FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 2004 SECTION 13(9), INDUSTRIAL RELATIONS ACT, 1969 PARTIES : ELAN CORPORATION (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - A WORKER DIVISION : Chairman: Mr Duffy Employer Member: Mr Grier Worker Member: Mr Nash |
1. Appeal against Rights Commissioner's Recommendation IR19751/04/JC.
BACKGROUND:
2. The appeal concerns a worker who was among a number of workers declared redundant at the Company's Athlone site in 2002. The worker claims that he was treated unfairly in relation to the application of his share options vis a vis other workers made redundant. Under the Company's redundancy programme workers fell into three categories as follows:
Category A ; workers remaining with the Company - focused on core business and valuable to the long term success of the Company.
Category B; workers leaving the Company and transitioning to a new business through divestment of a product or business (typically envisaged may transfer to 'acquiring companies').
Category C ; workers leaving the Company by virtue of redundancy as part of business re-organisation or down-sizing.
The claimant, during his employment received four stock option grants from 1996 to 1999 which had matured and which he did not cash. As part of the redundancy package his share options were not valid three months after leaving the employment. The worker claimed that the condition applied to all those workers who were made redundant before Christmas 2002 and those made redundant after Christmas 2002 were allowed to keep their options for a period of two years. He claimed that the rules of the redundancy package were changed mid way through the redundancy scheme and that the difference in how the share options were treated amounted to a substantial sum of money. He claimed that he was treated unfairly. The Company rejected the claim. The dispute was referred to Rights Commissioner for investigation. On the 13th December, 2004, the Rights Commissioner issued her recommendation as follows:
"It is clear that there were two different approaches to the treatment of the share option scheme and that one had an enhanced option period, however, that fact was not hidden, on the contrary it was clearly part of the redundancy package notified to all staff. Furthermore the difference in treatment of the stock option element of the redundancy package was not disputed by the claimant when he accepted his own severance package.
The treatment of the claimant's stock options was in accordance with the stock option agreement signed by the claimant and with the provision of the redundancy package offered to and agreed by the claimant.
The claimant accepted the severance package offered to him at the time, which was greater than his statutory redundancy entitlements. In his case, similar to all other employees categorised by the Company within Category C, his stock option expired 90 days after termination of employment.
The redundancy package was explained and clarified to staff at staff meetings and in information leaflets in August and September i.e. prior to the implementation of the redundancy package, and it was clearly identified that there were two different packages available to two different categories of staff in relation to the stock options scheme. This was not something that emerged for the first time after the termination of the claimant's employment and implementation of the redundancy package. The rules of the redundancy scheme were not changed mid way through the scheme. While those who left the Company at a later date may have been covered by the enhanced stock option that was not related to the date of their departure but rather to their category of staff i.e. Category B staff who were required to remain on in employment to assist the Company to successfully divest itself of certain businesses. When the claimant accepted his redundancy package the existence on an enhanced stock option scheme for employees in Category B had been communicated openly to all staff.
On the basis of the submissions made at the hearing I find that the terms of the redundancy package did not change after the claimant accepted his redundancy package.
In all the circumstances I find against the claimant's claim".
On the 14th January, 2005 the worker appealed the recommendation to the Labour Court. The Court heard the appeal in Mullingar on the 8th September, 2005 the earliest date suitable to the parties..
WORKER'S ARGUMENTS:
3. 1. The worker was fully aware of the Grading system within the Company. If at the time he had known it would have been used for redundancies he would have queried this when it was initiated. The Representative Committee meeting minutes (presented at the Rights Commissioner's hearing) stated that all employees would have a three month limit on stock options. This was not the case as some workers were given two year options.
2. The claimant must question how was graded at Category C when he had a supervisory post and was on supervisory salary (no payment for overtime). He was forced into this grade and does not understand why he was not in Category B. The claimant trained the remaining four technicians into the system that he had created. None of these workers were offered redundancy and are still Category C employees. The claimant feels he was discriminated against. He had over thirty years experience in instrumentation and spent many years undertaking and completing major projects during his employment (details supplied to the Court) yet he was still graded at Category C and made redundant. He feels he should have been a higher grade than Category C and queries why he was offered redundancy while employees that he trained were not, and were retained in the employment.
COMPANY'S ARGUMENTS:
4. 1 The claimant's redundancy was effected in line with the provisions of a Category C worker. He received the substantial severance package and his stock options expired 90 days post term of his employment. This reflects the manner in which the majority of the redundancies were consistently administered. The claimant also signed a 'discharge form' in full and final settlement.
2. The claimant makes reference to the way in which stock options of a number of other workers were handled at the Athlone site. However, the references he makes are to non-Category C workers. These workers received stock option enhancements as they were deemed to be Category B workers- their employment having been terminated as a result of a business or product divestment. In summary 192 Category C workers and 62 Category B workers were made redundant from the Athlone site.
3. The Company job grading structure was not the classification system used by the Company in the administration of redundancy terms including stock option provisions. The categorisation of workers (A,B,C) was not based on or in any way linked to job classification or job grading but to future employment status and for reason for termination. Workers, regardless of the job they held were classified A,B,C, based on whether they were remaining or departing from the business. In illustration, included in Category C, on the same terms and conditions regarding share options, was the Senior H.R. Director on site who was also let go with the same conditions applying to his share options as with the case of the claimant.
4. The Company's severance package was communicated to all workers at the outset of the redundancy programme July-September, 2002. Stock option details were communicated to all workers at that time. The claimant was an employee whose employment was terminated by virtue of redundancy as part of business re-organisation. The provisions of his redundancy terms were administered correctly and in line with those applicable to Category C employees. The rules for redundancy were not changed mid way through the scheme, they were defined at the outset. The Company did not discriminate between early and later employees. The Company strove at all times to be as professional and supportive as possible in transitioning workers from the organisation.
DECISION:
The worker's claim is based on the contention that the adoption of two different approaches to the treatment of the share option scheme was not disclosed by the Company and was applied in an arbitrary and unfair manner.
Having considered the submissions of the parties and having reviewed all relevant material the Court is satisfied that this contention is misconceived. The Company did make known its intention to categorise employees differently for purposes which included the treatment of the share option scheme. The Court also accepts the Company applied rational and objective criteria in placing employees in the different categories involved. Even if the claimant did not become aware of the Company's decision in that regard, it is clear to the Court that he did not meet the criterion for inclusion in Category B.
It is noted that the Rights Commissioner engaged in a thorough review of all relevant consideration in this case and isued a comprehensive and reasoned recommendation. The Court can find no basis upon which it could disagree with the conclusion which she reached on the merits of the claimant's case.
Accordingly, the Court affirms the recommendation of the Rights Commissioner and the appeal is disallowed.
Signed on behalf of the Labour Court
Kevin Duffy
19th September, 2005______________________
todChairman
NOTE
Enquiries concerning this Decision should be addressed to Tom O'Dea, Court Secretary.