FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : ESSO TOPAZ ENERGY GROUP LIMITED - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Ms Jenkinson Employer Member: Mr Marie Worker Member: Ms O'Donnell |
1. Changes to Pension Scheme, Protection of Terms and Conditions of Employment and compensation relating to the cessation of the Employee Share Ownership Plan. (ESOP)
BACKGROUND:
2. This case concerns a dispute between the Company and Union in relation to a) the cessation of the Defined Benefit (DB) Scheme and the introduction of a Defined Contribution (DC) Scheme, b) Protection of Terms and Conditions of Employment and c) the cessation of the Employee Share Ownership Plan. The Union is seeking compensation in relation to the changes to the pension scheme and an actuarial evaluation to establish the required level of employer contribution to the DC scheme that would provide for the same pension entitlements as the DB Scheme. The Union is also seeking compensation for the cessation of access to the ESOP and that any changes to established terms and conditions of employment in the future be the subject of negotiation and agreement.
The dispute was not resolved at local level and was the subject of a conciliation conference under the auspices of the Workplace Relations Commission. As agreement was not reached the matter was referred to the Labour Court on 12th January 2016 in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on 4th February 2016.
UNION'S ARGUMENT:
3 1 The Union contends that its claim for compensation in relation to changes to the Pension scheme and ESOP is fair and reasonable in all the circumstances. The Claimant's should not be disadvantaged in respect of established terms and conditions of employment as a result of the Company share sale and no changes should be implemented without negotiation and agreement.
COMPANY'S ARGUMENT:
4 1 Management has committed to providing alternative equivalent values in terms of pension arrangements and has also proposed reasonable alternatives in respect of the ESOP. It is also accepted that any proposed changes to terms and conditions of employment in the future will be the subject of consultation and dispute resolution processes..
RECOMMENDATION:
The issue before the Court concerns the Union’s claims regarding the discontinuation of a Defined Benefit Pension Scheme and an Employee Share Ownership Plan which arose following the share sale of Esso Ireland Limited to Kendrick Investments Limited (parent company of Topaz Energy Group Limited). The acquired enterprise is now called Topaz Bull Fuels Limited (“the Employer”). The Union also claimed that the sale created uncertainty regarding the future terms and conditions of employment for its members involved with the claim.
As part of the commercial share purchase agreement, the Employer agreed,inter alia, to establish alternative equivalent pension arrangements and to establish an alternative equivalent value allowance in respect of the share plan.
There were fifteen Claimants involved in this claim; all had previously been employed by Esso Ireland Limited. In the circumstances of this case, the Court’s Recommendation is applicable to the fifteen Claimants and has no broader application.
Cessation of the Defined Benefit Pension Scheme
The Defined Benefit Pension Scheme (Exxon Mobil Pension Plan) previously applicable to the Claimants can no longer continue following the share sale. To compensate for the loss of the Defined Benefit Pension Scheme, the Employer introduced a Defined Contribution Scheme as an alternative, with an employer contribution of 18% and an employee continuation of 3.5%, thereby maintaining the level of employee contribution as it existed under the Defined Benefit Scheme. Those with over two years’ service will become deferred members of the Exxon Mobil Defined Benefit Pension Scheme , in which the Claimants’ accrued benefits are retained and protected in the Scheme, which is fully funded.
The Union sought compensation for the loss of the Defined Benefit Pension Scheme; the appointment of an actuary to assess the level of contribution required to provide an equivalent defined contribution pension. It also sought that when decided the contribution level should be fixed for an indefinite duration of time, and in any event should not be for less than 24 months and the employer contribution should as a minimum be at the proposed level of 18%.
Both parties produced pension information to the Court on the effects of the proposal. Having considered the submissions of both parties the Court sees no merit in awarding compensation in the circumstances here present. The Court notes that the Employer confirmed at the Court hearing that the Defined Benefit Pension Scheme proposals as outlined above will be applicable to the Claimants involved in this claim on an indefinite arrangement.
Having reviewed the pension information and taking account of the Employer’s proposal as confirmed at the hearing, the Court sees no requirement for an actuarial assessment to be carried out. The Court is satisfied that the proposed pension arrangements as confirmed by the Employer are fair and reasonable in the circumstances and meet the criteria of an “alternative equivalent arrangement”. The Court recommends acceptance of these terms in settlement of this claim.
Cessation of the Employee Share Ownership Plan
In lieu of the benefit to employees of the Share Ownership Plan, the employer proposed two alternative options (i) an alternative equivalent-value cash allowance with no employee contribution required or (ii) an option to convert this allowance into an additional 5% employee contribution in the Defined Contribution Pension Scheme and the Employer will match it with an additional 5% employer contribution.
Furthermore the Court notes that the Share Trust will continue for a period of three years post completion of the sale to ensure all shares become fully tax efficient and the costs associated are borne by Exxon Mobil.
The Union sought compensation for the termination of access to the Plan; it sought the equivalent alternative allowance for an indefinite period, in any event not less than 24 months, or its incorporation into salary.
The Court notes that the Employer confirmed at the Court hearing that the alternative options proposed by the Employer as outlined above will be applicable to the Claimants involved in this claim on an indefinite arrangement.
Having considered the submissions of both parties the Court sees no merit in awarding compensation in the circumstances here present. Taking account of the Employer’s proposal as confirmed at the hearing, the Court is satisfied that the alternative options proposed are fair and reasonable in the circumstances and meet the criteria of an “alternative equivalent arrangement”. The Court recommends acceptance of these terms in settlement of this claim.
Protection of Employment Terms
The Union sought that any change required in employment terms in the future should be agreed in-advance before any change is implemented.
Under the commercial share purchase agreement the employer committed to the preservation of terms and conditions of employment for employees for a twelve month period. It submitted that it had no further scope to extend that period; however, it confirmed that employee’s existing terms were protected in the same way as other employees in the group where unilateral changes could not be made without normal consultation and dispute resolution processes.
The Court therefore notes the commitment given by the Employer in the event of any changes to terms and conditions of employment in the future and recommends that should the need arise, the parties should proceed accordingly.
The Court so Recommends.
Signed on behalf of the Labour Court
Caroline Jenkinson
19th February 2016______________________
AHDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Andrew Heavey, Court Secretary.