DEC-E2014-062

The Equality Tribunal

EMPLOYMENT EQUALITY ACTS

DECISION NO. DEC-E2014-062

PARTIES

John Hanlon, John Byrne, Michael O’Keefe and Michael Kirby

(HR Ireland)

AND

Lake Communications Limited

(Represented by Rosemary Mallon B. L. instructed by Arthur Cox)

File references: EE/2011/673, 674, 675 & 676

Date of issue: 29 August 2014

Head notes: Employment Equality Acts – sections 6 and 8 – conditions of employment – age

1.DISPUTE

1.1 This dispute involves claims by Mr John Hanlon, Mr John Byrne, Mr Michael O’Keefe and Mr Michael Kirby that they were discriminated against in relation to conditions of employment contrary to section 8 of the Employment Equality Acts (the Acts) by Lake Communications Limited on the grounds of age contrary to section 6 of the Acts.

1.2 The complainants referred their claims under the Acts to the Equality Tribunal on 23 September 2011. On 20 December 2013 in accordance with his powers under the Acts the Director delegated the complaint to the undersigned, Hugh Lonsdale, Equality Officer, for investigation and decision and for the exercise of other relevant functions under Part VII of the Acts, on which date my investigation commenced. In accordance with Section 79(1) of the Acts and as part of my investigation I proceeded to a hearing on 13 February 2014.

2. SUMMARY OF THE COMPLAINANT’S CASE

2.1 Towards the end of 2010 the respondent decided to make a number of redundancies. The redundancy scheme allowed for the payment of 3.5 weeks pay per year of service plus statutory redundancy and the total was capped at one year’s salary. The complainants submit that the cap on their redundancy terms of one year’s salary is indirectly discriminatory against them as older workers with longer service. This cap had the effect of seriously diluting the yield of the ex gratia payment by virtue of the fact that as age and service increases that dilution factor reduces the potential payment to employees from 3.5 weeks to 2.7 days per year of service at 35 years service.

2.2 The table below shows the service of the complainants, their ages and the loss they suffered as a result of the salary cap: 

2.3 The complainants submit that the respondent has refused to enter into any dialogue with them and have ignored a Labour Court Recommendation which deemed the complainants to have been unfairly treated. The complainants submit that EC Directive 2000/78 Article 6 means that any difference of treatment on the grounds of age has to be objectively and reasonable justified by a legitimate aim and they contend that the Labour Court recommendation means that the scheme cannot be objectively justified.

3. SUMMARY OF THE RESPONDENT'S CASE

3.1 The respondent submits that the complainants were made redundant in December 2010. They received statutory redundancy entitlement in addition to an ex gratia payment. The ex gratia was calculated as 3.5 weeks basic pay for each completed year of service and was additional to the statutory redundancy payment. The total redundancy payment was capped at 52 weeks salary, i.e. the cap was reached where the statutory redundancy pay plus the ex gratia payment exceeded the employee’s basic annual salary.

3.2 The respondent submits a preliminary issue that the complainants made claims to the Labour Court under the Industrial Relations Acts 1969 – 2007. This was heard on 19 May 2011 and the Chairman asked the complainants if they wished to pursue the claims under the Industrial Relations Acts or the Employment Equality Acts. He indicated that if the complainants pursued their claims under the Industrial Relations Acts he would expect the respondent to argue that the Equality Tribunal should be estopped from hearing the claims. The complainants continued with their claims under the Industrial Relations Acts. In accordance with its’ legal entitlement the respondent has not implemented the Labour Court recommendation due to financial circumstances. The respondent submits that the matter is res judicata and cited Paul A. Mc Dermott in Res Judicata and Double Jeopardy, Butterworths, Ireland 1999 p.3 in which res judicata is described as: “A final judicial decision pronounced by a court of competent jurisdiction, disposes once and for all of the matter decided so that they cannot afterwards be raised for relitigation between the same parties or their privies”. They rely on Breathnach v Ireland and Ors No. 1, [1989] IR 489 in which it was held that where a clearly identifiable issue had been raised in the course of a criminal trial and had been decided against a party to those proceedings by means of judgement explaining how the issue had been decided, such decision could give rise to issue estoppel in later civil proceedings in which that party was also involved. Such estoppel would arise, not only in relation to the specific issue determined but also to findings which were fundamental to the court’s decision on such issue.

