Complainant

Respondent

Anonymised Parties

An Administrative Officer

A County Council

Representatives

Attended in Person

Act

Complaint/Dispute Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under section 13 of the Industrial Relations Act, 1969

CA-00010069-001

06/03/2017

The Complainant has been employed by the Respondent for over 41 years and his current position is anAdministrative Officer. The Complainant is part of the Local Government Superannuation Scheme and since 2009 he has been trying to get a resolution to an issue in relation to the manner in which the Council is treating the calculation of his pension entitlements. The issues in dispute between the parties in the present case relate to the calculations utilised by the Respondent in the determination of his pension entitlements and the application of superannuation contributions in respect of this calculation. The dispute also relates to the inordinate length of time which the Complainant claims that it took the Respondent to process and deal with the grievance that he raised in relation to the foregoing matter under the internal dispute resolution procedures.

The Complainant is currently employed as an Administrative Officer by the Respondent and has been in permanent employment with the Council since 1975. During the period from April, 2003 to September, 2010 the Complainant held two specially created contract positions of Project Co-ordinator (from April, 2003 to September, 2007) and Project Manager (from September, 2007 to September, 2010) with the Respondent. The Complainant submits that these specially created positions were not core positions within the Council or local authority structure and he was paid an allowance in addition to his normal salary for his core position as an Administrative Officer. The Complainant submits that under the 10 year look back rule his pensionable salary is made up of (i) the salary rate on his core position as an Administrative Officer and (ii) the differential between this rate and the rate of pay for the two contract positions that he held during the period from 2003 to 2010. The Complainant held these two contract positions on the same rate of pay for the entirety of this period and he contends that the differential he received for the 7 years was an additional specified payment of a regular nature and should have been treated as an emolument and paid as superannuable at the time. The Complainant submits that this would have meant that he could have contributed at the time and thereby have had the opportunity at the end of the contract to avail of pension entitlements as normal.

The Complainant submits that the Respondent treats this regular emolument as an acting allowance which means that there will be a substantial reduction applied to the amount of the lump sum payment that he will receive upon retirement. The Complainant submits that on a number of occasions going back to 2008/09, and at times of the early retirement schemes in the public sector, he has sought calculations on his pension entitlement. When the calculations came back setting out the options on whether or not he could retire early and also indicating the scenario that would apply to him on retirement at 60 years, the Complainant became aware that a substantial reduction of between €37,000 and €44,000 would apply to his lump sum entitlement. This reduction is a Superannuation and W&O charge for all the pensionable years in respect of the increase in salary arising from the Complainant’s appointment to specially created positions. The Complainant submits that when the Respondent carries out the look back on the last 10 years of calculation, this appointment falls within the scope and is still within the frame up to July, 2017.

The Complainant submits that he has attempted without success, on several occasions over the last 6 years, to have this matter addressed by the Respondent. The Complainant states that he invoked the Respondent’s formal internal disputes resolution procedures in relation to the matter on 27^th July, 2015.   However, he contends that the Respondent failed to deal with his grievance in a timely manner and there was no action taken in relation to the matter for a period of 17 months. The Complainant contends that the Respondent only reacted to his complaint after he was forced to seek support from his trade union. The Respondent eventually appointed a person to examine his complaint, however the process concluded in December, 2016 with an unfavourable outcome and the position in relation to his pension entitlements remained the same. The Complainant submits that the internal disputes resolution process did not serve him well and only resulted in a further delay being imposed on his attempts of getting the matter resolved.

The Complainant submits that while he was waiting to have the matter dealt with through the internal disputes resolution process, and out of frustration with the delay, he also referred the matter to the Office of the Pensions Ombudsman. The Complainant confirmed that the Pensions Ombudsman informed him that “The Pensions Ombudsman does not have the authority to determine that an acting allowance you received should be treated as anything other than an acting allowance for pension purposes. In the absence of another appropriate authority directing otherwise the Pensions Ombudsman can only examine your benefits from the perspective that you received a basic salary and an acting allowance”.

The Complainant submits that under the Protection of Employees (Fixed Term Work) Act 2003 that temporary contract positions should not be treated any differently to permanent contract positions. He contends that a person who takes up a position on a normal permanent contract at the same rate of pay as held by him has only to pay 3 years superannuation to become entitled to a pension and there is no charge back to full service. However, the Complainant contends that in his case, even though he had 7 years’ service at the higher rate that superannuation and W&O is applied for the full 41 years. The Complainant also contends that the Respondent has paid some differentials particularly in the area of dual roles where superannuation is charged giving a very different result to how his pension is treated. The Complainant submits that a more equitable and obvious approach which could be adopted would be to only charge for the period while he was on the differential.

The Complainant submits that he has been unable to avail of the early retirement schemes because of the uncertainty which has arisen in relation to the manner in which his pension entitlements will be calculated and the protracted period of time that it has taken the Respondent to deal with his grievance through the internal disputes resolution process.

