INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
PENN RACQUET SPORTS
(REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION)
- AND -
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
Chairman: Mr Duffy
Employer Member: Mr McHenry
Worker Member: Ms Ni Mhurchu
1. Pension scheme.
2. The Company set up its plant in Mullingar in 1974. It manufactures tennis balls, and employs approximately 160 workers, 130 of whom are involved in the claim.
The dispute concerns the fact that in 1997, the Company took a contribution holiday from the Company/Union defined benefits pension scheme. The Company claims that it is legally entitled to do this. The pension scheme was set up in 1980. Total funding at the time was 13.4%, split 50:50 between the parties. In 1989, it was agreed that the employees contribution would be reduced to 4.7%, with the Company making up the balance.
Following talks in 1997, the Union believed that its members' contribution would be reduced to 3.7%. This, however, was a misunderstanding and the employees' contribution remains at 4.7%.
The dispute was referred to the Labour Relations Commission and a conciliation conference took place on the 28th of April, 1998. As the parties did not reach agreement, the dispute was referred to the Labour Court on the 12th of June, 1998,in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 27th of April, 1999, in Mullingar, the earliest date available to the parties.
1. The Company is part of the multi-national company Gen. Corp. at present. However, this could change shortly as the Company has announced that its polymer division is for sale. The Company's decision to take a contribution holiday is akin to asset stripping.
2. If there is a surplus in the scheme, as the Company maintains, the benefits should be for everyone, not just the employer. It became obvious that there was over-subsidising by 1990. The employees had been contributing 6.7% (50% of total) from 1980-1989.
3. The Company's action is in breach of the spirit of recent national wage agreements to ensure that people retiring have an adequate pension.
1. Since it began in 1980, the pension fund has developed a short-term surplus. There were 2 reasons for this:
(i) the investment fund had performed well and;
(ii) since the scheme's inception, 67 employees who had been members had left.
Sixty three of these opted to reclaim their own pension contributions, but the Company's contribution had remained in the fund. Because of these 2 factors, the Company felt it was entitled to a short-term reduction in contribution.
2. The Company intends to support the pension scheme agreed with the Union. It's action in making reduced contributions in the last few years has not affected this commitment.
3. The Union wants all the benefits of a defined benefit scheme but it is the Company which carries all the risks.
4. The facility to make short-term reduced contributions is fully permitted under the pension legislation. It represents no risks to the employees.
In considering the submissions of the parties in this case, it is clear to the Court that the rules of the Company Pension Scheme are such as to place the exclusive responsibility on the Company for maintaining the solvency of the fund, and that the employees' contribution is fixed irrespective of how the fund performs.
In these circumstances, the Court accepts that the employer is entitled to reduce its contribution to the fund, in circumstances where this is made possible by a surplus, and where the accrued benefits to members of the scheme will be unaffected.
For these reasons, the Court does not recommend concession of the Union's claim.
Signed on behalf of the Labour Court
21st May, 1999.______________________
Enquiries concerning this Recommendation should be addressed to Ciaran O'Neill, Court Secretary.