FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 83, EMPLOYMENT EQUALITY ACT, 1998 PARTIES : CALOR TEORANTA (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - MICHAEL MCCARTHY (REPRESENTED BY KEN MURRAY & CO SOLICITORS) DIVISION : Chairman: Mr Duffy Employer Member: Mr Doherty Worker Member: Mr Nash |
1. Appeal under Section 83 of The Employment Equality Act, 1998
BACKGROUND:
2. The worker appealed his case to the Labour Court in accordance with Section 83 of the Employment Equality Act, 1998, on the 16th October, 2007. A Labour Court hearing took place on the 14th March, 2008, in Cork. The following is the Court's determination:
DETERMINATION:
Introduction
This is an appeal by Mr Michael McCarthy against the decision of the Equality Tribunal in his complaint of discrimination on the age ground against Calor Teoranta. Mr McCarthy’s complaint arose from his compulsory retirement on reaching age 60. The Equality Officer found that age 60 was the retirement age fixed by Calor Teoranta. She went on to hold that Mr McCarthy was required to retire on reaching that age and that the fixing of a retirement age was saved by Section 34(4) of the Act and did not constitute discrimination on the age ground. Mr McCarthy appealed to this Court.
In this determination the parties are referred to, as they were at first instance, using the descriptions prescribed by Section 77(4) of the Act. Hence, Mr McCarthy is referred to as the Complainant and Calor Teoranta is referred to as the Respondent.
Preliminary issue.
It was submitted on behalf of the Respondent that the complaint herein was not properly before the Equality Tribunal and is not now properly before the Court. In support of this submission it was pointed out that the complaint was lodged with the Equality Tribunal on 23rd December, 2004, whereas the Complainant’s employment did not terminate until 1st January, 2005. Thus, it was submitted, the act alleged to constitute discrimination had not occurred at the time the complaint was lodged. On that basis the Respondent contended that the complaint was invalid.
The Court cannot accept that submission. The Respondent, by letter dated 13th October, 2004 told the Complainant that he was being retired on reaching his 60th birthday on 1st January, 2005. The act alleged to constitute the discrimination of which the Complainant complained was the decision of the Respondent to require him to retire at age 60. That decision crystallised on 13th October when the Respondent, in effect, gave the Complainant notice that his employment would terminate by retirement on 1st January, 2005. Hence, when the Complainant lodged his complaint on 23rd December, 2004, the act complained of had occurred. Moreover, the Court is not aware of any rule of law or logic that could render invalid a complaint made under the Act in response to a firm and final notice by an employer of an intention to commit a discriminatory act which was subsequently carried into effect.
For these reason it is clear that the matter is properly before the Court.
The Facts
The material facts, as admitted by the parties or as found by the Court, are as follows: -
The Complainant commenced employment with the Respondent in 1964. He worked in a number of positions and eventually became a chargehand. The retirement age was then 65. In or about November 1987 a proposal was made by the Complainant’s trade union to allow for retirement at age 60. The Respondent agreed to this proposal. Employees were then asked to elect between remaining in employment to age 65 or retiring at age 60. The Respondent agreed to provide extra funding to its pension scheme to accommodate those opting to retire at age 60. The Complainant was amongst those who elected for the new retirement age. He signed a form consenting to this change in his conditions of employment.
In 1994 the Respondent introduced a scheme whereby employees could opt to terminate their employment and return as casual employees on reduced pay and less favourable conditions. Those who opted for this arrangement received an enhanced redundancy lump sum and a reduced pension. The Complainant opted for this arrangement.
There was considerable disagreement between the parties in their submissions and arguments as to the effect which this arrangement had on the retirement age of those who had previously agreed to go at age 60. The Complainant gave sworn evidence that when the package was proposed to him, Mr Colm Lindsay, a Director of the Respondent, told him that if he opted to accept the proposal he could remain in employment to age 65. The Complainant told the Court that this statement was made in the presence of Mr Michael Kinnefeck, who was a manager with the Respondent. Corroborative evidence on this point was given by Mr Christy Harty, a former colleague of the Complainant. In his sworn evidence Mr Harty told the Court that Mr Lindsay had told him that those opting to accept the proposed package could work on to age 65.
The Court notes that this evidence is controverted by the Respondent. However, having considered the evidence as a whole, the Court accepts, as a fact, that when the Complainant opted to sever his employment and return as a casual employee he did so on the understanding that he could work until he attained the age of 65.
In 2002 a dispute developed between the Union of which the Complainant was a member and the Respondent concerning a range of issues relating to holidays. This dispute was settled in negotiations with the Union. At the request of the Union the terms of settlement were reduced to writing in a document dated May 2002. This document contained a statement that: -
- “The normal retirement age will continue to be 60 but the participants in the Defined Contribution scheme may opt with the company’s agreement to stay until 65”
This document was signed by a number of employees, including the Complainant who was then a shop steward.
