DEC-E2013-010- Full Case Report

EMPLOYMENT EQUALITY ACTS 1998-2012

Decision - DEC-E2013-010

PARTIES

Patrick McCabe, Terry O'Sullivan, Charles Maher, Philip Blanche, Richard Nolan, John Judge, Anthony Guider, John Fearn, Richard Regan, Brendan Mulvey and Michael Butler
(Represented by Cliona Kimber B.L., instructed by Bowler Geraghty & Co. Solicitors)

v

SR Technics Ireland Ltd.
(Represented by IBEC)

File Reference: EE/2009/588 - 597 & 626
Date of Issue: 21 February 2013

Keywords - Employment equality - Age discrimination - Redundancy - Ex-gratia severance payment - Compromise agreement - Waiver - Lack of Consideration -Discriminatory treatment or unequal remuneration - Prima facie case - Employment Equality Acts 1998 to 2008 ss. 6, 8, 29, 30, 34 (3), 85A.

1. Dispute

This dispute involves claims by Messrs Patrick McCabe, Terry O'Sullivan, Charles Maher, Philip Blanche, Richard Nolan, John Judge, Anthony Guider, John Fearn, Richard Regan, Brendan Mulvey and Michael Butler, all at the material time aged upwards of 61 years, (hereinafter "the complainants") that they were discriminated against by SR Technics Ireland Ltd (hereinafter "the respondent") on grounds of age within the meaning of sections 6 (2) of the Employment Equality Acts, 1998 - 2008 (hereinafter "the Acts") in relation to conditions of employment contrary to section 8 of the Acts by not affording to the complainants the same treatment in relation to payment of an ex-gratia severance grant on redundancy as were afforded to employees of a different age.

Alternatively the complainants claim that they were denied the same rate of remuneration (the ex-gratia severance payment) as named employees of a different age employed to do like work contrary to sections 29 and 30 of the Acts. The complainants are seeking the application to them of the ex-gratia severance payment given to all employees under the age of 61 years.

The complainants referred complaints under the Acts to the Equality Tribunal on 10 August 2009 and (in one case) on 18 August 2009. A written submission was made on behalf of the complainants on 14 April 2010. A written submission on behalf of the respondent was made on 12 July 2010. Further submissions were received from the complainants on 20 December 2012. An oral hearing was held on Tuesday 8 January 2013.

2. Background

The complainants were employed by the respondent as Grade 1, 2 or 3 clerks.

On 12 February 2009 the respondent informed trade union representatives that it had decided to cease its Dublin operations. This entailed the redundancy of all 1,135 employees other than approximately 100 employees engaged in particular activities who were transferred to another operator. This decision came as a complete surprise to both management and employees in the Dublin base.

On 10 March 2009 the respondent issued details of the severance package which it intended to provide. The package which it valued at 48.6 million euro comprised three elements:

Statutory redundancy payments were calculated as follows (for staff with greater than 2 years service):
* Two weeks pay for every year of service, (capped at €600 per week), and
* One additional week (capped per above)

Statutory notice entitlement - payment in lieu of notice

This element varied according to length of service as follows:

For the purposes of payment calculation, an employee's average weekly gross earnings were used.

Ex-gratia element.

The ex-gratia element comprised an apportionment of the total amount of €15m on the basis of years of service and basic salary. A factor of 0.84 weeks per year of service was derived. The payment was calculated by multiplying weekly basic salary by number of years' service and multiplying the product by 0.84. However staff aged 61 years and over who were members of the SRT Defined Benefit Pension Fund did not receive the ex-gratia payment because under the terms of the SRT Defined Benefit Pension Scheme they were entitled to an immediate full pension. Twenty two persons, including the eleven complainants, fell into this category. They received their statutory redundancy payments and payments in lieu of notice, but not the ex-gratia element. By contrast, 25 employees aged 61 and over who were members of another pension scheme, the Irish Airlines (General Employees) Superannuation Scheme (IASS) were not entitled to a pension until age 65. They received the ex-gratia payment as well as their statutory redundancy payments and payments in lieu of notice.

The difference in entitlements between the complainants and those who received the ex-gratia payments can be illustrated in the following example:

In this example, employees who received the ex-gratia payment got €20,992 more in severance payments than persons, like the complainants, who did not receive the ex-gratia. The total cost of paying the ex-gratia payment to the complainants would be about €268,000.

