Complainant

Respondent

Anonymised Parties

A Worker

An Employer

Representatives

Karan O'Loughlin SIPTU

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-00027982-001

26/04/2019

The worker has continuous service of 17.05 years with the respondent. In April 2019 however the respondent issued the worker ’s service as being 16.62 years services as the calculation (excluding statutory redundancy payment) was on the basis of pensionable service and not actual service. When asked, the respondent confirmed that they had excluded 0.43 years from the calculation as the worker had taken up a secondment opportunity with the ECB for that period of time in 2015. The worker does not accept that this is fair or proper and is seeking payment of the ex-gratia redundancy and training allowance for this missing service period to the value of approximately €5,000.

There is no disagreement with the respondent that the worker has 17.05 years’ service. The difference is between pensionable service and actual service. This is acknowledged freely by the respondent and is consistent with the worker’s service as recorded on the respondent’s time management portal.

The respondent raised several arguments as to why they excluded the seconded period from the calculation of ex gratia redundancy.

1.           This is their policy for redundancy

2.           It is not allowable under the pension rules

3.           The public service rules do not allow it

In respect of any secondment, it is a prerequisite that a worker obtains approval from their immediate business Director. The worker therefore undertook the short secondment with the consent of and full support of the respondent. At no time did the they inform the worker that taking up a secondment was likely to have a detrimental effect on his service. To inform him of this retrospectively is just not appropriate.

Notwithstanding this, the intention to calculate redundancy based on pensionable service was never agreed nor recorded in the agreement as should have been the case if the respondent intended it to be covered by any internal policy that they may have.

The respondent acknowledged the worker’s 17.05 years continuous services for the Statutory element of the redundancy but reduced the calculation for ex-gratia payment and training allowance to 16.62 years pensionable service, this resulted in him receiving a redundancy calculation of less 0.43 years.  

The worker is raising a trade dispute under section 13 of the Industrial Relations Act and claims that his employer, did not include his period of secondment to the ECB when calculating his service for the purposes of redundancy . The respondent is refuting this claim as the calculations were applied correctly as a matter of policy, practice and precedent. The worker’s period of secondment was not reckonable in the calculation of his ex-gratia payment as it was unpaid leave and thus not pensionable service.

Background to the Case

The worker commenced work in the respondent on 08 April 2002 as a ‘No 2 Printer’ and, over the course of seventeen years, occupied a number of positions before accepting a severance agreement, and leaving the respondent, on the 26 April 2019.

As part of his tenure in the respondent, The worker applied for, and was successful in securing, a secondment to the ECB. There, he took up the position of ‘Production Expert’ from 15 October 2015 until 14 January 2016. It is important to note that he was paid by the ECB, and not the respondent, for the duration of the secondment. The worker’s service then immediately resumed with the respondent upon returning from said leave from 15 January 2016 until his departure on 26 April 2019.

The worker, having due notice and consideration of the terms of the redundancy agreement, duly accepted its conditions and received a total gross lump sum of €192,644.58.

The respondent will now demonstrate that its actions were in accordance with its pension scheme, policy, and indeed public service practice. Furthermore, the worker was aware of this before he undertook his secondment in the ECB.

On 02 October 2015, the worker signed a Secondment Sponsorship Agreement) which confirmed that both he, his Line Manager, and the Director of Currency and Facilities Management, were aware of the obligations under said agreement.

On 08 October 2015, the worker was further provided with a letter   from Human Resources clearly stating the terms and conditions as applicable to his special leave in the ECB. It specifically stated that, while the period of special leave would not change his employment status as an employee of the respondent, said “period of special leave will not count as service and is not reckonable for superannuation purposes or annual leave”.

It also stated that, in respect of his pension, his “service prior to this special leave will be aggregated with service after his return and will be taken into account in calculating pension entitlements on retirement”. The worker duly signed this letter thus agreeing to the abovementioned conditions.

The above terms and conditions, as signed by the worker, clearly state that his secondment to the ECB was not reckonable for pension purposes. Therefore, the service would never have been considered when calculating his redundancy payment.

This is the practice applied across the respondent when a staff member is paid by the host organisation on secondment. The reason being is that it prevents the staff member from accruing double benefits. Thus, the worker’s absence for this period of special leave did not count as service and did not reckon for incremental or superannuation purposes. This was explained to the worker in correspondence dated 8 October 2015.

This is also reflected in the Outward Secondments Policy. It states that “your service is not reckonable for pension purposes in instance where you are paid by the host organisation (including accrual of pension benefits)…this is to avoid accruing double benefits, as you will have access to the host organisation’s terms and conditions for the period of secondment”.

As part of the redundancy agreement between the respondent and SIPTU the agreed terms provided for six weeks’ pay per year of service. This sum included the statutory redundancy payment for employees. Redundancy payments were subject to a maximum of two years pay or the total amount of gross pay an individual would receive up to the minimum retirement age, whichever is lower. If the amount of gross pay an individual would receive up, to minimum retirement age, was lower than the statutory redundancy entitlement, two weeks’ pay per year of service plus one additional weeks’ pay applied.

In respect of the calculation of the ex-gratia payment and, in line with public sector practice, pensionable service has always been used by the respondent to calculate this. For clarity and correctness, a query on this matter was raised with the Department of Public Expenditure and Reform (DPER). They advised that the respondent’s practice was indeed correct and that, in the example as applicable to the worker, he is not entitled to use the three-month service in the ECB for inclusion in the calculation of his redundancy payment.

DPER also referred to the Department of Health Circular 4/2013, the terms of which are based upon the Collective Agreement: Redundancy Payments to Public Servants from June 2013. This details the applicable redundancy terms within the public service and, specifically, the calculation of the ex-gratia element of redundancy payments. It states that service will be determined in the same manner that pensionable service is determined under the relevant superannuation scheme. It further explicitly states that any form of unpaid leave will not be included as service for the purpose of calculating the ex-gratia element of the payment.

Thus, according to the respondent’s Superannuation Scheme reckonable service is “pensionable service calculated on the basis of completed days service, less leave without pay”. Therefore, the process was correct in excluding unpaid leave, such as a secondment, in the calculation of reckonable service for the ex-gratia payment.

Prior to exiting the respondent under the terms of the severance arrangements, the worker was fully aware that reckonable service would be the basis of calculation. All employees leaving the Respondent, under the terms of the agreement, were required to sign a waiver acknowledging that acceptance of the terms constituted full and final settlement of all claims.

On an exceptional basis, the Respondent agreed to amend this waiver and included the following additional wording: “except only that the Respondent agrees that you may refer a dispute or claim to the Workplace Relations Commission and on appeal to the Labour Court in respect of the treatment of any period of secondment from the Respondent to the European The respondent in the determination only of reckonable service to calculate your voluntary ex-gratia severance payment and your statutory redundancy entitlement”. An email to SIPTU divisional organiser confirmed that this concession in no way indicated that the Respondent viewed any such claim as meritorious.

The respondent acknowledged the worker’s 17.05 years continuous services for the Statutory element of the redundancy but reduced the calculation for ex-gratia payment and training allowance to 16.62 years pensionable service, this resulted in him receiving a redundancy calculation of less 0.43 years.  

Based on the evidence adduced during the hearing together with documentation submitted, I am satisfied that the respondent’s calculation of the worker’s service for the purpose of calculating his redundancy payment was correct. I am therefore not making a recommendation in this matter.

I am satisfied that the respondent’s calculation of the worker’s service for the purpose of calculating his redundancy payment was correct. I am therefore not making a recommendation in this matter.