ECJ find in favour of Waterford Crystal Workers

The European Court of Justice has found in favour of former Waterford Crystal workers in a landmark case taken over losses in their pensions.

Background to case

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.

ECJ Finding
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” . The court stated that this was a “serious breach” of Ireland’s obligations.

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 was stated that 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.

 

High Court
The matter will now go back to the High Court to determine how much the workers should be paid in pensions. It remains sub judice until that time and further comment cannot be made on it.

The High Court must now assess what reasonable financial protection should have been afforded to the glass workers.

Since the 2007 ruling by the same European Court of Justice the State has been on notice that it had not made adequate provision for members of failed pension schemes. These cases hinge on Article 8 of an EU directive which is designed to ensure “necessary measures” were taken to protect employees and former employees in the event of the employer’s insolvency.

Significance
The ruling could have ‘enormous significance’ for employees of other failed businesses who were left substantially out of pocket because of deficits in defined benefit, or final salary, pension funds.

If you would like further information on your rights as an employee we would encourage you to look at our website at the following link:  Brophy Solicitors: Employment

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