INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 20(1), INDUSTRIAL RELATIONS ACT, 1969
DEPARTMENT OF FINANCE
- AND -
(REPRESENTED BY SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION)
Chairman: Ms Jenkinson
Employer Member: Mr McHenry
Worker Member: Mr O'Neill
1. Alleged inclusion of pension gratuity as part of the redundancy package.
2. The worker was employed for 21 years as a secretarial assistant. She was assigned to work for the Fine Gael Party and held the status of unestablished civil servant. A non-contributory pension scheme covers all such employees.
In March, 1997, under the auspices of the Labour Relations Commission, an agreement was reached between the Union and the Department of Finance with a view to the re-structuring proposals on future employment methods in the House of the Oireachtas, covering all political parties and independent members. The agreement had 4 distinct clauses/options to be exercised on a voluntary basis.
Option 1 is a voluntary redundancy offer which, the Union claims, does not refer to retirement. This provision allows for 4 weeks' pay per year of service with credit given for additional service up to a maximum of 7 years. The worker qualified for 7 added years. Options 2 allowed for a buyout of service. The worker also qualified for this clause, which would give her a payment equal to 3 weeks' pay per year of actual service. By opting for clauses 1 and 2, options 3 and 4 did not apply.
In August, 1997, the worker received her redundancy payments, inclusive of statutory. The Union's claim is that the redundancy package should not have included her pension gratuity, such gratuity being due to her upon reaching normal retirement age - 60/65 years. The Union raised the matter directly with the Department of Finance and it was referred to a Rights Commissioner. The Department refused to attend a hearing and the issue was referred to the Labour Court by the Union on the 21st of April, 1999, in accordance with Section 20 (1) of the Industrial Relations Act, 1969. Again, the Department refused to attend, but did furnish the Court with a written submission. In the submission, the Department made the following points:
(a) Option 2 allowed for secretarial assistants to accept a buyout of his/her service before the 1997 General Election and be re-employed on contract. Those who so opted could avail of voluntary redundancy after the General Election.
(b) The worker initially opted for the buyout arrangement and subsequently also availed of the voluntary early retirement (VER) option after the 1997 General Election. Had the worker not availed of the early retirement package, she would have been entitled to a superannuation lump sum payment of £19,352 at age 60 or £23,081 at age 65. She actually received a voluntary early retirement payment of £44,710 in 1997. She also received a buyout amount of £24,781 in 1997.
The Department also referred to a letter sent to the worker, informing her of the package on offer. The Department felt that it was evident that the VER payment was inclusive of the superannuation lump sum, and claims that this had been discussed with secretarial assistants before they made a decision on which option/clause to chose.
1. The agreement reached in March, 1997, clearly made no provision for early retirement but was, instead, a voluntary redundancy package.
2. The issue of pension gratuity being included in redundancy payments was never raised in discussions at conciliation conferences.
3. While the Department of Finance did use the term "voluntary early retirement" in its "offer" to the employees, it made no reference to the pension gratuity being included in the lump sum.
4. Had the deduction of the pension gratuity been raised as an issue, agreement would probably not have been reached, as it would have been a much less attractive financial package. The Department had failed to implement the terms of the agreement reached in March, 1997.
The Court considers it regrettable that the employer side did not attend the Court's investigation, however, they did outline their position in writing.
The Court is satisfied from its investigation that the voluntary severance package which was agreed and paid out to the claimant in 1997, made no reference to the inclusion of a pension gratuity lump sum. Accordingly, the Court recommends that when the claimant's pension becomes due, it should not be reduced by any amount related to her severance package.
Signed on behalf of the Labour Court
30th August, 1999.______________________
Enquiries concerning this Recommendation should be addressed to Ciaran O'Neill, Court Secretary.