Agreement between ESB and the Unions representing staff on the issues of Pension, Pay and Change 1. Introduction: Industrial Council Recommendation 2937(a)(b)(c)II (copy attached, appendix 1) issued on 23rd September 2005. Following rejection of the recommendation by staff and in accordance with agreed procedures, the parties re-engaged in direct negotiations to resolve the matter peaceably and in accord with the spirit of the Council’s Recommendation. On the basis of the clarifications listed below ESB and the unions are prepared to enter into a 4 year agreement (from date of acceptance) on the issues, central to which is the acceptance by all parties of the ICR. 2. Pension: Shared Understanding on Pension Fund The signatories to this agreement recognise and acknowledge the description of the ESB General Employees Superannuation Scheme (hereafter referred to as “the scheme”) as a defined benefit pension scheme, whilst also recognising the terms of the scheme as set out in the scheme regulations and ministerial directives and authorisations. It is the commitment of all signatories to provide a solution to the current pension issues in a way that does not alter the status of the scheme. In addition it is the intention to provide a solution to all issues in a way that underpins and supports the method of indexation as it has been applied to the scheme prior to the enactment of this agreement. The solutions outlined below to current pension issues are provided against this background and are unique to the current difficulties effecting and impacting on the scheme as of the date of this agreement only. They are presented without prejudice to the position of any party to this agreement on issues not referred to herein. Resolution The Actuarial review of Dec 2003 identified a deficit in the pension fund of €511m. In order to address the situation there is a necessity to provide an appropriate level of additional funding combined with managing the liabilities. 1 Industrial Council Recommendation 2937(a)(b)(c)II as it relates to pension is accepted with the following clarifications. 2 All percentage pension contribution increases provided for in the council recommendation will be payable from the first day of the day of the month following the date of acceptance of this agreement. 3 Subject to the advice of the Actuary, ESB may pay any or all of its contributions at earlier dates than required by the above or by existing Scheme regulations, with the amount(s) to be paid in this event to be determined by the Actuary as being equivalent to the contributions being substituted. At the end of the four years of this agreement the Actuary will confirm that any front-ended element of the payment was in fact equivalent to the contributions substituted. In the event of the actuary reporting an actual shortfall in this element of the payment at that time such shortfall will be rectified by the company. 4 In order to manage the fund liabilities there will be no increases in pensionable salaries beyond the level of increases agreed under national pay agreements or their equivalent for the next 4 years (other than those arising from existing arrangements for individual progression and promotion). Should any reward element arise in the local change arena it will be handled in accordance with the detail in section 3 below and will not have any detrimental effect on the pension fund. 5 As part of an overall solution ESB will make a special one off capital contribution of €25m to the pension fund. 3. Pay and Change: Shared Understanding For the duration of this agreement, any aspiration that staff may have for the superannuation of any reward other than those contained in National Wage Agreements or equivalent must take cognisance of the stability and viability of the pension scheme now and in the future. The background to this agreement is the current actuarially verified pension deficit of €511m. Accordingly all pay and reward within the company (other than those contained in National Wage Agreements or equivalent) provided for during the term of this agreement must not have a negative impact on the pension fund, this to be confirmed by the fund actuary. Resolution In the context of recent and continuing regulatory price reviews, increasing competitive pressures and company commitment to enhanced customer service, management, unions and staff fully commit to ensuring that business areas will adapt to reduce costs and improve efficiencies to ensure the continued financial health and profitability of the company. 6 Industrial Council Recommendation 2937(a)(b)(c)II as it relates to pay and change is accepted with the following clarifications. 7 Current agreements will continue to apply except where altered by agreement. Future Business Change to be carried out in accordance with the details in appendix 2 8 The payments outlined in section 2(a) of ICR 2937(a)(b)(c)II are to be converted into a personal to holder non-superannuable allowance of 2% for current staff. 9 A lead-in lump sum payment of €3,000 will apply in recognition of the move to local change. This payment will be paid on a pro rata basis. 10 The reward elements of this agreement may be taken into account in the local arena as future changes are discussed and agreed. 4. Underpinning Elements: Partnership The ESB Partnership Model has provided the company with a vehicle for handling major change over a period of considerable development in the electricity market. The parties to this agreement endorse the model of partnership in the company and commit to conducting their ongoing business in the same spirit of partnership. Safety
