THE EQUALITY TRIBUNAL
EMPLOYMENT EQUALITY ACTS 1998-2008
DEC - E2011-177
Rose Kelly and Margaret Masterson (deceased)
(represented by Eilis Barry B.L. instructed by Northside Community Law Centre)
Versus
Chivers Ireland Ltd
(represented by Michael McGrath, IBEC)
File reference: EE/2006/166 and EE/2007/090
Date of issue: 20th September 2011
Keywords: Employment Equality Acts, Age, Redundancy, Collective Agreement, Equal Treatment, Waiver, Complainant Deceased, Conditions of Employment
Dispute
1.1 The case concerns claims by two complainants, Rose Kelly and Margaret (Rita) Masterson against Chivers (Ireland) Ltd [now owned by Premier Foods Ltd]. Their claim is that they was discriminated against in relation to their conditions of employment on the ground of age in terms of 6(2)(f) of the Employment Equality Acts 1998 - 2008 [hereinafter referred to as 'the Acts'] and that a provision of a collective agreement was discriminatory
1.2 The complainants referred their complaints under the Acts to the Director of the Equality Tribunal on 17th May 2006. Since the lodging of the complaint, one of the complainants, Ms Masterson, died. On 26th May 2009, in accordance with her powers under Section 75 of the Acts, the Director delegated the case to me, Orlaith Mannion, an Equality Officer, for investigation, hearing and decision and for the exercise of other relevant functions of the Director under Part VII of the Acts. On this date, my investigation commenced. For various reasons both the complainants and the respondent were granted adjournments and a hearing was eventually held on 16th February 2011 as required by Section 79(1) of the Acts. In response to queries by me at the hearing, correspondence closed on this case on 30th March.
Summary of the complainants' case
2.1 Both complainants were employed by Chivers (Ireland) Ltd for a period of 25 years. Both were 62 when they were made redundant. Ms Masterson was employed as a machinery operator. Her gross weekly wage was €316.65. When her employment was terminated, she was given her accumulated pension as a lump sum of €14,434 as well as statutory redundancy of €16,149 (two weeks for every year of service plus one week).
2.2 Ms Kelly worked as packer and her weekly wage was €327.18 (including shift allowance of €26.32). Her redundancy was €16,686 as well as an encashed pension lump sum of €15,119.
2.3 Prior to the redundancy packages accepted by both applicants in February and March 2006, there were various period of lay off due to a downturn in sales e.g. Ms Masterson was laid off for a period of 10 weeks in February 2005 and Ms Kelly was due to be laid off in March 2006. They were advised that the evening shift was being fully closed prior to Christmas 2006. Because of all the preceding periods of lay off, the employees of the evening shift (including the two complainants) threatened strike action unless an offer of redundancy was made. Their Union official became involved in discussions regarding the redundancy package with Chivers on behalf of the ten people on the evening shift. Five of the employees on the evening shift were under 60 and five (including the two complainants) were over 60. According to the complainants the union official told them that they would not get a better deal and that there was no point in going to the Labour Court on this issue.
2.4 The complainants submit that they were not given a choice between drawing down their pension at the termination of their employment or leaving it in the pension fund until the official pensionable age. As the complainants were previous members of the Cadburys pension scheme (which was taken over by Chivers), they understood the normal retirement age to be 65 rather than 63 as the respondent suggests.
2.5 The complainants submit that they raised this issue of being paid less redundancy than others are at the time. They became aware that Ms D, who was aged 54 and also had 25 years of service received €15,963 in statutory redundancy and €9,577 in an ex-gratia payment. She was not forced to take her pension entitlements as a lump sum; they were allowed to remain in the pension fund until retirement which is more beneficial. They submit that every employee on this manufacturing line under 60 (irrespective of years of service) got an ex-gratia payment as well as their statutory redundancy.
2.6 The complainants submit that there is a clear difference between what those over 60 received and what those under 60 received and that the redundancy payments should be levelled up.
2.7 The complainants submit that the redundancy settlement is a collective agreement within the meaning of the Acts. Section 86 of the Acts provides that a person who is affected by a collective agreement can refer a complaint to the Tribunal on the basis that a provision of that agreement is null and void by virtue of Section 8. Section 9 provides that in a case where a collective agreement in which a provision gives rise to discrimination, that provision shall be null and void.
