A legal action by ESB workers to block the company from paying up to €478 million in dividends to the Exchequer will get its first airing in court next week.

Four staff, Owen Kilmurray, Brian Baitson, William Flavin and Margaret O'Connor, are seeking to halt a €78 million dividend and €400 million special payment to the Exchequer from the State company, claiming they are unlawful as the ESB has failed to account for a €1.6 billion shortfall in its pension scheme.

The workers’ solicitors last month warned the ESB and the Government that they would take the action if the company’s agm approved the payment of this year’s annual dividend. The €400 million payment is pending the sale of some of the group’s power plants.

Lawyers for the staff are due in the High Court in seven days’ time to seek to have the case added to the commercial list, while they will also serve plenary summonses – the first step in a lawsuit – on the ESB and the Government.

The ESB staff pension pot is €1.6 billion short, according to the minimum funding standard laid down in legislation, which calculate's a scheme's liabilities in the event of it being wound up. However, the company says that its actuaries have confirmed that it has enough funds to meet its liabilities as they fall due.

Funding standard
It also maintains the Pensions Board has already approved its proposals for bringing the scheme into line with the funding standard by 2018. Separately, it is also seeking a derogation from the standard, as it does not believe it is appropriate.

The company’s annual accounts have described the scheme as defined contribution since 2011, implying that it believes it has no liability for any deficit.

However, shortly after it changed the definition in 2011, Brendan Ogle, secretary general of the ESB group of unions, told management at a meeting that the unions had not agreed to any change in how deficits would be tackled in the future.