3.3 The respondent submits that the facts of this and the claim before the Labour Court are identical and I am therefore estopped from hearing this claim.

3.4 The respondent submits that the complainants have not established a link between their ages and their treatment. The calculation of the redundancy payments had no connection to the complainant’s ages.

3.5 The respondent is part of a large multi-national group which made considerable losses in the financial year ending April 2010. A strategic decision was made towards the end of 2010 that the hardware development and support function carried out in Ireland would be transferred to Arizona and fifteen employees were made redundant, including the complainants.

3.6 The respondent submits that a full and proper consultation was carried out in relation to the redundancies. Initially, there was a group meeting on 9 November 2010, followed by individual meetings on 10 and 11 November 2010. Then between 15 and 23 November 2010 individual letters were sent advising those effected of the statutory redundancy payment and the ex-gratia payment which it was proposed to pay employees. This confirmed the payment cap and that the ex-gratia payment was discretionary. On 22 November 2010 three of the complainants wrote to the respondent stating that they considered the imposition of the cap to be disproportionately unfavourable to employees with long service.

3.7 The respondent replied on 26 November 2010 stating that the ex-gratia payment was discretionary and noted that the respondent had suffered significant financial losses in the last several years. The cap was imposed as a prudent fiscal measure based on affordability.

3.8 The four complainants’ employment was terminated through redundancy between 1 December 2010 and 4 March 2011.

3.9 When the respondent had redundancies in 2003 the payments were statutory redundancy plus 3.5 week’s pay per full year of service capped at one year’s salary. In 2008 5/6 people were made redundant and no cap was applied but the respondent’s financial position was vastly different. Further redundancies were implemented in late 2009 and a cap of 52 weeks salary applied to the ex-gratia portion of the redundancy payments.

3.10 The respondent submits the imposition of the cap was not discriminatory. The scheme was applied to all employees. It is submitted that the cap was a fair and reasonable cap particularly in the light of the financial circumstances of the respondent.

3.11 The complainants are claiming indirect discrimination but have provided no comparators who received different treatment.

3.12 The respondent cites section 34 (3) (d) states “in an occupational benefits scheme it shall not constitute discrimination on the age ground for an employee….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 the employee on leaving the employment and his or her compulsory retirement age” and an “occupational benefits scheme” is defined as: “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 and occupational pension scheme providing for pensions, gratuities or other allowances payable on retirement or death.”

4. JURISDICTION

4.1 The respondent contends that I have no jurisdiction to investigate and decide on these claims as they have already been considered by the Labour Court. They state the facts of the two claims are the same and as they have already been decided on they cannot be relitigated. The complainants’ representative contends that there is a difference between the claims before the Labour Court under the Industrial Relation Acts and the claims before the Equality Tribunal under the Employment Equality Acts.

4.2. The Labour Court recommendation is that, a recommendation, which could be, and was, ignored by the respondent. I do not see how this could be considered to fall within the category of “a final judicial decision”. I would expect such an outcome to be enforceable and/or appealable. The Labour Court recommended that the cap be increased to the equivalent of 104 weeks pay. This might seem more equitable but there is nothing in the recommendation which indicates that the matter was considered as an age discrimination issue.

4.3 I therefore conclude that the Labour Court considered the matter as an industrial relations issue and that I am considering it as a claim of discrimination. Although the facts of the claims are largely the same they are being investigated in different contexts. I conclude there is no reason for me not to complete my investigation.

5. FINDINGS AND CONCLUSIONS OF THE EQUALITY OFFICER

5.1 The issue for decision by me is whether the complainants were discriminated in relation to conditions of employment on the grounds of age. In reaching my decision I have taken into account all of the submissions, oral and written, made to me in the course of my investigation as well as the evidence presented at the hearing.