The Respondent contended that this agreement had reaffirmed the normal retiring age at 60 and that the Complainant, as evidenced by his signature on the document, had accepted this. The Complainant told the Court in evidence that the dispute to which the document related was about holidays and there had been no discussion about the retirement age. He gave evidence of having signed the document in the belief that it related only to the settlement agreed on holidays and that he had not read the document before signing it. The Complainant’s evidence was corroborated by Mr Harty.
Mr Tom O’Carroll who is Operations Director with the Respondent gave evidence. Mr O’Carroll created the document of May, 2002. He told the Court that there had been a strike regarding holiday entitlements for casual staff. Following negotiations in which both the witness and the Complainant participated the dispute was resolved. It was Mr O’Carroll’s evidence that the Union Branch Secretary asked him to produce a comprehensive statement of conditions applicable to casual staff. He produced the document dated 10th May, 2002, which was put in evidence. At the suggestion of the Union all of those who participated in the negotiations signed this document, including the Complainant.
Mr O’Carroll told the Court that certain named employees were allowed to remain in employment after reaching the age of 60 but only because they had special skills which the Respondent required. This consideration did not arise in the case of the Complainant.
Mr O’Carroll accepted in cross-examination that he was unaware of the commitment given to the Complainant by Mr Lindsay that he could work until age 65. In reply to further questions, Mr O’Carroll told the Court that the agreement concluded in May, 2002 was not intended to affect any change in relation to retirement age.
On this evidence the Court is satisfied as a matter of fact that the agreement concluded in 2002 did not offset or supplant the commitment made to the Complainant in 1994 that he could continue working until age 65.
The Law Applicable.
Section 6(1) of the Employment Equality Acts 1998 and 2004 (the Act) provides, in relevant part, as follows: -
- ‘‘(1) For the purposes of this Act and without prejudice to its provisions relating to discrimination occurring in particular circumstances discrimination shall be taken to occur where—
- (a) a person is treated less favourably than another person is, has been or would be treated in a comparable situation on any of the grounds specified in subsection (2) (in this Act referred to as the ‘discriminatory grounds’)
which—
(i) exists,
(ii) existed but no longer exists,
(iii) may exist in the future, or
(iv) is imputed to the person concerned,
- (a) a person is treated less favourably than another person is, has been or would be treated in a comparable situation on any of the grounds specified in subsection (2) (in this Act referred to as the ‘discriminatory grounds’)
(4) Without prejudice to subsection (3), it shall not constitute discrimination on the age ground to fix different ages for the retirement (whether voluntarily or compulsorily) of employees or any class or description of employees.
Subsection (3) deals with occupational benefit schemes and is of no relevance to the issues arising in this case.
The Act gave effect in domestic law to Council Directive 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation (the Directive). Recital 14, 25 and Articles 1, 2 and 6 of the Directive are of particular relevance to the instant case. Recital 14 provides: -
“This Directive shall be without prejudice to national provisions laying down retirement ages.”
- The prohibition of age discrimination is an essential part of meeting the aims set out in the Employment Guidelines and encouraging diversity in the workforce. However, differences in treatment in connection with age may be justified under certain circumstances and therefore require specific provisions which may vary in accordance with the situation in Member States. It is therefore essential to distinguish between differences in treatment which are justified, in particular by legitimate employment policy, labour market and vocational training objectives, and discrimination which must be prohibited.
- ‘[t]he purpose of this Directive is to lay down a general framework for combating discrimination on the grounds of religion or belief, disability, age or sexual orientation as regards employment and occupation, with a view to putting into effect in the Member States the principle of equal treatment.’
Article 2 of the Directive under the heading ‘Concept of discrimination’ states, in paragraphs (1) and (2) (a):-
- (1) For the purposes of this Directive, the “principle of equal treatment” shall mean that there shall be no direct or indirect discrimination whatsoever on any of the grounds referred to in Article 1.
(2) For the purposes of paragraph 1:
- Notwithstanding Article 2(2), Member States may provide that differences of treatment on grounds of age shall not constitute discrimination, if, within the context of national law, they are objectively and reasonably justified by a legitimate aim, including legitimate employment policy, labour market and vocational training objectives, and if the means of achieving that aim are appropriate and necessary.
Such differences of treatment may include, among others:
It had been submitted to the Court of Justice on behalf of the Governments of Spain, Ireland, the Netherlands and the United Kingdom, as interveners, that the prohibition on discrimination on grounds of age did not apply to the fixing of a retirement age. That submission was based on the wording of the 14th recital of the Directive (see Opinion of Advocate General Mazák, at par 43).