The Complainant commenced employment with the Respondent in 1975 and is currently employed as an Administrative Officer. The Complainant has been employed in an acting capacity in several different roles going back to 2003. The Respondent submits that each of these periods was the subject of a County Managers Order and each of them specified that the payment would be by way of an acting allowance. The Respondent submits that because the Complainant was an existing employee of the local Council and these posts were temporary positions there was no other methodology that could be applied to provide for additional salary attaching to the higher post other than by way of acting allowance.  

The Respondent submitted that historically acting posts were not superannuable and included in pension calculations. However, in a decision that was seen to be of benefit to all employees in the 1990’s consideration was given to acting allowances being superannuable. The issue of the treatment of acting allowances for the purposes of Superannuation is covered by several Departmental Circulars (namely Circular Letter S.14/91 and Circular Letter S.19/97). The treatment of contributions where acting allowance was considered in pensionable calculation was addressed in Circular Letter S.19/97 which stated as follows at Section 2(c): “where a person qualifies, by virtue of the new arrangements, to have acting-up payments included as part of his or her pensionable pay, superannuation contributions will be payable on such payments in respect of the person’s full pensionable service”.

The Respondent submitted that the matter of pensionability of acting allowances was subsequently addressed for the wider civil and public sector by Circular 10/2008. This created the position where the benefit of consideration of persons acting was widened out to consider “the best three in 10”. This advised in Section 22 that: “The reckoning of allowances for pension purposes is subject to the payment of appropriate contributions in accordance with the rules of the relevant scheme”. Circular Letter 10/2008 was given effect in the Local Government sector by Circular Letter S.4/2009 which, when reflecting the provisions of Section 22 of Circular 10/2008 stated as follows: “The reckoning of allowances for pension purposes is subject to the payment of appropriate contributions in accordance with the rules of the LGSS. In relation to contributions in respect of acting up payments, Circular Letter S.17/97 advises that where a person qualifies to have acting up payments included as part of his/her pensionable pay, superannuation contributions should be made at cesser of employment. Superannuation contributions will be payable on such payments in respect of the person’s full pensionable service”.

The Respondent submitted that therefore, as set out above, once the Complainant’s position in the assessment of the best three years in 10 included a period that was considered to be acting, the Council had no option but to apply the provisions in respect of superannuation contributions as set out above in the various Circulars which is what it has done.

The Respondent submits that the Complainant, in order to seek to avoid the liability to these superannuation contributions, has put forward a number of matters for consideration. He has raised comparisons with employees who are employed under either fixed term or fixed purpose contracts and the provisions of the Protection of Employees (Fixed Term Work) Act 2003. The Respondent submits that the Complainant is employed on a permanent basis with the Council and as such, it is submitted, cannot rely on the provisions of that Act. The Respondent submits that the Complainant has no locus standi to maintain any complaint which references the aforementioned legislation.

The Respondent submits that the Complainant suggests in his complaint that the Council should provide a unique solution to his position by in some way considering the acting allowance as in fact a separate and distinct remuneration for the role by way of emolument. The Respondent contends that the fact of the matter is that in all instances the Council, and all other local authorities and the Civil and Public Service as a whole, treat this type of arrangement as being acting and do not pay by way of emolument. The Respondent submits that there is no basis to create a separate and distinct arrangement for the Complainant so as to enable him to avoid the liability for contributions as set out in all Circulars. To retrospectively change the nature of the payment of the Complainant’s acting arrangement where documentation already exists specifying it to be paid as an acting allowance would no doubt be the subject of examination by local government auditors and something the Council would not be willing to undertake.

The Respondent submits that the Complainant has also suggested that the WRC recommend that he be required to pay superannuation contributions solely for the period that he was acting. The Respondent contends that this would be contrary to all existing Circulars and if this was to be adopted would have to be applied retrospectively to all persons who were assessed in accordance with Circulars from 1997 onwards which is clearly an absurd suggestion.

The Respondent submits that the fact is that the Complainant is and was at all material times a permanent employee of the Council and he took up another role at a higher rate of pay with the Council. The accepted practice within the Civil and Public sector is that when this occurs individuals are remunerated by way of their substantive salary and an acting allowance. This is what occurred in the Complainant’s case.   The superannuation scheme is governed by statutory instruments and there is no discretion afforded to a member organisation or to any individual to waive any pensionable contribution. Any benefits earned under the scheme must be earned by the employee.

The Respondent submits that the simple fact of the matter is that the Complainant will enjoy a significant benefit in his pension from the inclusion of the periods of the acting and therefore is required to make a contribution to this benefit. There is a significant level of public scrutiny on the contribution that public servants make to their pensions and the matter was the subject of discussion at the recent national pay discussions. Any proposal that would lead to a scenario where a public servant received significant benefits but failed to meet the contribution required in the various circular letters would create a matter of significant concern.

