INDUSTRIAL RELATIONS ACTS, 1946 TO 2004
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
LIEBHERR CONTAINER CRANES LIMITED
(REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION)
- AND -
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
Chairman: Mr McGee
Employer Member: Mr Murphy
Worker Member: Ms Ni Mhurchu
1. Pension scheme - new employees.
2. The dispute concerns the Company's proposal to introduce a defined contribution pension scheme (D.C.) for new employees. To date the Company operated a defined benefit scheme (D.B.) scheme with 336 employees in the scheme. Staff pay a contribution of 10.75% and the employer pays 14.25%.
In December, 2003, the Company raised concerns about the scheme and following an actuarial evaluation it was disclosed that there was a shortfall of €7.4 million. The Company agreed to contribute an additional €3.4 million to the scheme for the period March 2003 to March, 2006, and it increased its own contribution from 11.95% to its current 14.25%. Liebherr International AG (the parent Company) agreed the funding arrangement on the understanding that the D.B. scheme was closed to new members and would be replaced by a D.C. scheme.
The Union objected to the closing of the D.B. scheme by letter on the 25th of May, 2004, and referred the case to the Labour Relations Commission. A conciliation conference took place but, as the parties did not reach agreement, the dispute was referred to the Labour Court on the 9th of February, 2005, in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 17th of May, 2006, in Limerick, the earliest date suitable to the parties.
3. 1. A Defined Benefit scheme is part of the terms and conditions of employment for workers. They do not want a two-tiered pension scheme to be implemented at the plant.
2. Both last year and the present year look to be good for the scheme and, if there is an increase in interest rates, it would mean that the scheme would be 100% funded.
3. If there is an issue with funding the employees are prepared to address the problem with the Company.
4. 1. The Company operates in a highly competitive environment and it is essential to keep its costs under control. The recent funding problem with the D.B. scheme has shown how expensive these schemes are.
2. The Company has made an enormous financial contribution to the scheme (an additional contribution of €3.4 million and increasing its own contribution to 14.25%). It cannot absorb the cost and potential risk of extending the D.B. scheme benefits to new employees.
The Court has considered the submissions of the parties', noting:-
(a) the latest information on the scheme and the need to produce a new funding proposal,
(b) the fact that the parties are still discussing cost reduction measures, and
(c) the Company's expressed commitment to maintaining the pension benefits provided to existing D.B. scheme members.
The Court, rather than make a definitive recommendation at this time, would urge the parties to enter into immediate discussions, with the aid of any necessary professional assistance on both sides, with a view to
(i) safeguarding the position of those covered by the existing D.B. pension scheme and
(ii) arriving at a mutually agreeable (but sensible in the light of present developments) arrangement for pension coverage of those recruited since the closing of the D.B. Scheme and the setting up of the new D.C. scheme.
The Court is of the view that any changes in such vital areas as pensions should only take place by agreement where possible but notes the provision in the previous funding proposal which required the closure of the then existing D.B. scheme.
Signed on behalf of the Labour Court
31st May, 2006______________________
Enquiries concerning this Recommendation should be addressed to Ciaran O'Neill, Court Secretary.