The Court of Justice rejected that argument saying, at paragraphs 44,45.46 and 47 of the Judgment: -
44 It is true that, according to recital 14 in its preamble, Directive 2000/78 is to be without prejudice to national provisions laying down retirement ages. However, that recital merely states that the directive does not affect the competence of the Member States to determine retirement age and does not in any way preclude the application of that directive to national measures governing the conditions for termination of employment contracts where the retirement age, thus established, has been reached.45 The legislation at issue in the main proceedings, which permits the automatic termination of an employment relationship concluded between an employer and a worker once the latter has reached the age of 65, affects the duration of the employment relationship between the parties and, more generally, the engagement of the worker concerned in an occupation, by preventing his future participation in the labour force.46 Consequently, legislation of that kind must be regarded as establishing rules relating to ‘employment and working conditions, including dismissals and pay’ within the meaning of Article 3(1)(c) of Directive 2000/78.47 In those circumstances, Directive 2000/78 is applicable to a situation such as that giving rise to the dispute before the national court.
The Court of Justice went on to hold that the retirement age in issue in the main proceedings was lawful where, in accordance with Article 6 of the Directive: -
-[T]he measure, although based on age, is objectively and reasonably justified in the context of national law by a legitimate aim relating to employment policy and the labour market, and-the means put in place to achieve that aim of public interest do not appear to be inappropriate and unnecessary for the purpose.That case was decided after the Equality Tribunal gave its decision and after the within appeal had been lodged with the Court. Accordingly the Court invited the parties to make submissions on its relevance to the instant case.
Submissions of the parties
On behalf of the Complainant Ms O’Flynn B.L. submitted firstly that the Complainant’s retirement age had been set at 65 in 1994 when he agreed to accept the redundancy package proposed by the Respondent. In consequence, it was submitted, the Respondent could not now rely on Section 34(4) of the Act to save the discriminatory treatment afforded to the Complainant by terminating his employment on grounds of his age. It was submitted that if the Complainant had entered an agreement in 2002 to retire at age 60 (which was denied) that it would be void as amounting to a purported contracting out of the provisions of the Act.
Further, and in the alternative, Counsel submitted that in light of the decision inPalacios de la VillaSection 34(4) could not be applied to the facts of this case in so far as that section purports to remove the imposition of a retirement age from the ambit of the Act. It was submitted that the Court must instead apply the provisions of Article 6 of the Directive. Consequently, according to Counsel, a retirement age can only be saved from the prohibition of discrimination on grounds of age where it is objectively and reasonably justified by a legitimate aim and if the means of achieving that aim are appropriate and necessary. It was submitted that there was no evidence of such objective justification in this case.
On behalf of the Respondent it was submitted that it had set the normal retirement age at 60 in 1987, in response to a claim from the trade union of which the Complainant was a member. Employees were then given the option of retiring at 60 or remaining at work until age 65. The Complainant had elected to retire at 60. This, it was submitted, resulted in extra cost accruing to the Respondent in additional funding to its pension scheme. It was further submitted that the agreement of 2002 reaffirmed 60 as being the retirement age and that this had been expressly accepted by the Complainant. In these circumstances the Respondent contended that the Complainant’s employment ended by retirement which, by operation of Section 34(4) of the Act, is incapable of constituting discrimination on the age ground.
On the decision inPalacios de la Villait was submitted that the case could be distinguished on its facts from the instant case. That case, it was pointed out, concerned the imposition by law of a national retirement age. There is no national retirement age in Irish law and what is at issue in this case, it was submitted, is a contractually agreed retirement age. It was further submitted that on the facts of this case the impugned retirement age could be objectively justified on grounds of the costs incurred by the Respondent in funding its pension scheme to allow for retirement at age 60.
Conclusions of the Court
The Court has considered the submissions of the parties on the decision inF�lix Palacios de la Villa v Cortefiel Servicios SA.It appears to the Court that the decision, potentially at least, raises significant and far reaching questions concerning the extent to which Section 34(4) of the Act comports with Article 6 of the Directive. It is true, as was submitted on behalf of the Respondent, that the facts and the points in issue in thePalacios de la Villacase are different to those arising in the instant case. Nonetheless the Court of Justice appears to have held that a Member State cannot introduce a mandatory retirement age unless there is objective and reasonable justification for so doing. It would appear axiomatic that an individual employer would be similarly circumscribed in applying a contractual retirement age. If that is the law of the Community it is difficult to see how it can be reconciled with the apparent intendment of Section 34(4), at least in so far as it is to be interpreted as placing retirement ages outside the purview of the Act altogether. On that point the statement contained in the Determination of this Court inMount Temple Comprehensive School and Eileen McEvoy(EDA0716) to the effect that the subsection comports fully with the relevant Community Law would have to be reconsidered.
