LCR22968

PARTIES:

DIVISION:

SUBJECT:

On Call, standby premium to be included for pension calculation.

BACKGROUND:

This dispute could not be resolved at local level and was the subject of Conciliation Conferences under the auspices of the Workplace Relations Commission. As agreement was not reached, the dispute was referred to the Labour Court on 12th April 2024 in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on 8th May 2024.

UNION’S ARGUMENTS:

1. On-call allowance is an allowance in the nature of pay and as such should be included as part of salary calculation for pension purposes.
2. The allowance is a fixed payment that increases in line with negotiated pay agreements. Craft workers are paid the allowance when on annual leave and sick leave as part of their salary.

EMPLOYER'S ARGUMENTS:

1. The claim is not consistent with Henkel Ireland Pension Schemes provisions and parameters governing pensionable salary, i.e. the call-in allowance is a fluctuating emolument.
2. The call-in agreement from 2022, which was signed and accepted for and on behalf of the Union clearly states, “this premium will be adjusted on July 1st each year to reflect the percentage wage increase for that year but will not be used to calculate other terms and conditions”.

RECOMMENDATION:

The dispute before the Court is a claim by the union on behalf of six craft workers for the inclusion of an on-call allowance in the calculation of pensionable pay. The company operates a Defined Benefit (DB) Pension Scheme (pre-2014 employees) and a Defined Contribution (DC) Pension Scheme (post-2014 employees). Employer and employee pension contribution calculations are based on the annual basic rate of pay plus permanent shift allowance only.

The Trust Deed and Rules for the Defined Benefit Pension Scheme define salary as: “Salary means the basic annual rate of salary or wages of a member excluding benefits, bonus, overtime, commissions or other fluctuation emoluments but including permanent shift allowance where directed by the employer.”

The Trust Deed and Rules for the Defined Contribution Pension Scheme define salary as: “Salary shall mean an Employee’s basic annual rate of salary at 1 July each year plus permanent shift premiums and management and sales incentive payments received in the previous twelve months but excluding overtime, other bonuses, Commission and similar payments.”

Four craft workers are members of the DB Pension Scheme and two are members of the DC pension plan. The workers receive an on-call allowance of €356.31 per week when on call, which occurs one week in three. The union seeks that the on-call allowance be regarded as pay for pension purposes.

The union’s position is that the on-call allowance is clearly an allowance in the nature of pay. It asserts that on-call allowances are defined as pay in Regulation 5 of S.I.475 of 1997. Craft workers are paid the allowance when on annual leave and sick leave as part of their salary. Payments increase in line with negotiated pay agreements.  

Furthermore, it asserts that the Company is highly profitable, and it is common practice in the private sector to include on-call payments for pension contributions. The on-call allowance for craft workers in the local authority sector is pensionable, as are on call payments for ICT staff in the HSE.

The employer's position is that the on-call allowance was never set up to be part of pensionable pay.  The relevant Agreement concluded in 2002 with the union clearly states: “This premium will be adjusted on July 1st each year to reflect the percentage wage increase for that year but will not be used to calculate other terms and conditions”.

The employer submits that the allowance is a fluctuating emolument, and payments vary depending on attendance. Payment is not made when an employee is on sick leave. Furthermore, the employer assert that it is not an outlier in relation to the non-inclusion of on-call allowances for pension contributions. Both pension schemes are exceptionally generous and changes to the schemes are unwarranted. A wider cohort of employees receive an on-call allowance and to broaden the definition of salary would lead to unsustainable additional costs for the employer in the long term.

The Court has given careful consideration to the oral and written submission from both sides.

It is accepted by the parties that in 2002 the parties negotiated and agreed a collective agreement that determined terms and conditions of employment relating to on-call arrangements.

In response to questions from the Court, the union said that it was not attempting to vary the terms of that 2002 collective agreement, nor was it attempting to vary the definition of pay as set out in the DB and DC pension schemes. It asserts that, with the passage of time, the definition of what constitutes pay has changed. The Union relies on Labour Court decisions made under the Organisation of Working Time Act, to support their claim that an on-call allowance is an allowance in the nature of pay. Furthermore, it asserts that on-call allowances are fixed payments that do not fluctuate.

The employer strongly disputes that position and asserts that on-call allowances are a fluctuating emolument and do not constitute a permanent shift type allowance and were not envisaged as pensionable pay when the 2002 agreement was concluded.

Since the conclusion of the 2002 agreement on call allowances are not considered to be fixed payments for the calculation of pensionable pay. It is accepted that when the 2002 agreement was concluded the intention of the parties at that time did not encompass including on-call payments for the purposes of pensionable pay.

The role of this Court is to uphold agreements collectively negotiated between parties. While no agreement is immutable for all time, normal industrial relations practice requires that parties honour agreements in place unless and until they are voluntarily renegotiated or terminated by agreement. In the view of the Court, the union’s claim seeks to vary the terms of the 2002 agreement.

Any variation to the terms of that collective agreement must be concluded by agreement between the parties. In this case, the employer is not agreeable to vary the terms of the 2002 on call agreement.

In light of the above, the court cannot recommend concession of the unions claim, at this time.

The Court so recommends.

	Signed on behalf of the Labour Court
	Katie Connolly
FC	______________________
29 May 2024	Deputy Chairman

NOTE

Enquiries concerning this Recommendation should be addressed to Fiona Corcoran, Court Secretary.