3. Summary of complainants' case.

The complainants claim that they were denied the ex-gratia payment because they were aged 61 and over. This is a prima facie case of age discrimination in that it is quite clear that the difference in treatment was on account of their age. Therefore the burden of proof has shifted to the respondents.

The Labour Court acting under the Industrial Relations Acts had recommended to the respondent and the unions, regarding the position of workers aged 61 years or over that "the parties should discuss further the position of these employees with a view to arriving at a resolution of the matter." The Labour Court also recommended that the respondent increase the ex-gratia element from €15m to €30m and that the benefits of both the SR Technics Defined Benefit scheme and the Irish Airlines Superannuation Scheme should be fully funded by the Company in respect if its employees who are members of the schemes. The respondent rejected these three recommendations because "they carry very significant costs and present the Company with severe difficulties." The complainants point out that it is settled law that financial difficulties cannot be used to justify age discrimination. In any event the cost of meeting the claims of the complainants and the other employees in the same situation was about €457,000. The cost of meeting the claim of the complainants alone is €268,000. The respondent therefore has failed to rebut or to justify the presumption of discrimination.

As regards the respondent's contention that the complainants had compromised all claims by signing and therefore the Tribunal had no jurisdiction to hear their claim, the complainants argue in response, that they were given to understand that their claim was not comprehended by "Declaration of Acceptance of Redundancy" and that they signed on that basis. They were not told that they could take it away for independent legal advice. Moreover, unlike other employees who got the ex-gratia payment, they only received their statutory entitlements in respect of redundancy and in lieu of notice. No additional consideration was given in return for signing the agreement. If the complainants did not sign the letter, they would still have received their statutory entitlements in respect of redundancy and in lieu of notice. Unlike their colleagues who were offered ex-gratia payments, they would have been no worse off financially for not signing. The respondent has done nothing that he was not obliged to do by law. The complainants argue that the lack of consideration is fatal to the argument of the respondent that the complainants are estopped from making their claims. They refer to the judgment of Carroll J. in PMPA Insurance v Keenan and Others [1983] 1 I.R. 330 and in particular at page 335 where she says:

"If an individual currently receives equal pay under his or her contract of employment, and an agreement not to pursue a claim for arrears of equal pay is supported by consideration (e.g., additional benefits to which the individual would not otherwise be entitled), I can see nothing contrary to public policy in allowing the parties to compromise, in such a fashion, what is a claim for a liquidated sum. If there was no such consideration, and an employer, being legally obliged to pay equal remuneration from the 31st December, 1975, agreed to pay it from a later date provided there was waiver of past claims, it could not be said that there had been a valid waiver since the employer would have done nothing that he was not obliged to do by law; therefore, there would have been no consideration to support the waiver."

4. Summary of respondent's case

4.1 The respondent claimed that the Equality Tribunal does not have jurisdiction to hear the complaints on the grounds that the complainants have compromised their claims. All the complainants signed letters to the respondent entitled "Declaration of Acceptance of Redundancy" in which they:

1. Confirmed that they accepted the redundancy package.

2. Confirmed that they waived their notice period and accepted the payment of statutory notice in lieu on the basis that their contract of employment would terminate with immediate effect.

3. Accepted that the redundancy and other payments (including the ex-gratia payments paid to some workers) and the other terms of the letter are in full and final settlement of all current, pending and future claims they have or may have against the Company under common law, statute and EU law including claims or potential claims under the following statutes:

* Redundancy Payments Acts
* Protection of Employment Acts
* Minimum Notice and Terms of Employment Acts
* Employment Equality Acts
* Transfer of Undertakings Regulations
* Unfair Dismissals Acts
* Organisation of Working Time Act

4. For the avoidance of doubt, it was stated that acceptance of these terms does not discharge any claim that an employee had or may have in respect of personal injury and/or full pension entitlements under theappropriate scheme or schemes of which the employee is or has been a member arising from his/heremployment with the Company.[Emphasis added].

5. Understood that the Company confirmed that, notwithstanding the employee's signature of the Declaration, it will:
* Promptly rectify any error in the calculation of the payments due under the terms of the Declaration
* Make any additional ex-gratia payment that becomes available from the company to employees who become redundant available to me, provided that the employee would qualify for any such additional payment if the employee had remained in employment with the company beyond 3 April 2009.

6. Agreed to sign this declaration without coercion or duress having been given the opportunity to obtain independent advice.

