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: Mr McGee
Employer Member: Mr Murphy
Worker Member: Mr Nash
1. Proposed winding up of Defined Benefit Pension Plan
2. In June 2006, the Company announced to its members by way of memorandum its decision to cease contributing to the defined benefit pension plan with effect from the 31st December, 2006. The Union responded by way of a letter to the Company advising them that the pension plan was part of the conditions of employment of its members and any changes would need to be discussed. The Union held a number of meetings with the Company in an effort to identify means of saving the plan. The Company contend that there are clear financial reasons why the Company management made the decision to close the defined benefit plan and replace it with a defined contribution plan. The Union advised the Company that it would have no option but to ballot its members if the Company was not prepared to suspend closing the defined benefit plan an go through the relevant procedures
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 23rd January, 2007 in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 17th August, 2007.
3. 1 The Company has shown no willingness on their part to engage in good faith with its employees through their Union in any meaningful way to protect many of its long service employees in maintaining the existing pension scheme. The Company has displayed utter contempt for its employees by attempting to pass on any increased costs as the only means of saving the scheme.
2 This pension scheme was the subject of a Labour Court Hearing in 1995 (LCR14992). The Union official had no knowledge of this during any of the local discussions, nor at the LRC Conciliation Conference. If the Company was even paying today what had been recommended in 1995 by the Court, then the current defined benefit scheme can be maintained going forward.
4. 1 The trend in the Company's operating losses make it inoperable for the management to continue to incur increased costs that are unsustainable. This clearly involved dealing with the realities of declining numbers, increasing age profile and the risk that factors outside its control could have led to a problem of a significantly depleted pension provision at the time of retirement if the Company did not make difficult decisions.
2 There were legal issues that were prominent in the Company's assessment of this situation. The Company is concerned over its ability to meet further significant cost increases in the future and meet its legal obligations under the defined benefit plan. The Company had to exercise its right to withdraw from the scheme under the Deed of Trust, as it could not have confidence that it could meet future liabilities that would arise from the continuation of a scheme that frankly it could not afford to maintain.
The Court has carefully considered the submissions made to it by the parties.
The Court is conscious of the current difficult commercial position of the Company. It is also of the view that the financial situation of the defined benefit scheme is also quite difficult. The Court feels, however, that given the high level of social welfare integration in the scheme coupled with the funding history of the scheme and the relatively low level of contributions from both sides having regard to such schemes generally and particularly at the present time, that the problem is not insurmountable with appropriate levels of effort and goodwill from both parties.
The Court accordingly, recommends that the parties should immediatly re-engage with the object of jointly addressing the means necessary to retain the defined benefit scheme in operation. The assistance of the LRC may be sought if necessary.
Signed on behalf of the Labour Court
4th September, 2007______________________
Enquiries concerning this Recommendation should be addressed to David P Noonan, Court Secretary.