IRELAND - The Pensions Ombudsman is continuing to place pressure on employers to co-operate with its investigations and comply with pensions obligation, after attaining the successful prosecution of another employer in the construction industry.

John McAllen, of McAllen Construction limited, was given a criminal conviction and a fine of €750 at the Killarney District Court yesterday, after pleading guilty to obstructing the Ombudsman by failing to produce payslips.

However, Paul Kenny, the Pensions Ombudsman, warned this was just the first stage of the process as the defendant could be liable to further prosecution following a complaint from a former employee that pension contributions had been deducted from his wages but not passed on to the mandatory Construction Workers Pension Scheme (CWPS).

“It is a requirement that all construction workers be members of the CWPS. While I have many cases where this has not happened, this particular case is much more serious. Consequently, it is important that I have sight of payroll records and payslips to complete my investigation,” said Kenny.

Should the investigation find that McAllen failed to pass on the pension contributions, which is a criminal offence under the Pensions Act, he would be liable to prosecution by the Pensions Board in addition to the Ombudsman forcing him to repay the contributions. 

Since signalling a harder line on uncooperative employers last year, the Ombudsman has prosecuted five criminal cases and three enforcement actions, yet employers do not appear to be getting the message, said Kenny. (See earlier IPE article: Ombudsman’s legal warning over non-compliance)

“Hopefully the penny will drop soon as it is an awful waste of time and resources to go after these [companies] all the time,” he said. “And we can’t actually budget for legal expenses as we don’t know what it is going to be,” he continued, noting expenses have to include both prosecutions and possible defence cases for appeals against determinations.

Despite this, he told IPE there is a further “series of cases lined up, including a couple of adjournments to be heard in October. And there are probably half a dozen cases where we haven’t yet served papers”.

Kenny added: “There seems to be a culture, particularly among smaller contractors, that if they ignore it, it will go away, but we won’t. In most cases they go to court and look for an adjournment to delay [proceedings]. In this case our lawyers made it clear no matter how many adjournments there were we would keep coming back. So he pleaded guilty and we didn’t ask for the maximum penalty” - which is a €5,000 fine and one year in jail.”

All of the prosecutions made by the Ombudsman have so far been related to the construction industry, which he attributes partly to the mandatory pension scheme, but also partly to the industry being “less well-organised in its affairs, particularly at the smaller end where things can be a bit haphazard”.

But he pointed out employers would be better off to comply with his office’s requests for information, as not only could they be fined and convicted, in one case he revealed a defendant spent €20,000 on legal fees to avoid paying €19,000 in contributions.

Construction is one of the hardest hit industries by the global economic downturn, so while Kenny sympathised that some smaller contractors may be getting squeezed by both larger suppliers and clients who cannot afford to pay their bills he pointed out “at the end of the day it’s the workers that suffer”.

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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