4.2 The Respondent claims that the letter meets the test set out by Smyth J. in the High Court in Sunday Newspapers Ltd v Stephen Kinsella and Luke Bradley¹ for when an employee can lawfully compromise their statutory employment law entitlements. The Respondent identifies the requirements for an effective compromise (as set out by Smyth J.) as:

* The agreement means what it says - that it is in full and final settlement.
* Whether it is effectively compromised is a matter for the 'proper construction' of the agreement.
* In that regard, the employee is to be advised what statutory entitlements under employment legislation are to be compromised.
* The employment statutes are to be listed.
* The employee is to be directed to seek appropriate advice.
* The advice referred to need not be legal advice, but appropriate advice.

The Respondent argues in particular that Trade Union advice is appropriate advice. The complainants' trade union, SIPTU, sought and was given a last minute change to the Declaration (bold above). The respondent argues that it is clear that where SIPTU sought and achieved an amendment, one must conclude that the interests of the complainants have been actively managed by SIPTU. The respondent could safely assume that SIPTU was in a position to provide appropriate advice.

The fact that each complainant accepted and signed a compromise agreement means that the Tribunal has no jurisdiction to hear any or all of the claims.

4.3 The respondent argues that the complainants were not discriminated against on the age ground within the meaning of section 6 of the Act. Section 6 (1) of the Act states that for the purposes of the Act...discrimination shall be taken to occur where ... a person is treated less favourably than another person is, has been or would be treated in a comparable situation on any of the discriminatory grounds. The age ground is defined as "that they are of different ages". The respondent argues that the complainants (all aged in excess of 61 years) were not treated less favourably than people below 61 years in that they had access to an immediate full pension under their pension scheme while their younger colleagues did not. Indeed their younger colleagues would never get as good a deal because there was a deficit in the SR Technics Defined Benefit scheme on winding up and those below the age of 61 got a lump sum which would not yield a full pension. Calculations made by the respondent immediately prior to the hearing were claimed to show that the benefits of the immediate pension more than compensated for not getting the ex-gratia award. The complainants dismiss this stating that there is no evidence that such calculations were made when the decision was made to exclude them.

4.4 The respondent argued also that the difference in treatment was not based on age as such but on eligibility or otherwise for an immediate pension under the SR Defined Benefit pension scheme. Those 25 colleagues over the age of 61 but under 65 (i.e. in the same age group as the complainants) who were not members of the SR Technics Defined Benefit scheme but members of the Irish Airlines Superannuation Scheme received the ex-gratia payment because they were not eligible for an immediate pension. Those 25 employees were treated the same as their colleagues under the age of 61 but differently to the complainants. Therefore the complainants were not treated differently on account of their age but because of their different pension entitlements.

4.5 The respondent argues that even if the difference in treatment was because of the age of the complainants, the difference in treatment is comprehended by the exception provided by section 34 (3) of the Act. Section 34 (3) and (3A) provide:

(3) In an occupational benefits scheme it shall not constitute discrimination on
the age ground for an employer --
(a) to fix ages for admission to such a scheme or for entitlement to benefits under it,
(b) to fix different such ages for all employees or a category of employees,
(c) to use, in the context of such a scheme, age criteria in actuarial calculations, or
(d) to provide different rates of severance payment 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 that that does not constitute discrimination on the gender ground.
(3A) In subsection (3) --
'occupational benefits scheme' includes any scheme (whether statutory or non-statutory) providing for benefits to employees or any category of employees on their becoming ill, incapacitated or redundant but does not include any occupational pension scheme providing for pensions, gratuities or other allowances payable on retirement or death;

'severance payment' means a sum paid voluntarily by an employer to an employee otherwise than as pay when the employee leaves the employment.

4.6 The respondent recognises that difference in treatment on the age ground, even if excepted under section 34 (3) requires justification on the basis of necessity and appropriateness under EU law. The respondent points out that the entire operation was shutting down. The respondent had no money to make ex-gratia payments. €15m was provided by the shareholder for this purpose. No more could be obtained. The means chosen was the fairest, most transparent and most equitable having regard to the needs of the entire work-force.

5. Consideration

The issues for decision are:

(i) whether or not the complaints are properly before the Tribunal for investigation; and if so,
(ii) whether the complaints are in respect of denial of equal treatment or denial of equal remuneration;
(iii) whether the complainants were treated less favourably on account of their age; and if so,
(iv) whether the respondent can avail of the exceptions provided under the Act and in particular section 34 (3) interpreted in accordance with Article 6 of Council Directive 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation.