2.8 Cases cited by the complainant include Loxley v BAE Systems, MacCulloch v Imperial Chemical Industries PLC, Donnelan v Minister for Justice Equality and Law Reform, Kucukdevici v Swedex Gmbh, Andersen v Region Syddanmark and Perry and the Garda Commissioner.
Summary of the respondent's case
3.1 The complainants worked on the production line that produced individual condiment sachets. The business volume in this area reduced and there was a series of lay-offs. In June 2005, the employees approached management seeking redundancy. The respondent submits it would have preferred to continue to lay off employees rather than make them redundant. The respondent and the employees' Trade Union attended conciliation at the Labour Relations Commission. Talks broke down.
3.2 Later the union approached Chivers again about offering redundancy and the respondent conceded. The discussions with SIPTU ensued and the respondent offered an early retirement option for those over 60 (normal company retirement age was 63) and, for those under 60, statutory redundancy as well as an ex-gratia payment was offered.
3.3 Each employee was given a document with how much individually they were to receive. The employees affected then took a vote. They agreed to the proposal. Each of the relevant employees signed a waiver.
3.4 The respondent points out that Section 34 (3) of the Acts state:
In an occupational benefits scheme it shall not constitute discrimination on the age ground for an employers
(d)To provide different rates of severance payments for different employees or groups or categories of employees, being rates based on or taking into account the period between the age of an employee on leaving the employment and his or her compulsory retirement age provided it does not constitute discrimination on the gender ground
3.5 In Chivers (Ireland) Ltd the normal retirement age was 63. Ms Kelly was 62 at the time of her redundancy and due to retire in February 2007. Ms Masterson was also aged 62 and due to retire in October 2006. In both cases, the statutory redundancy was equal to or in excess of the normal earnings the complainants could have achieved had they remained employed to their normal retirement age. To offer payments in excess of statutory redundancy would result in the complainants receiving in excess of earnings that could have been achieved at normal retirement age.
3.6 The respondent disputes that the discussions with the employees' Trade Union regarding redundancy is a collective agreement within the meaning of the Acts. In the alternative and without prejudice to this point, the respondent cites a Labour Court Determination:
The jurisdiction of the Director under Section 86 of the Acts is complementary to that conferred on her by Section 77 but cannot be used as an alternative to obtain the same result as is available under Section 77. It is clear that the redress available to Section 86 is purely declaratory. And no substantive redress can be ordered by way or compensation or otherwise.
3.7 The other case cited by the respondent was O'Dwyer and Coillte Teoranta.
Conclusions of the Equality Officer
Jurisdictional issue following the death of the complainant
4.1 I will first consider the jurisdictional issues of whether a complaint can survive the death of a complainant. Accordingly, I have taken cognisance of a recent Decision of this Tribunal Ibidunni v Boston Scientific where the Equality Officer had to decide whether a complaint brought under the Acts is governed by the provisions of the Civil Liability Act 1961, in circumstances where the complainant has died before the investigation has been completed.
4.2 In considering this issue, the Equality Officer had regard of a UK decision, Harris -v- Lewisham & Guy's Mental Hospital Health, in which the Court of Appeal in England overturned the Employment Appeal Tribunal's ruling there that a race discrimination claim taken under the Race Relations Act 1976 does not survive the death of the Applicant. In this judgment, the Court of Appeal had occasion to refer to the English equivalent of Section 7 of the Civil Liability Act 1961, namely section 1(1) of the Law Reform (Miscellaneous Provisions) Act 1934. The Equality Officer noted the comments of Mummery LJ. in this case where it was held that:
There is no provision in the 1976 Act precluding a complaint of the kind made by Mrs. Andrews from being a cause of action or from devolving on her estate. The NHS Trust relied on section 53(1) which restricts proceedings for breach of the 1976 Act to those provided by the Act. That subsection does not exclude or disapply the provisions of the 1934 Act [...] The death of Mrs. Andrews does not mean that they have ceased to be proceedings under the 1976 Act. Mrs. Harris, as personal representative, is entitled to continue the subsisting proceedings under that Act as a result of the vesting in the estate of the cause of action under that Act.
