European court rules in favour of Waterford Crystal workers in pension case

Friday 26 April 2013 11.46
ECJ found the State had an obligation to protect the pension entitlements of workers
ECJ found the State had an obligation to protect the pension entitlements of workers

The European Court of Justice has found in favour of Waterford Crystal workers who took a case against the State for the loss of their pensions when the company went bankrupt.

In a ruling issued in Luxembourg this morning, the court found that under EU law the State had an obligation to protect the pension entitlements of workers in the event of a company becoming insolvent.

The protection is enshrined in the 2008 Insolvency Directive.

The court rejected the Government's argument that the State contributory pension should be taken into account in assessing how much of the lost pensions should be made up following the insolvency of Waterford Crystal and its pension fund in 2009.

At the time 1,500 workers were told they would receive only between 18% and 28% of their full pension entitlements.

The court also criticised the Government for not fulfilling obligations which were imposed following the judgement in favour of an English woman who brought a similar case against the UK in 2007, before the Insolvency Directive was introduced.

On that occasion the Luxembourg court ruled that the woman, Carol Robins, should have received more than 49% of her pension entitlements after a double insolvency - the bankruptcy of a company and its pension fund.

When transposing the 2008 Insolvency Directive member states were supposed to apply the findings of the Robins case.

Because the Government did not take account of the Robins case, the court ruled this morning, the State was "in serious breach" of its obligations.

The court also rejected the State's arguments that the economic situation in Ireland should be taken into account when assessing the State's liabilities under the Insolvency Directive.

The judges ruled that the economic situation of a member state "does not constitute an exceptional situation capable of justifying a lower level of protection" for employees.

Today's judgment was a preliminary finding as the issue was referred by the High Court to Luxembourg.

As such, the judges were not expected to spell out how much of their pension entitlements the Waterford employees should get.

That means that the case will now go back to the High Court since the points of European law have been addressed.

It will be up to the High Court to decide by how much the State will be liable for the lost pensions of the Waterford workers.

Following the Robins case, the UK government agreed to restore her pension to 90%.

As a result of today's judgment, the workers should expect to receive at the very least more than the 49% referred to in the Robins case.

The decision of costs for today's judgment will be made by the High Court.

Government urged to put funds in place

Unite Regional Secretary and former Waterford Glass employee Jimmy Kelly said it is a great day for former Waterford Crystal workers and for others who lost their pensions in similar situations.

Speaking on RTÉ’s Today with Pat Kenny, Mr Kelly said the Court's decision was very clear - Waterford Crystal workers had won on all seven points.

He said: "It will be a great lift for people there. They've gone through the horrors of losing their jobs but losing the lifetime pension was adding insult to injury”.

Mr Kelly added that the ruling will also be good news for workers across the country who find themselves in the same situation and who will now “have the benefit of this pension protection fund having to be in place."

He also urged the Government not to drag its heels and to put the funds in place.

He said making good the gap in the pension fund would be around €296m and the Government “should do the decent thing now and take this result as being something that has to be put into place” rather than dragging it out.

Meanwhile, Pensions Ombudsman Paul Kenny has said the ruling will have implications for other employees who suffered losses to their pensions in similar situations.

Speaking on the same programme, he said he believed the Government would have to find substantial sums of money to meet their liabilities, following today's decision. 

The solicitor representing Waterford Crystal workers said he is hopeful they could get up to 89% of their pension entitlements.

Gary Byrne said the workers' Wedgwood counterparts in Britain secured 89% of their pension entitlements, and is hopeful a similar arrangement will be secured for workers here.

Mr Byrne said they would not settle for the bare minimum.

"We have to get north of 50% which is a significant uptake, but 51%, we certainly wouldn't be happy”, he said.