MML Pensionable Pay dispute: background

20 September 2007

The union has written to all its members employed by Midland Mainline to explain the background to its decision to ballot for industrial action over pensionable pay.

The letter reads as follows:

 

Dear Colleague

 

PENSIONABLE PAY IN MML: A MATTER OF DISPUTE

 

You will have recently received communications from Midland Mainline (MML) about the pension situation. The union’s Executive Committee would like to explain why we reject the company’s arguments and why we have begun arrangements for an industrial dispute ballot.

We believe MML has not applied the ‘fully pensionable pay’ elements correctly

MML claims in its letter to Drivers of 12 September 2007 that it was agreed that a ‘second tier of restructuring premium’ would be introduced. This was not agreed with ASLEF.

MML refer to a letter sent to Drivers on 8 August 2001 from pensions management

As far as we know, pensions management are not included in the agreed procedures. Also, the company did not advise ASLEF about a letter sent on 22 February 2001 from the Strategic Rail Authority (SRA) which agreed to applying a ‘ second restructuring premium’. This correspondence was only made available to ASLEF in the last month.

Every increase in pensionable pay since 1997 shows an increase in the Fully Pensionable Pay (FPP) element in line with the pay award - apart from 2001. This is the centre of the dispute. (see table below)

In 1998 Driver’s rate of pay increased by 3.5% - as did the FPP element.

In 1999 the rate of pay went up by 6.8% - as did the FPP. The correspondence from MML (dated 18 February 1999) formally confirms the 1999 pay award. Point 3 specifies that, ‘Pensionable pay for future service will be increased from the present level of 83% to 87% from January 1999 and 90% (MML Drivers only) from January 2000. It is acknowledged that it remains the aspiration to achieve 100% fully pensionable pay within the life of the MML Franchise.’

In 2000 the rate of pay went up by 1.9% as did the F.P.P.

In 2001 a problem arose. In every other year the FPP increased in line with the pay award – but in 2001 it remained static. The cumulative effect of this means that by 2007 the FPP element of the pension is several thousand pounds less than it should be. 

The 2001 pay award reaffirmed that the pensionable element would be 90% of the new salary. Specifically it says, ‘The amount of pensionable pay for future service will be based on 90% of the new salary, effective from the date of the salary change.’

In 2004 ASLEF agreed a restructuring premium with MML which is set out on the second page of the letter from the company dated 28 April 2004. It states: ‘This agreement will increase the pensionable amount of a Driver’s salary from 90% to 100% on the effective date of 1 October 2004 (i.e. from £28,800 to £32,000).

For existing Drivers before 1 October 2004, the extra pensionable salary of £3,200 will become a new tier of pensionable restructuring premium which will qualify for future pensionable service on and from 1 October 2004, but not for pensionable service before this date.’

If we had previously agreed to a restructuring premium being applied, we would have used the same words for the 2004 agreement.

We would not have used wording similar to the 1999 agreement - when the fully pensionable pay increase was applied.

The union is convinced that MML is breaking an agreement both unilaterally and retrospectively: it has failed to honour the 2001 agreement. That is why The Executive Committee has given MML notice of our intention to ballot our members within the company for Industrial Action.’

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