4.3 The Equality Officer concluded that 'I find that the complaint survives the death of the complainant, Mr Ibidunni, for that of his estate and that the Tribunal does have jurisdiction to proceed with the investigation and hearing.' The fact of the complainant dying after lodging a complaint to the Tribunal is similar to this instant case so I am satisfied that I also have jurisdiction to hear the case of Ms Masterson. This instant case is atypical from most cases before the Tribunal in that the facts of the case are, for the most part, agreed and consequently neither side is at a particular disadvantage regarding the absence of Ms Masterson to give direct oral evidence.
Waiver
4.4 Regarding both complainants signing a waiver in full and final settlement on acceptance of their package, it is settled law that the terms of a waiver must be construed against the part from whom it emanated. The complainants were not advised in writing that they should take appropriate legal or financial advice nor did the waiver list all the various Acts applicable to the waiver. In these circumstances, I cannot accept that the complainants intended to waive their statutory rights to refer complaints to this Tribunal when they signed the waiver documents.
4.5 Section 6(1) of the Act provides that discrimination shall be taken to occur where on any of the discriminatory grounds mentioned in subsection (2) one person is treated less favourably than another is, has been or would be treated. The discriminatory ground in this case is age. Therefore, the issues for me to decide are:
a. Whether a provision in an agreement within the meaning of Section 9 is discriminatory
b. Were the complainants discriminated in relation to conditions of employment on ground of age in terms of 8(1)(b) of the Acts?
Collective agreement
4.6 I accept the respondent's contention that the negotiations between the employees' Trade Union and Chivers (Ireland) Ltd. regarding ten staff being made redundant does not constitute a collective agreement. No collective understanding of what was agreed was committed to writing. Where no document exists, it would be difficult to identify a provision in an agreement to declare null and void.
4.7 I also find that the respondent's reference to the Labour Court decision in 3.6 is salient in that complaints that are more appropriately taken under Section 77 should not be taken under Section 86.
4.8 Having examined the definition of collective agreement within the Acts, I am satisfied that what is suggested by the complainant is not a collective agreement and therefore, I do not have jurisdiction to further investigate this aspect of the case under Section 86 of the Acts.
Conditions of employment
4.9 Regarding conditions of employment, Section 8(6) of the Acts states that an employer shall be taken to discriminate against an employee in relation to conditions of employment if, on any of the discriminatory grounds, the employer does not offer or afford to that employee the same treatment [my emphasis] in relation to overtime, shift work, short time, transfers, layoffs, redundancies, dismissals and disciplinary measures as the employer offer or affords to another person where the circumstances in which both such persons are employed are not materially different.
4.10 Most of the facts in this instant case are not in dispute. Those over 60 were obliged to 'cash in' their pension and received statutory redundancy. Those under 60 were allowed to keep their pension within the Chivers Defined Benefit pension scheme or transfer it to an other pension fund and received an ex-gratia payment (an additional 60% of their statutory redundancy payment) as well as their statutory redundancy. Section 8(6) of the Acts precludes me from examining the complainants' treatment in relation to pensions rights as a complaint was not made under the Pensions Acts.
4.11 An unusual feature of direct discrimination on the grounds of age, in comparison to other grounds, is that the Acts provide an exemption for employers to specifically discriminate on the basis of age. The respondent is correct to point out that Section 34 (3) (d) allows employers to give a different rate of severance payment to employees to take account between the age of employees on leaving the employment and their compulsory retirement ages. However, the Acts, inter alia, implement the Framework Directive on equal treatment in employment and occupation. Domestic legislation must be interpreted in light of the wording and purpose of European legislation and where there is a conflict between both, European legislation take precedence. Article 6 of the Directive states:
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:
the setting of special conditions on access to employment and vocational training, employment and occupation, including dismissal and remuneration conditions, for young people, older workers and persons with caring responsibilities in order to promote their vocational integration or ensure their protection
