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 Grier
Worker Member: Mr O'Neill
2. The ABB Group of companies operates in about 100 countries and employs about 107,000 people. It was formerly know as Wessel Cable Ltd. The Company employs 140 people at the Longford site , of which 75% are members of the Union.
The Company is currently facing pension funding difficulties. The Longford employees have had a defined benefit scheme for some years but the Company have now decided to switch to a defined contribution scheme for new employees recruited to Longford since the move there. The existing staff are to remain in the defined benefit scheme as previously. The Union are opposed to the change.
The dispute was the subject of a conciliation conference under the auspices of the Labour Relations Commission held in February, 2006. As agreement was not reached the dispute was referred to the Labour Court on the 22nd February, 2006, in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 5th September, 2006.
3. 1.The Defined Contribution scheme is unilaterally imposed and not negotiated or agreed and as such is against the spirit of clauses in recent national agreements on pensions.
2. The Defined Benefit scheme gives an employee a certainty of earnings in their retirement and there is no reason why new employees should not become members of this scheme. The existing scheme is financially sound.
3.The voluntary nature of the Defined Contribution scheme and the cap of 6% on member's contributions is a saving to the Company.
4. 1.The Company's actions have been motivated at all times by the need for responsible and prudent governance of the existing investment in the Pension Scheme.
2. The Company does not accept that the existence of two pension schemes, Defined Benefit and Defined Contribution will cause a great division between existing and new staff. The two schemes have operated together for the last year without any difficulties.
3.The Company is currently in a loss-making situation. The extension of the Defined Benefit pension scheme to include new employees has the potential to seriously impact further the Company's finances and put the Defined Benefit scheme in jeopardy.
The claim before the Court concerns the newly introduced Defined Contribution Pension Scheme, introduced on a voluntary basis for all new employees recruited after 1st August 2004. The scheme involves matching employer/employee contributions levels of between 3% and 6%, at the discretion of the employee who opts to join.
The Union objected to the introduction of a Defined Contribution Scheme, however, in the event that such a scheme were to be retained then the Union claimed that it should be a mandatory scheme for all employees with matching contributions levels of 5%; in the event that a mandatory scheme is not implemented then the Union sought a 10% wage increase for those employees who opted not to join.
Having considered the views of the parties expressed in their oral and written submissions, the Court recommends that the Defined Contribution Scheme should become a mandatory scheme for all employees to join. The level of contributions should be set at 5% from the employee and 5% from the employer. The scheme should allow those employees who are currently contributing at 6% to continue at that level with matching employer contributions - this provision is being recommended on a red circling basis specific to named individuals contributing at this level at the date of this Labour Court Recommendation.
The Court so recommends.
Signed on behalf of the Labour Court
25th September, 2006______________________
Enquiries concerning this Recommendation should be addressed to Madelon Geoghegan, Court Secretary.