to exit the scheme but rather continued with membership of it. Having done so, she sought to resist the implementation of the amended contribution rate by claiming it was an unlawful deduction. However that option was not available to her within the terms of the scheme. As she sought to continue her scheme membership she was subject to all of terms as amended which included the associated contribution rates. As the amended scheme was in effect a statutory instrument the operation of the scheme, including the relevant contribution rates, amount to a deduction authorised by virtue of that statutory instrument and accordingly is lawful within the meaning of section 5(1)(a) of the Act.

The Court further finds that the Complainant had, when she signed the contract of employment in 2002, accepted an option to take up membership of the pension scheme when established by the North/South bodies. In 2006 she exercised that option. At the time the contribution rate was set at 1.5% of pay considerably lower than the contribution rate in her existing scheme. As a consequence her pay was reduced in line with the reduction in the level of pension contribution. As a result she experienced no loss of net income.

However the terms of the scheme changed with each subsequent amendment. Six in all followed until the scheme was substantively restructured and the contribution rate increased. At that point Tourism Ireland entered into discussions with the Trade Unions that led to proposals from the Labour Relations Commission that were offered to the staff affected. These proposals provided each member of staff with an option to remain in the core scheme as amended or to revert to the original pension scheme. A limited time period was set within which staff wishing to exit the Core scheme could do so.

The Complainant chose not to exercise that option and accordingly continued her membership of the amended core scheme. Membership of that scheme involved a higher contribution rate which she thereby implicitly authorised by failing to exercise the option to revert to the old scheme or notify the Respondent of her desire to leave the amended core scheme.

The Court finds that the Complainant objected to the increased contribution rates. However by remaining in the scheme she was in effect agreeing to be bound by its full terms including the contribution rates. Accordingly the Court finds that the Respondent was implementing the terms of the Complainant’s contract of employment within the meaning of section 5(1)(b) of the Act.

The Court finds that the Trade Unions entered into discussions with the Respondent when the contribution rates to the scheme increased. They referred the matter to the LRC and engaged in considerable discussions there. A set of proposals emerged from those discussions. The Trade Unions did not formally accept or reject those proposals.

However the Court has some expertise in the area of industrial relations. Arising out of that expertise the Court finds that the absence of any opposition to the LRC proposals by the Trade Unions must be understood, in line with normal practice in industrial relations, to amount to an acceptance of the terms on offer.

The Court therefore finds that the LRC Proposals as implemented amended the terms of the collective agreement in force at the time.

The 2002 Agreement establishes the terms on which the Complainant transferred to Tourism Ireland. That Agreement provides that its terms are subject to amendment by way of collective agreement. The Court finds that the LRC proposals amounted to an amendment of that collective agreement when the Unions raised no formal objection to their implementation by Tourism Ireland.

Accordingly the Complainant’s contract of employment was contractually amended by the terms of the amended Collective Agreement to provide for a time limited option to remain in the Core scheme or revert to the original pension scheme.

The Court, on this reasoning, finds that any action taken by the Respondent that was consistent with giving effect to that amended contract of employment, including effecting the increased contribution, could not be an unlawful deduction within the meaning of section 5(1)(b) of the Act.

Determination

For these reasons the Court finds that the complaint is not well founded. The deductions were not unlawful.

The Court for the reasons set out above affirms the decision of the Adjudication Officer.

The Court so determines.

Signed on behalf of the Labour Court



Brendan Hayes
9th December 2016______________________
JKDeputy Chairman



NOTE

Enquiries concerning this Determination should be addressed to Jason Kennedy, Court Secretary.