In conclusion, the Respondent submits that the Council is satisfied that in its decision making on the pensionability of the allowance in question that it gave full consideration to the facts of the case, the application of the appropriate circulars and that its decision was correct. The fact is that if the Complainant wishes to have the circulars which provide a benefit to him applied the totality of the circular must apply including the provision in relation to contributions.

Issue of Jurisdiction

The Respondent raised an issue in relation to my jurisdiction to investigate the present dispute under Section 13 of the Industrial Relations Act 1969 on the basis that the Complainant had also referred a complaint to the Office of the Pensions Ombudsman in relation to the matter. I note that the Pensions Ombudsman issued a response to that complaint indicating that: “The Pensions Ombudsman does not have the authority to determine that an acting allowance you received should be treated as anything other than an acting allowance for pension purposes. In the absence of another appropriate authority directing otherwise the Pensions Ombudsman can only examine your benefits from the perspective that you received a basic salary and an acting allowance”. It is clear that the present dispute relates to the manner in which the acting allowance which the Complainant received during the period he was employed on the fixed term contracts from 2003 to 2010 should be treated for the purpose of calculating his pension entitlements. I am satisfied that this matter falls within the definition of a “trade dispute” in accordance with the provisions of Section 3 of the Industrial Relations Act 1946.   Accordingly, I am satisfied that I do have jurisdiction to investigate the present dispute.

Substantive Issue

The first issue in dispute between the parties in the present case relates to the calculations utilised by the Respondent in the determination of his pension entitlements and the application of superannuation contributions in respect of this calculation.

The Complainant has been employed by the Respondent on a permanent basis since 1975. During the period from April, 2003 to September, 2010 the Complainant was appointed by the Respondent to two different temporary positions on a fixed term contract basis. The Complainant was paid the normal salary for his substantive position as an Administrative Officer and an acting allowance for the duration of the period which he was employed on the fixed term contracts.

The Respondent adduced evidence in relation to the contractual arrangements that governed the employment relationship between the parties for the duration of the period that the Complainant was working on the fixed term contracts from April, 2003 to September, 2010. It is clear from the documentation submitted that the Complainant was to be paid an acting allowance in addition to the salary for his substantive position for the duration of these fixed term contracts.   The Respondent adduced evidence that the operation of the Local Government Superannuation Scheme is governed by statutory instruments and the issue of the treatment of acting allowances for the purposes of superannuation is covered by several Departmental Circulars (namely Circular S.14/91, Circular S.19/97, Circular 10/2008 and Circular S4/2009).

I am satisfied that the Respondent had no option or discretion but to apply the provisions as set out in the various Circulars in terms of the manner in which the Complainant’s superannuation contributions were calculated having regard to the period of time that he was employed on the fixed term contracts. I accept the Respondent’s evidence that the calculations utilised in the determination of the Complainant’s pension entitlements and the application of the superannuation contributions in respect of these calculations was in accordance with the rules of the Local Government Superannuation Scheme.

In the circumstances, I find that it is not open to me to make a recommendation which would require the Respondent to act contrary to the provisions of a statutory superannuation scheme. Having regard to the foregoing, I find that the Complainant’s pension entitlements are being calculated in accordance with the rules of the pension scheme. Accordingly, I cannot make a recommendation in favour of the Complainant in relation to this element of his dispute.

The other element of the dispute which I must consider relates to the inordinate length of time which the Complainant claims that it took the Respondent to process and deal with the grievance that he raised in relation to the foregoing matter under the internal dispute resolution procedures. It is clear that the issues surrounding the calculation of the Complainant’s pension entitlements were of the utmost importance to him and that he required an expedient resolution in relation to the matter given his pending retirement. The Complainant adduced evidence that he formally invoked the Respondent’s internal dispute resolution procedures on 27^th July, 2015 and that it took a period of 17 months before the internal process was finally completed by the Respondent. The Respondent neither disputed the Complainant’s evidence in relation to this matter nor did it offer any reasonable explanation for the delay in progressing the dispute through its internal dispute resolution procedures.

I find that the Respondent’s delay in this regard was inexplicable and unreasonable in the circumstances and that the resultant uncertainty which arose was the source of much frustration and distress for the Complainant at a time when he was attempting to plan for his retirement. In the circumstances, I find that the Complainant is entitled to compensation for the distress he experienced as a result of the manner in which the Respondent dealt with the Complainant’s dispute under its internal dispute resolution procedures.

For the reasons set out above, I find that it is not open to me to make a recommendation in favour of the Complainant in relation to the manner in which the Respondent has calculated his pension entitlements and the application of superannuation contributions in respect of this entitlement.

I recommend that the Respondent pay the Complainant a sum of €2,500 in compensation for the distress arising from the delay in progressing his dispute through the internal dispute resolution procedures.

Industrial Relations Act 1969 – Trade Dispute – Section 13 – Pension entitlements – internal dispute resolution procedures - compensation