Waterford Wedgewood Failure Creates Question Mark on Workers’ Pensions

The Irish-British luxury china and ceramics company Waterford Wedgewood caused doubt and uncertainly among workers in both Ireland and the UK when it fell into receivership early in January. And now the Irish regional secretary of Unite the Union is calling on the government of Ireland to assume the pension liability of the company, even as the union and receivership administrator negotiate with an American private equity firm to continue production and retain jobs.

Jobs were immediately put in doubt throughout the company and its subsidiaries, including an Irish factory at Killbarry, County Waterford, which has seen a workforce of 900 shrink to 125 over the past year, and at a factory in Barlaston, Stoke-on-Trent, UK, which employs 1,100 people.

Following the collapse of the group, Unite Irish Regional Secretary Jimmy Kelly – himself once employed by Waterford Crystal in Killbarry – urged Irish Social and Family Affairs Minister Mary Hanafin to underwrite the pension liability. She declined, stating the pension was a private investment fund so the government is not responsible.

Ireland’s government, however, has failed to implement an EU directive requiring member-states to protect the interests of workers’ pension entitlements if an employer fails. In the UK, a pension protection scheme was introduced following a European Court of Justice ruled in 2007 that prior British legislation did not constitute proper implementation of the directive.

Since being placed into receivership on 5 January, Waterford Wedgewood’s administrator, Deloitte of Ireland, has stopped payments into the pension scheme, although workers still contribute. Last week, the remaining Irish workers at Killbarry, were placed on a three-day work-week.

A potential buyer of Waterford Wedgewood is New York-based KPS Capital Partners, but the equity fund has expressed interest in only some of the company’s worldwide assets, and has dismissed the idea of picking up pension liabilities. KPS has expressed only a one-year option on three factories.

Unite the Union claims that since Ireland has failed under the EU directive to put in place appropriate minimum guarantees that protect workers’ pensions, it is in breach of EU law. Besides the Waterford Crystal brand, the 250-year-old company manufactures Wedgewood pottery and Royal Doulton china. The firm also operates Rosenthal ceramics in Germany, a business unit it has been trying to sell, and operations in Australia.