If this appeal were to turn on those questions the Court would have to consider seeking guidance from the Court of Justice, pursuant to Article 234 of the Treaty, on the applicable Community law. In that regard it is clear on settled authority that the Court must apply the law of the Community, in a case within its jurisdiction, setting aside where necessary any conflicting provision of national law (see in particular to that effect, Case 106/77Amministrazione delle Finanze dello Stato v Simmenthal Spa[1978] ECR 629, paragraph 21, and Case C-347/96Solred SA v Administraci�n General del Estado[1998] ECR I-937, paragraph 30. That principle of Community Law was most recently restated in Case C- 144/04Mangold v HelmECR 1 –09981, at paragraph 77)
However, it is equally clear that recourse should only be had to the preliminary reference procedure under the Treaty where it is necessary to do so in order to decide the case at hand. The Court must therefore consider if the case can be decided on the primary submissions made on behalf of the Complainant namely, that his contractual retirement age was 65 and not 60. If that submission is correct Section 34(4) of the Act could not, in any event, avail the Respondent.
The Complainant’s retirement age
The Court heard corroborated evidence from the Complainant to the effect that Mr Lindsay on behalf of the Respondent told him that if he took the option of redundancy and re-employment at lower pay he could work until he was aged 65. The Court accepts that evidence. That was clearly a representation in the nature of a warranty intended to have contractual effect. It seems clear that it was offered as an inducement to the Complainant to accept the arrangement proposed. It also had that effect. The Complainant told the Court in evidence that he regarded the possibility of continuing at work until age 65 as a major consideration in deciding to accept the offer.
In considering the Respondent’s submissions to the effect that the agreement of 2002 reaffirmed 60 as being the normal retirement age, the Court has had particular regard to the evidence of Mr O’Carroll. In his evidence Mr O’Carroll confirmed that he was unaware of any representation made to the Complainant that he could work until age 65. Mr O’Carroll further confirmed that the document dated 10th May 2002 was not intended to alter any previously determined retirement age. It could not, therefore, have produced such a result in the case of the Complainant.
For these reasons the Court is satisfied that as part of the arrangement concluded between the parties in 1994, the Complainant’s retirement age was set at age 65. That contractual arrangement was not altered by the agreement of May, 2002, since neither party to that agreement intended it to have such an effect. In these circumstances s 34(4) of the Act could not avail the Respondent in defending the Complainant’s claim.
It follows that when the Respondent terminated the Complainant’s employment on 1st January, 2005, it did so on grounds of his age. He was thus treated differently than a person in a comparable position who had not attained the age of 60 would have been treated. That constituted discrimination within the meaning of Section 6(1) of the Act. Accordingly the Complainant is entitled to succeed in this appeal.
For the sake of completeness and for the avoidance of doubt the Court wishes to point out that this case was decided on the factual circumstances of the complaint herein as disclosed in evidence. It has no application beyond this case. Secondly, the Court has not reached any concluded view on the submissions made to it in relation to the compatibility of Section 34(4) of the Act with the provisions of Directive 2000/78/EC. The Court wishes to expressly reserve its position on that question to another case in which it is a determinative issue.
Redress
The redress sought in this case is compensation. In considering quantum the Court is required to apply the principle enunciated by the ECJ in case C – 14/83Von Colson and Kamann v Land Nordrhein-Westfalen[1984] ECR 1891. Here the ECJ held that where the sanction for a breach of Community rights is compensation it must be effective, proportionate and dissuasive. That means that the compensation awarded must, at minimum, reflect the economic loss attributable to the discrimination found to have occurred. It must also provide a dissuasive element against future infractions of the right to equal treatment. In that regard it is noted that the Complainant was deprived of five years potential employment. It is further noted that at the time his employment terminated his annual salary amounted to €23, 313 per annum.
Determination.
The within appeal is allowed. The Equality Officer’s decision is set aside and substituted with a finding that the Respondent herein did discriminated against the Complainant on the age ground in contravention of Section 8 of he Act. Taking all relevant considerations into account the Court determines that the appropriate redress in this case is an award of compensation in the amount of €46,000. That amount is made up of €38,000 in respect of past and future pecuniary loss and €8,000 in respect of the effects of the discrimination suffered. The Respondent is directed to pay the Complainant compensation in that amount.
Signed on behalf of the Labour Court
Kevin Duffy
11th April, 2008______________________
CONChairman
NOTE
Enquiries concerning this Determination should be addressed to Ciaran O'Neill, Court Secretary.