In reaching my decision I have taken into consideration all of the submissions, both written and oral, made to the Tribunal.

(i) I find that the complainants did not receive anything over and above what they were entitled to by law in return for signing the Declaration. Therefore for lack of consideration alone, the Declaration signed by the complainants does not constitute a valid waiver of rights under the Employment Equality Acts. Therefore I reject the contention of the respondent and find that these claims are validly before the Tribunal.

(ii) Next I have to decide if this is to be treated as a claim for equal treatment or equal pay. A severance payment, such as is at issue here, comes within the definition of "pay" as understood in EU law and "remuneration" under the Act. On the other hand it can be argued that the claim is that the complainants were denied the same treatment in relation to redundancies as were offered to other persons, contrary to section 8 (6) of the Act. The complainants are asking that I should order that the calculator for the ex-gratia payment should be applied to them. They are not seeking to be paid the same total remuneration as the named comparators. Indeed no evidence was presented on the total remuneration of the comparators. In my view the claim of the complainants is more appropriately treated as one of discrimination in relation to conditions of employment contrary to section 8 of the Acts rather than a claim of unequal pay. The claim before me therefore is that by not affording to the complainants the same treatment in relation to payment of an ex-gratia severance grant on redundancy as were afforded to employees of a different age, they were treated less favourably on account of their age.

(iii) Section 85A (1) of the Acts provides that

"where in any proceedings facts are established by or on behalf of a complainant from which it may be presumed that there has been discrimination in relation to him or her, it is for the respondent to prove the contrary."

It requires the complainant to establish, in the first instance, facts upon which he can rely in asserting that he suffered discriminatory treatment on the grounds specified. It is only where such a prima facie case has been established that the onus shifts to the respondent to rebut the inference of discrimination.

Section 6 (1) (a) of the Acts provides-

"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 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').

Section 6 (2) (f) defines the "age ground" that they are of different ages.

In this case it is up to the complainants to establish that they were not afforded the same treatment in relation to redundancies on account of their age as the respondent offered or afforded to persons of a different age.

The complainants argue that they were denied the ex-gratia payment because they were aged 61 and over. This is a prima facie case of age discrimination in that it is quite clear that the difference in treatment was on account of their age.

The respondent argues that (a) the difference in treatment was based on eligibility for an immediate pension and not based on age as such; and (b) the difference in treatment did not constitute less favourable treatment since the complainants' entitlement to an immediate pension more than compensated for the lack of an ex-gratia severance payment, leaving them better off overall than their comparators.

As stated by Nicholls L.J. in Shamoon v Chief Constable of the Royal Ulster Constabulary²

There will be cases where it is convenient to decide the less favourable treatment issue first. But, for the reason set out above, when formulating their decisions employment tribunals may find it helpful to consider whether they should postpone determining the less favourable treatment issue until after they have decided why the treatment was afforded to the claimant.³

In the present case in my view it is helpful to consider first of all the reason why the complainants were treated differently. Was it on grounds of age? If yes, then I shall go on to consider whether the difference in treatment constituted less favourable treatment. If not, then the difference in treatment (be it favourable or unfavourable) cannot constitute discrimination on the age ground.

The complainants were treated differently because they, as members of the SR Technics Defined Benefit scheme over the age of 61 were eligible for an immediate full pension. Their age is only relevant because that determines their eligibility for pension. This is confirmed by the fact that members of a different pension scheme, the Irish Airlines Superannuation Scheme, of a similar age to the complainants (i.e. between 61 and 65 years old) were given an ex-gratia payment because, under the terms of their scheme, they were not eligible for a pension until age 65. Therefore I find that the comparators have not established a prima facie case that they were treated differently on account of their age and their claim fails. It is not necessary for me to consider whether or not the difference in treatment amounted to less favourable treatment.

6. Decision

I have completed my investigation of this complaint and make the following decision in accordance with s. 79(6) of the Act. I find that:

(i) the complainants did not enter into a binding and enforceable agreement which prevents them from pursuing their complaints to this tribunal and those complaints are properly before me for investigation;

(ii) the respondent did not discriminate against the complainants on grounds of age in terms of s. 6 (2) of the Acts and contrary to s. 8 of the Acts by not affording to the complainants the same treatment in relation to payment of an ex-gratia severance grant on redundancy as were afforded to employees of a different age.

Niall McCutcheon
Director

21 February 2013

¹ [2008] ELR 53
² [2003] I.C.R. 337
³ [2003] I.C.R. 337 at 341, 342