Complainant

Respondent

Anonymised Parties

A Director of Nursing

A Voluntary Hospital

Representatives

Albert Murphy Irish Nurses and Midwives Organisation

Maria Kearns

Act

Complaint/Dispute Reference No.

Date of Receipt

Section 13 of the Industrial Relations Acts 1969

CA-00044018

11 June 2021

The employer is a voluntary hospital. The Worker was employed in the hospital from September 1988 until her retirement in May 2021.

This complaint relates to a dispute regarding the exclusion of an industrial relations allowance in the calculation of a pension.

The worker is seeking compensation for loss of pension benefits.

The Worker commenced employment with the Employer in 1988 and joined the Superannuation Scheme in 1990 when she was made permanent. In line with the relevant pension rules her previous service dating back to 1982 was deemed reckonable for pension purposes.

In 2007, the Worker was appointed as Director of Nursing in the hospital. As she took on additional industrial relations type responsibilities, she received an Industrial relations Officer Allowance (IROA) from February 2011.  Pension deductions were applied to the allowance in accordance the Superannuation Scheme.

In 2013, a directive was issued to the hospital from the HSE stating that the IROA should cease. This directive was appealed by the Employer and a business case was submitted in December 2017 supporting the appeal.  In March 2020, the HSE issued a final decision which stated that the IROA should be red-circled and continue specifically for the Worker as an individual until she vacated her post.  The HSE stated that the allowance should not be included in the Worker’s pension calculation and that any contributions made by the Worker in respect of same should be refunded.  There was no internal avenue available for the Worker to appeal this decision.

The Worker submits that to not include the IROA in her pension calculation greatly affects her final benefits.  She has paid contributions for almost 10 years and has now retired from her post. The Employer has prepared two estimates for the worker, one with the allowance included and the other without which show a substantial difference.

The Worker submits that there is no justification for not including the allowance plus the additional contributions in the calculation of her final pension. The Worker points to a letter from HR to her in September 2014 which clearly states that her salary plus allowances were pensionable. The first time the Worker was made aware that the allowance was not pensionable was in March 2020 when she received an email from the hospital’s Director of HR; at this stage the Worker had been paying pension contributions for almost 10 years.

The Worker is seeking compensation in respect of this loss of earnings on the basis that this agreement was freely entered into by the Employer and the Worker and that for the duration of the allowance being paid the Worker paid tax and PRSI on these contributions. The Worker submits that it was reasonable for her to have a legitimate expectation that the IROA would be included in her pension calculations.

The Employer submits that it is a voluntary hospital and a member of the Ireland East Hospital Group under the remit of s38 of the Health Act 2004 as amended which means that it falls under the HSE Employment Control Framework.  The Employment Control Framework ensures the Government approved employment ceiling, employment levels and payroll costs are rigorously monitored, controlled, managed, and accounted; this includes grades, number of posts, all aspects of pay and pensions, and anything else to do with the financial aspects of the employment relationship.

The Employer submits that the Worker commenced employment with the Employer in 1988 and was Director of Nursing from 2011 until her retirement in May 2021. She had been appointed to the Board of Directors in September 2007.

The Worker was in receipt of an IROA from February 2011, in addition to her annual remuneration. Superannuation deductions were taken from the IROA by the Employer from February 2011.

The allowance was disclosed annually to the HSE in the Employer’s Annual Compliance Statement and was separately disclosed during the review of public pay compliance for voluntary hospitals.  Following that review a business case was made to the HSE in December 2017 for approval of the IROA.  In November 2019, approval was received for retention of the Allowance, red-circled to the post-holder, on a non-pensionable basis.

The fact that the Allowance was non-pensionable was challenged by the Worker by way of an appeal submitted in December 2019. The appeal was not upheld on the basis that the HSE could not overturn a decision taken by the Department of Health.  The outcome of this appeal was confirmed to the Worker in writing in two letters (20 July 2020 and 26 November 2020).

The Employer submits that as the Worker was on the Board, she would have been fully aware of this situation as it was the Annual Compliance Statements each year from 2016 to 2020 expressly referenced the HSE’s decision that the Allowance was not pensionable. The hospital’s Director of HR also confirmed to the Worker in March 2020 that the HSE had advised that they did not have the authority to overturn the Department of Health’s decision.

The Employer accepts that it continued to make superannuation deductions from the Worker’s salary until the date of her retirement. The rationale for the Employer continuing the deductions was that the Employer was continuing to advocate on behalf of the Worker that the Allowance should be pensionable, and it was hoped that it would ultimately be decided as the case.  The Worker was a valued employee and the Employer was happy to advocate on her behalf for the Allowance to be pensionable in recognition of the valuable contribution she had made to the hospital over the course of her career.

The Employer submits that it is not in a position to determine the Allowance as pensionable or otherwise. This is a matter for the Department of Health. Accordingly, there is no trade dispute between the parties. That the Worker was aware from the Board’s Annual Compliance Statement’s that the Allowance was not pensionable.

The Employer also refers to a letter (of 29 March 2021, from the HSE to the CEO of the hospital in which it is stated that the decision on the pensionability of the Worker’s Allowance was based on advice from the Attorney General “and has applied to many other cases.” Under the Industrial Relations Act an Adjudicator cannot investigate a complaint involving the rate of pay of a body of workers.  Pension is a form of pay. Any recommendation made by the Adjudicator has implications for other workers based on the statement in this letter.  Therefore, the Adjudicator cannot investigate this dispute.

In addition, the Employer submits that a number of other staff within the Hospital had allowances that were not approved by the HSE and made pension contributions based on those unapproved allowances.  The pension contributions of these staff have been repaid to them.

The Employer is happy to return to the Worker the monies that were deducted from her Allowance as a pension contribution.  The monies being held are being accrued and on receipt of the Worker’s request can be returned to her.

This complaint does not involve a dispute involving a rate of pay for a body of workers, it refers to a single individual worker and therefore I may investigate it and make a recommendation on the matter.

It is clear the IROA is non-pensionable.  However, the Worker had a not unreasonable expectation, as it would seem had her Employer, up to November 2020, when confirmation was received that the matter was closed out fully and no further internal appeal mechanism was available, that the IROA was pensionable.

If the Worker had be fully aware and certain from the outset that the IROA was not reckonable for pension purposes she could have directed the deductions made to some other financial vehicle for her future benefit. 

In light of the above, it is only fair and reasonable that the Worker be compensated for the difficulties this situation has created for her.   

I recommend the Worker accept that the IROA was not and is not reckonable for pension purposes.

I recommend the Worker request the contributions she made be refunded to her. 

I recommend the Employer pay the Worker a once off payment of €9,140.00.

Allowance, pension, retirement