European Court finds State was in serious breach of pension obligation

The European Court of Justice has ruled that Ireland failed to implement an EU directive designed to protect the pensions of employees.

In a legal decision that could have major ramifications for the State, the court ruled that Ireland had failed to implement fully the EU Insolvency Directive, part of which protects employee pensions in the event of an insolvency.

Ten Waterford Crystal employees, through their union, took the case against the State following the collapse of the company in 2009, arguing that the State had failed to properly implement Article 8 of the directive.

The matter was then referred to the European Court of Justice by the Irish Commercial Court for consideration. Yesterday’s ruling found that Ireland had not fulfilled its obligations under the EU directive, which dates back in some form to 1980. The matter now reverts to the Commercial Court for consideration.

Compensation
While the judge will now decide what compensation will be paid to the pensioners, there is expectation that they will be entitled to at least 50 per cent of their entitlements.

The 2007 Robins case, in which a group of UK employees sued the UK government over lack of pension payments, found that a guarantee of pension benefits of less than half of the entitlement could not be considered as a protection.

In its ruling, the European Court of Justice also dismissed two key arguments put forward by the State in its defence. It ruled that neither the economic situation of a member state, nor the entitlement of citizens to the State pension, justifies the provision of a lower level of protection.