With regard to safety our goal is to eliminate all accidents and resulting injuries from ESB business. Achieving this requires that everyone fully understands their safety responsibilities and their commitment to fostering a pro-active safety culture, based on a duty of care for oneself, one’s co-workers and for members of the public. This agreement facilitates and supports the on-going change required for the business to meet the commercial, regulatory and environmental challenges it faces. In this context, it is agreed that there will be no dilution of the parties’ commitment to safety. Industrial PeaceThe parties to this agreement restate their commitment to industrial peace and their adherence to the existing procedures and agreements in the company. Signed: For the Unions Brendan Ogle ATGWU Jimmy Jordan SIPTU Paul Cronin AMICUS Davy Naughton TEEU Fran O’Neill ESBOA Tom Crean Convenor For ESB Luke Shinnors Oliver Brogan Paul Mulvaney Date: 14th Dec 2005
Appendix 1:
ESB INDUSTRIAL COUNCIL Case No. 2937(a)(b)(c) (II)
Dispute between
Electricity Supply Board
and
Technical, Engineering & Electrical Union
Services, Industrial, Professional & Technical Union
Amalgamated Transport & General Workers’ Union
Union of Construction Allied Trades & Technicians
AMICUS
ESB Officers’ Association
DISPUTE : As referred back to the Industrial Council by way of a number of Joint Statements dated 1 September, 2005. RECOMMENDATION:1. SUPERANNUATION
The full terms of Recommendation 2354(a) to be re-applied:
_ ESB to pay an additional 4.5% contribution to the Superannuation Fund, _ the members to pay an additional 2% as their share of the increased contribution of 6.5%, _ these additional contributions to apply with effect from 1 January, 2006. 2. PAY AND CHANGE (a) Over the coming four years, commencing upon acceptance of this Recommendation, a lump sum of €1500 should be paid each year to each employee. The second, third and fourth of these payments should be adjusted annually by reference to all the appropriate terms of any National Agreement(s)/Norm(s) applicable across ESB generally.
(b) Discussions and negotiations should commence as soon as is practicable in all Business
Units on matters concerning change appropriate locally in each Unit.
(c) Given the situation, as stated, which obtains regarding the Superannuation Fund,
payments made under this part of the Recommendation should not be superannuable.
3. GENERAL The services of the Industrial Council wi1 continue to be available to the parties in the normal wayin order to assist with the implementation/application of all matters covered by thisRecommendation, linked as they are to each other in an intricate combination of different ways. Upon expiry of the four years, the Council is prepared to assess the entire situation at the requestof the parties by way of Joint Statement at that time. COUNCIL MEMBERS
H. Henry
P. Dunne
J. Campion
L. Tobin
K. Mc Govern
CHAIRMAN
23 September, 2005
Appendix 2: Future Change Current agreements will continue to apply except where altered by agreement or by these principles; 1 Management, unions and staff fully commit to ensuring that business areas will adapt to reduce costs and improve efficiencies to ensure the continued profitability of the company in the context of operating within the increasingly severe regulatory price reviews and other competitive pressures.2 Change will be business area specific, when and if required by the business area.3 The required business changes will be outlined to the relevant unions at business unit level following which decisions will be taken by management and these unions as to how to these changes are to be negotiated. 4 Any agreed change must enhance the performance of the business in terms of finances, productivity and efficiencies and must provide a net benefit to the bottom line through reduction in normal operating costs and/or increase in profits. 5 NWA will apply and there will be no other pensionable increases within the company for the next 4 years other than promotions and progression. Should any reward element arise in the local change arena it will be handled in accordance with the detail in section 3 of this agreement and will not have any detrimental effect on the pension fund. 6 There will be no Group of Union or category relativity claims for the next 4 years.7 Agreements on reward in any given business area in respect of local change will be ring-fenced to that area and will not be used as a precedent for reward elsewhere.8 If a business line or business activity becomes non-viable / non-economic then the staff will urgently engage with management to develop a viable recovery strategy or an exit strategy.
