ADJUDICATION OFFICER DECISION
Adjudication Decision Reference: ADJ-00003375
A Sales Executive V A Company
Complaint for Resolution:
Complaint/Dispute Reference No.
Date of Receipt
Complaint seeking adjudication by the Workplace Relations Commission under Regulation 10 of the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (S.I. No. 131 of 2003)
Date of Adjudication Hearing: 07/11/2016
Workplace Relations Commission Adjudication Officer: Patsy Doyle
In accordance with Regulation 10 of the European Communities (Protection of Employees on transfer of Undertakings) Regulations, 2003 Statutory Instrument No 131, 2003, following the referral of the complaint to me by the Director General, I inquired into the complaint and gave the parties an opportunity to be heard by me and to present to me any evidence relevant to the complaint.
Complainant’s Submission and Presentation:
The complainant commenced work for a Bio Science company as a Sales Manager, level one on December 1st 2005. Under his terms of employment, he was required to join the company defined benefit pension scheme on the nearest scheme renewal date the following year. This pension scheme was fully funded by the company and referred to as the pre 2006 Plan.
The complainant was a shareholder in the company and worked without incident until he was informed that his company at his commencement of employment had been acquired by a Global Pharmaceutical company in July 2010. There was no marked difference to his working life initially until mid 2014 when he received a regrading proposal from the new company.
The complainant submitted a series of documents relating to this proposal in 2014.The position was to be regraded to a level four position, Global Grade 11:
“Your salary and bonus % will be grandfathered however (to answer your question below this simply means retained on a personal basis)”
Extract from communique of 24 June, 2014.
This was followed by a further email on 27 June 2014:
“The good news is that current global grade benefits (e.g.) car) will be grandfathered. This means your benefits will continue to be based on those applicable to X post “
The respondent proposed the closure of a new Defined Contribution scheme to replace the Defined Benefit scheme during 2016. The complainant submitted documentary evidence of the deliberations of the staff group and the respondent on this issue. The complainant submitted that he understood that the DB scheme was not compromised or under funded .
“The Defined Benefit Section of our pre 2006 plan is …..well funded. However the company shares the general view that DB pensions do not provide a sustainable model for the future …..
Members of the pre 2006 plan will also have the opportunity to attend a one to one formal consultation meeting onsite to review the material and help make informed choices “
The respondent offered a gesture of goodwill to all active members of the DB scheme. In the complainants case , this stood at 15% of base salary .Staff at the respondent company detailed their dissatisfaction on July 18, 2016 and made counter proposals .The company responded on July 25th confirming that the Trustees of the Pension scheme had endorsed the proposed changes . The Defined Benefit scheme closed to future accrual and was replaced by a DC scheme on 31 July 2016.
The complainant submitted that his “red circling /grandfather clause” of 2014 was not incorporated into any of the company’s’ exchange of documents .
The complainant presented as being extremely worried at the prospect of a diminished set of pension benefits on retirement He submitted an actuarial report to support his case.
In order to mirror the benefits accumulated under the DB scheme in realising a pension of €23,130 on retirement, he estimated that the company would have to maintain a 27% of gross salary contribution. The company were paying a maximum of 12% of salary into the DC scheme .He sought adjudication on the issue.
The complainant made his complaint to the WRC on 31 May 2016. He sought clarification on the correct formulation of his complaint in advance of the hearing.
On 12 October, 2016, the complainant asked the WRC why his request for mediation in the case had not been acceded to. On 18 October, 2016, the WRC confirmed that the communication sent to him in June seeking to ascertain his position on mediation had gone unanswered and the case had therefore proceeded to Adjudication on November 7.
The complainant was dissatisfied that his efforts to secure clarification on the formulation of his claim were not addressed in advance of the hearing and I will deal with this later in my reasoning and decision section.
The complainant had prepared two series of documents for the hearing, one was passed to the respondent and he agreed to submit a copy of any documents he wished to rely on to the Adjudicator immediately after the hearing.
Respondent’s Submission and Presentation:
The respondent agreed with the background of the case as provided by the complainant. The respondent submitted that the company was transferred by way of acquisition in 2010 and TUPE did not apply. They submitted that as a Shareholder of the first company, the complainant was made aware of the acquisition.
The respondent submitted that their purported intention to amend the company pension scheme and the adequacy of compensation were not matters for hearing under the TUPE Regulations .They requested that the Adjudicator deem the claim misconceived . There were 320 employees similarly encompassed by the same changes from DB to DC schemes.
