Court rules in favour of Waterford Crystal workers
ECJ decision State has to protect pension entitlement has ’enormous significance’
A man walks past the Waterford Crystal visitors centre during a protest in 2009. Photograph: Eric Luke / The Irish Times
The European Court of Justice has found in favour of former Waterford Crystal workers in a landmark case taken over losses in their pensions.
The case was described as having “enormous significance” while the outcome was a “ very comprehensive victory” for the employees, lawyer Gary Byrne of Byrne Wallace which represented the workers said.
The ten workers took the case against the State to the European Court of Justice in Luxembourg for its failure to establish a pension protection system and were seeking compensation. They claimed that their rights were not protected by the State in the event of the insolvency of their employer.
Waterford Crystal was placed in receivership in January 2009 and the company’s pension schemes were wound up two months later with a deficit of some €110 million.
Given the funding levels in the pension schemes workers were offered payments representing between 18 per cent and 28 per cent of their entitlements. It was argued that following a 2007 European court decision the workers were entitled to at least 49 per cent.
In its judgement today the court said the measures taken by Ireland subsequent to its 2007 ruling “have not brought about the result that the plaintiffs would receive in excess of 49 per cent of the value of their accrued old age pension” . This was a “serious breach” of Ireland’s obligations, the courts said.
Judges ruled that offering retirees half of what they had been promised under a defined benefit scheme does not amount to protection by the state. It said the economics situation of Ireland does not constitute an exceptional situation capable of justifying a lower level of protection of the interests of employees as regards their entitlement to old-age benefits under a supplementary occupational pension scheme.”
Reacting to the ruling, Tánaiste Éamon Gilmore said: “We have not yet had an opportunity to study the full judgement of ECJ in detail but the ruling will now be the subject of a full hearing by the High Court in the coming months. Until then the mater remains sub judice and we cannot comment any further on it.” The Department of Social Protection declined to comment as the case will now go back to the High Court in Dublin to determine how much the workers should be paid in pensions.
“The Court found in their favour on all of the major points that were at issue,” the employee’s lawyer Mr Byrne said.
“It is regrettable that it was necessary to take this case to the European Court of Justice to achieve the protection, “ he added.
The ten workers who took the case were a cross section of those employed at the factory. About 1,700 workers are due defined benefit pensions. On average they were worth €9,600 a year while the ten who took the case, who included some long-serving skilled craft workers, had pensions worth on average €19,000.
Unite said that if the Government contests liability in the courts it could end up costing €258 million in a one-off payment to the pension fund. If the state accepts then it could be about €15m euro a year.
Eight of the workers were due to retire between 2011 and 2013 with the other two due to retire in 2019 and 2022.
The successful case was taken by Thomas Hogan, John Burns, John Dooley, Alfred Ryan, Michael Cunningham, Michael Dooley, Denis Hayes, Marion Walsh, Joan Power and Walter Walsh against the Government.
The case was taken on the back of a successful legal challenge by English woman Carol Robins against the British government after a company’s insolvency left her with only 49per cent of her pension. Article 8 of European Directive 2008/94 is designed to ensure that workers’ pensions are protected if a company goes bust. The directive does not examine the reasons why a company went bust or why the pension fund is insolvent.
Unite trade union has welcomed the ruling by the court. “Today’s ruling will come as welcome news for workers who have seen the value of their occupational pensions collapse in the wake of insolvency,” regional secretary Jimmy Kelly said.
“It is regrettable that the State chose to contest what should have been an open and shut case, causing distress and uncertainty for the workers involved and forcing the taxpayer to pick up a substantial legal bill.
“The onus is now on the Government to follow through on this ruling and ensure that workers’ pension entitlements are protected.
“It should be noted that, at present, workers in the UK are entitled to receive 90 per cent of their accrued pension entitlements in the event of insolvency. He said the case affects every worker who is a member of an occupational pension scheme.
Former Waterford Crystal worker Sean Maher told RTÉ Radio it was a “wake-up call” for the Government.
Walter Cullen, who worked at the crystal factory for 20 years up to 1987 and is a Unite official, said the union will continue to argue that the Government should cover 90 per cent of the pension fund. “I don’t believe that it is necessary for the Government to waste any more taxpayers’ money pursuing this through the courts,” Mr Cullen said. “The cost of this to the Government depends on the way they approach it.”
Labour MEP Phil Prendergast expressed delight at the ruling.
“This is a victory for Waterford Crystal workers, the 1,500 people who deserved better treatment following the bankruptcy of the company four years ago.
“I am calling on the Government to respond immediately to the case and not let the workers from Waterford Crystal wait any longer,” she said.
Additional reporting: PA