INDUSTRIAL RELATIONS ACTS, 1946 TO 2004
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
(REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION)
- AND -
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION)
Chairman: Ms Jenkinson
Employer Member: Mr Carberry
Worker Member: Ms Ni Mhurchu
1. Change in Pension Scheme.
2. The case before the Court concerns the closure of a Non Contributory Defined Benefit Pension Scheme and the introduction of a Defined Contribution Scheme for workers employed by the Rehab Group. In May 2003, the Director of Finance of the Rehab Group, received a letter from the Company auditors advising that the Company should reconsider their position with regard to the Pension Scheme.
In December 2003, the Board of the Rehab Group decided to close the Defined Benefit Scheme and introduce a Defined Contribution Scheme for new entrants to the Company after 1st April 2004.
The Union rejected the Company's position initially on the basis that it would create disharmony amongst old and new staff which may create industrial relations issues in the future and that it would create a two tier pension scheme which would be unreasonable.
The dispute could not be resolved at local level and was the subject of a conciliation conference under the auspices of the Labour Relations Commission. As agreement was not reached, the dispute was referred to the Labour Court on the 27th July,2004 in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 3rd November, 2004.
3. 1. It has been agreed that a Defined Contribution Scheme is necessary going forward but the new scheme should at least provide comparable benefits to the existing scheme.
2. A contribution rate of 18% is necessary (12% payable by the employer and 6% payable by the employee) to ensure that the new scheme will not disadvantage people in comparison with the existing scheme.
3. In order to reach Agreement, it was indicated that a 15% contribution (10% by the employer and 5% by the employee)would be accepted. This was rejected by the company.
4. 1. The Company have been advised that to continue to provide a Defined Benefit Pension Scheme in 2005 would cost 18.6% of pensionable salary. This is unsustainable.
2. The Company offered a contribution of 8% of salary with an employee contribution of 4%. This was rejected by the Union. In an effort to reach agreement the Company suggested that if the employee wished to contribute 5% the Company would increase their contribution to 9%. This was also rejected by the Union.
The Court notes that the employer has proposed options for employees in terms of the amount of contributions to be paid into the new proposed Defined Contributory Pension Scheme, ranging from a total of 12% to 14%. This is in addition to the provision by the employer of Life Assurance and Income Protection Schemes. The Court also notes the Union's current position that a total contribution rate of 15% should be paid, made up of an employer contribution of 10% and an employee contribution of 5%.
Having considered the views of the parties expressed in their oral and written submissions, the Court is of the view that the employer's proposed contributions of 9% of pensionable pay to be paid by the employer and 5% of pensionable pay to be paid by the employee is reasonable in all the circumstances of this case. Therefore, the Court recommends acceptance of this proposal and recommends that it be accepted by the Union with an implementation date of 1st December 2004 for all new entrants to the organisations involved in the Rehab Group.
Signed on behalf of the Labour Court
26th November, 2004______________________
Enquiries concerning this Recommendation should be addressed to Andrew Heavey, Court Secretary.