The company had hosted a Staff engagement forum to inform staff on the changes to the pension scheme agreed by the Trustees of the scheme and Management. These were held via town hall meetings and Web sessions .These measures were complemented by Individual Financial Consultations. The complainant did not raise any issues of dissatisfaction with the Pension Consultant.
The respondent put forward a number of preliminary matters, which they argued were fatal to the success of the claim. The claim was received by the WRC on 31 May 2016.
1 No contravention existed on that date
The respondent submitted that the claim lacked evidence of contravention .The respondent confirmed that consultation on proposed changes to the company pension scheme were underway at the time the claim was lodged .However, no change had been made. The respondent submitted two documents from July 2010 which served as company records of an acquisition of the complainants company of first employment. They denied that the acquisition constituted the framework for application of the Regulations under TUPE.
“….. We will now move quickly to bring together the expertise and complimentary capabilities of both X and Y employees to capture the significant opportunities in the high growth, high margin market segments such as bio research and bio production.”
The respondent sought a direction on the complaint being misconceived.
2 31 May, 2016 is outside the statutory time limits for grounding a claim.
The respondent submitted that the claim is not properly before the WRC. The complaint was filed in anticipation of a contravention and prior to the date of an actual contravention. This filing is outside the statutory time limits, as being before time is to be outside the time allowed.
The respondent requested that the Adjudicator should decline jurisdiction in the case.
3 There was no transfer under TUPE Regulations.
The respondent submitted that the transaction of acquisition was approved by the Boards of Directors of both companies. The second company (Pharma) delisted the shares of the first company (Bio Life science) from the New York Stock Exchange and removed the shares from registration with the US Commission.
The respondent contended that TUPE regulations did not apply to a take over of a company by way of acquisition of its share capital as the Regulations require the transfer of an undertaking from one person to another or for the legal identity of the employer to change.
A Direction for dismissal was sought
4 Transfer of Pension Rights is not covered under the Regulations
The respondent contended that the rights and obligations of an employee under a contract of employment, other than pension rights existing on the date of transfer , are transferred to the new employer on the transfer of the business or part thereof .Pension rights did not transfer to the new employment .
5 The adequacy of compensation is not provided for under the TUPE Regulations.
The respondent advanced the case that the adequacy of compensation offered during an ongoing consultation process was not properly encompassed by the TUPE regulations and again sought a direction for dismissal.
Reasoning and Decision:
Section 41(4) of the Workplace Relations Act 2015 requires that I make a decision in relation to the complaint in accordance with the relevant redress provisions under Schedule 6 of that Act. In Regulation 10 of the European Communities (Protection of Employees on transfer of Undertakings) Regulations, 2003 Statutory Instrument No 131, 2003, I must make a decision in the case.
At the outset of the hearing, the complainant expressed dissatisfaction that he could not secure the assistance of the WRC in assisting with the formulation of his complaint. He had expressed reservations on his complaint submitted on 31 May 2016 directly with the complaint reception area I had no prior notice of these reservations, with the exception of the reference to Mediation on 18 October, 2016 . I discussed the fact that I was an external Adjudicator who had been delegated the case from the Director General of the WRC.
I explained to the complainant that staff at WRC reception area is not in a position to assist in the formulation of a complaint as they presume that a complainant has been advised in relation to the preparation of the statement of claim. I also confirmed that there were two parties involved, i.e. complainant and respondent and the WRC had to be seen to be fair to both parties. I asked the complainant to give an outline of his case on that basis. He agreed to do this.
I have inquired into this complaint, I have given the parties an opportunity to be heard and I have allowed for evidence to be adduced. I received a copy of the complainant submission a number of days post hearing as I had given the sole copy to the respondent on the day of the hearing .The respondent submitted a written presentation on the day of the hearing. Documents were exchanged between the parties.
In light of the complainants continued interest in Mediation. During the course of the hearing, I asked the respondent whether the company was in a position to entertain mediation as a disputes resolution mechanism? . The respondent refused this stating that there were over 300 employees with a similar status to the complainant at the company .
Legislation involved and requirements of legislation:
Statutory Instrument 131/2003,
3. (1) These Regulations shall apply to any transfer of an undertaking, business, or part of an undertaking or business from one employer to another employer as a result of a legal transfer (including the assignment or forfeiture of a lease) or merger.