5.2 The complainants’ claim falls within conditions of employment as defined by Section 8 (6) of the Acts which states:

“Without prejudice to the generality of subsection (1), an employer shall be taken to discriminate against an employee or prospective employee in relation to conditions of employment if, on any of the discriminatory grounds, the employer does not offer or afford

to that employee or prospective employee or to a class of persons of whom he or she is one—

(a) the same terms of employment (other than remuneration and pension rights),

(b) the same working conditions, and

(c) the same treatment in relation to overtime, shift work, short time, transfers, lay-offs, redundancies, dismissals and disciplinary measures,

as the employer offers or affords to another person or class of persons, where the circumstances in which both such persons or classes are or would be employed are not materially different.”

5.3 The claim is that of indirect discrimination; which can be said to take place where an apparently neutral provision puts persons who are different ages at a particular disadvantage. The complainants contend the redundancy cap put them at a disadvantage because their length of service meant they received proportionately less ex-gratia payment per year of service, and that this dilution became more the longer their service.

5.4 The respondent contends they put a cap on the ex-gratia payment because of economic circumstances and they contend that section 34 (3) (d) allows such action not to be discriminatory. They also rely on the recent Labour Court Determination EDA1315, Hospira v Mary Roper, Phyllis Needham, Margaret Bryson, Breege Ward and Evelyn Dunnion in which the Labour Court stated “it appears that the Oireachtas considered it reasonably and objectively justifiable, within the meaning of Article 6(1) of the Directive, to provide for the difference in treatment allowed for by s.34(3)(d) of the Act. The Court cannot see any basis upon which it could be held that the Oireachtas was precluded from reaching that conclusion by a provision of Directive 2000/78 as interpreted in the jurisprudence of the CJEU.” The Determination also stated that “It appears to the Court that the underlying rationale for this provision is that workers close to retirement are in a substantially different position than those who have longer periods in which they could have expected to remain in the active labour force and that, as a matter of social and labour market policy, this difference can be legitimately reflected in constructing redundancy packages.” In the Hospira case the package was constructed with direct reference to the closeness of the complainants to the retirement age and this is not the specific circumstances of these claims.

5.5 In these claims the cap was imposed on the basis of service with the respondent and was not directly related to their closeness to retirement. As can be seen from the table in paragraph 2.2 Messrs Hanlon, O’Keefe and Kirby were all in their forties and within two years in age to each other but Mr Hanlon had around ten years less service than the other two. Mr Byrne was 61 at the time he was made redundant and had 31 years service. Indeed anyone with more than 10 years service would have been affected by the cap, to some extent. The more service the more you were affected than if there had been no cap. They did not receive a lesser payment but less recognition of their longer service.

5.6 The cap meant the respondent could manage their overall expenditure on the redundancies at a specific level. They could have done this by merely paying those made redundant their statutory entitlements. The complainants wanted the respondent to pay 3.5 weeks per year of service with no cap. The cap did not mean that anyone approaching retirement age was paid less. No one was paid less, those with more service were paid the same as each other and more than those with less than ten years service.

5.7 Section 5.6 of the Employment Equality Acts states that: “an employer shall be taken to discriminate against an employee if, on any of the discriminatory grounds, the employer does not offer or afford to that employee or to a class of persons of whom he or she is one … the same treatment in relation to … redundancies ….as the employer offers or affords to another person or class of persons, where the circumstances in which both such persons or classes are or would be employed are not materially different.” In claiming indirect discrimination the four complainants are claiming that they are a class of persons who, because they had more than ten years service, have been treated differently than those who would not have been affected by the cap because they had less than ten years service. The complainants did not receive redundancy payments of 3.5 weeks pay per year of service because of the cap. They all received one year’s salary. The amount they were affected depended on service. As I have already stated three of the complainants were in their forties and within two years in age to each other. One of them had around ten years less service than the other two but all three received the same redundancy payment. In the complainant’s claim of disproportionate effect based on service this example shows that age is not the primary factor in their different treatment.

5.8 I therefore conclude that the redundancy cap does not amount to discrimination on the grounds of age.

6. DECISION OF THE EQUALITY OFFICER.

I have concluded my investigation of this complaint and hereby make the following decision in accordance with Section 79(6) of the Employment Equality Acts that the respondent did not discriminate against the complainant in relation to conditions of employment on the ground of age.

_____________________

Hugh Lonsdale

Equality Officer

29 August 2014