Therefore, the respondent must have a legitimate aim for giving severance pay to those under 60 and not to those over 60 and this aim must be capable of being objectively and reasonably justified. The means of achieving that aim must also be appropriate and necessary. The former Managing Director gave cogent and forthright evidence when he said his aim in devising the scheme was to keep costs down for the company and that the normal retirement age there was 63. However, he acknowledged that people could stay up to 65 and beyond that age with the permission of the company. Ms Kelly's evidence was also credible. She said that both she and Ms Masterson wished to stay working until at least 65. While it may be argued that business objectives and avoiding windfall payments to employees close to retirement are legitimate aims, where this justification clearly fails is that the means chosen to achieve these aims were not appropriate or necessary. For example, as in Perry and the Garda Commissioner, I considered the application of the scheme to two hypothetical employees, with identical service records - Employee X aged 60 and 1 day and Employee Y aged 59 years and 364 days. The both earn €300 per week and have 25 years service:
Employee X Employee Y
Pension service 25/60ths 25/60ths
Statutory redundancy €15,000 €15,000
Ex-gratia payment (60% of statutory redundancy) 0 €9,000
The inequity of the scheme is obvious and is based exclusively on the age of the employees. While taking account of income forgone between termination of employment and compulsory retirement age is a legitimate aim, the means employed by Chivers (Ireland) Ltd was not appropriate. If the respondent had presented a tapered scheme based on income forgone, their justification would be less assailable. The total cost to the company if all the relevant employees over 60 received the ex-gratia payment was €41,207. Chivers (Ireland) Ltd was sold to Premier Foods for £21.8 million (sterling) in January 2007.In addition, the respondent would also be entitled to a 60% rebate from the Social Insurance Fund for all employees given statutory redundancy. Therefore, I also find the means chosen to achieve the aim was not necessary. Therefore, the complainants are entitled to succeed with this aspect of their complaint.
Decision
6.1 I have completed my investigation of this complaint and make the following Decision in accordance with section 79(6) of the Acts I find that -
the negotiations regarding redundancy are not a collective agreement within the meaning of the Acts. Therefore, this aspect of the complainants' case fails.
the respondent discriminated against the complainants on grounds of age in term of section 6(2) of the Acts and contrary to section 8 of those Acts in relation to the manner in which it calculated their entitlements as regards redundancy packages on termination of their employment
6.2 In accordance with my powers under section 82(1) (d) of the Acts, I order that the respondent provide equal treatment i.e. pay Rose Kelly and the estate of Margaret Masterson the appropriate shortfall amount - as detailed at the Appendix to this Decision - and to calculate the effect of those payments, when added to the amounts previously paid to each of them and make the necessary adjustments which arise in terms of individual liability to the Revenue Commissioners having regard to the rules and regulations governing the taxation of termination agreements on cessation of employment. This is to place the complainants in a position they would be in had discrimination not occurred.
________________
Orlaith Mannion
Equality Officer
Appendix
Name Date of Birth Age Years of Service Weekly pay Statutory Redundancy Ex-gratia given Ex- gratia if given
Ms A 07/05/1941 65 25 €330 Not offered as she retired on 11/05/2006 €10,089
Ms Masterson 08/10/1943 62 25 €316 €16,149 €9,686.40
Ms Kelly 07/02/1944 62 25 €327.18 €16,686 €10,011.60
Ms B 11/11/1944 62 17 €356 €12,460 €7,476
Ms C 01/02/1945 61 9 €346 €6,574 €3,944.40
Ms D 26/11/1951 54 25 €313 €15,963 €9,577
Ms E 11/05/1954 52 25 €281 €14,381 €8,630.40
Ms F Exact unknown 40-50 4 €328 €2,952 €1,771.20
Ms G Exact unknown 30-40 3 €337 €2,359 €1,415.20
Ms H Exact unknown 30-40 Less than a year €300 Not entitled to Statutory Redundancy - accepted alternative employment in company
Appendix in web format
Name Date of Birth Age Years of service Weekly pay Statutory redundancy Ex-gratia Ex-gratia if given
Ms A 07/05/1941 65 25 €330 Not offered as she retired on 11/05/2006 €10,089
Ms Masterson 08/10/1943 62 25 €316 €16,149 €9,686.40
Ms Kelly 07/02/1944 62 25 €327.18 €16,686 €10,011.60
Ms B 11/11/1944 62 17 €356 €12,460 €7,476
Ms C 01/02/1945 61 9 €346 €6,574 €3,944.40
Ms D 26/11/1951 54 25 €313 €15,963 €9,577
Ms E 11/05/1954 52 25 €281 €14,381 €8,630.40
Ms F Exact unknown 40-50 4 €328 €2,952 €1,771.20
Ms G Exact unknown 30-40 3 €337 €2,359 €1,415.20
Ms H Exact unknown 30-40 ≤1 €300 Not entitled to redundancy