(2) Subject to this Regulation, in these Regulations - “transfer” means the transfer of an economic entity which retains its identity; “economic entity” means an organised grouping of resources which has the objective of pursuing an economic activity whether or not that activity is for profit or whether it is central or ancillary to another economic or administrative entity.
(3) These Regulations shall apply to public and private undertakings engaged in economic activities whether or not they are operating for gain.
(4) An administrative reorganisation of public administrative authorities or the transfer of administrative functions between public administrative authorities is not a transfer for the purposes of these Regulations.
(5) These Regulations shall not apply to sea-going vessels.
Rights and obligations.
4. (1) The transferor's rights and obligations arising from a contract of employment existing on the date of a transfer shall, by reason of such transfer, be transferred to the transferee.
(2) Following a transfer, the transferee shall continue to observe the terms and conditions agreed in any collective agreement on the same terms applicable to the transferor under that agreement until the date of termination or expiry of the collective agreement or the entry into force or application of another collective agreement.
(3) Subject to paragraph (4), this Regulation shall not apply in relation to employees' rights to old-age, invalidity or survivors’ benefits under supplementary company or inter-company pension schemes that do not fall within the Social Welfare Acts.
(4) (a) The interests of employees and of persons no longer employed in the transferor's business at the time of the transfer in respect of rights conferring on them immediate or prospective entitlement to old-age benefits, including survivors' benefits, under a supplementary company pension scheme that is an occupational pension scheme within the meaning of the Pensions Acts 1990 to 2003 are protected under those Acts.
(b) The transferee shall ensure that the interests of employees and of persons no longer employed in the transferor's business at the time of the transfer in respect of rights conferring on them immediate or prospective entitlement to old-age benefits, including survivors’ benefits, under a supplementary company pension scheme, other than a supplementary pension scheme that is an occupational pension scheme within the meaning of the Pensions Acts 1990 to 2003, are protected.
S. 41 (6) Subject to subsection (8), an adjudication officer shall not entertain a complaint referred to him or her under this section if it has been presented to the Director General after the expiration of the period of 6 months beginning on the date of the contravention to which the complaint relates.
The Regulations implemented Council Directive No 2001/23/EC of 12 March 2001 aimed at safeguarding the rights of employees in the event of a transfer of an undertaking, business or part of a business to another employer as a result of a legal transfer or merger.
The respondent denied the presence of a transfer in accordance with the regulations .The complainant contended that he was covered by the regulations. I asked the complainant to review his documents for any trace of a reference to the obligatory consultation/notification period under TUPE in 2010. I have not received any further documents in this regard.
I was keen to establish the parameters of the “Grandfather clause “(red circled) company assurance to the complainant from 2014. This referred to retention of benefits.
I asked the parties for submissions on Section 7 of the Dept. of Jobs, Enterprise and Innovation explanatory handbook for Employers and Employees on the TUPE Regulations. Neither party had referred any query or complaint to the Pensions Board in relation to an Occupational Pension scheme. Neither had the complainant shared the Actuarial Report, he had commissioned with the respondent.
I assessed the timelines referred to in the complainant’s complaint on 31 May 2016.
“My current /new employer (Transferee) did not ensure that my terms and conditions transferred from my previous employer (Transferor) “
The formal statement referred to a contention by the complainant that the company were in the process of closing the DB scheme without adequate compensation.
I have considered both parties submissions in this regard and I must, on the balance of justice , accept the respondent’s summation that the claim is anticipatory in nature and was lodged in advance of an actual contravention date.
S. 41 (6) of the Workplace Relations Act, 2015 provides that
Subject to subsection (8), an adjudication officer shall not entertain a complaint referred to him or her under this section if it has been presented to the Director General after the expiration of the period of 6 months beginning on the date of the contravention to which the complaint relates.
There is provision to extend this limitation period due to reasonable cause to 12 months.
The events put forward by the complainant in relation to pension changes occurred on 31 July, 2016. I established this with certainty once I received the complainants documents post the hearing date. The clock starts ticking in employment law terms from that time Vis a Vis any formulation of complaint.
The WRC received the instant complaint on 31 May, 2016.
While I appreciate that the complainant is dissatisfied with the closure of the DB scheme at his company, I must record my decision as finding that the complaint is not well founded on this occasion, due to the anticipatory nature of the claim, which pre-dated the date of contravention referred to as July 31, 2016. Michael Sheils et al v Integrate Ireland Language and Training ltd , Dept. of Education and Science and 8 named VECS 21 ELR 41 ,considered .
Dated: 15 December 2016