EDA1513

Mr Lett brought a claim before the Equality Tribunal pursuant to the Employment Equality Acts 1998 -2011 (the Act) contending that he was discriminated against on grounds of his age. The Equality Tribunal found for Mr Lett on both points and awarded him compensation in the amount of €24,000.

In this Determination the parties are referred hereafter as they were at first instance. Hence, Mr Lett is referred to as the Complainant and Earagail Eisc Teoranta is referred to as the Respondent.

The Complainant now appeals against the quantum of the award of compensation made by the Equality Officer. The Respondent cross appeals against the totality of the Equality Officer’s decision.

The parties made helpful written and oral submissions on the issues arising in the case and the Court heard oral evidence tendered by both parties. Following the hearing the parties made final written submissions. All of the submissions and the evidence adduced have been carefully evaluated by the Court in reaching its determination.

Background
While there are significant issues of material fact in dispute between the parties the background factual matrix against which the dispute arose is not in dispute and can be summarised as follows: -

The Complainant was born on 8^thSeptember 1945. He was formally a director and shareholder of Lett and Company Limited and Lett Group Limited. These companies operated a family business engaged in fish processing and distribution. The Complainant’s co-directors were his two brothers. In or about 1988 or 1989 Lett Group Limited acquired the shareholding in the Respondent. It appears that the Complainant became a director of the Respondent and continued in that capacity until 1998, at which time he resigned so as to facilitate a restructuring of the business.

In or about April 2007 the Respondent was acquired by an entity known as the Navid Group. The consideration for the acquisition was that the Navid Group took on the liabilities of the Respondent and procured the release of the Complainant and members of his family from personal guarantees against the bank borrowings of the Respondent.

As a condition of the acquisition the Respondent undertook to employ the Complainant as a fish buyer and engineering consultant. On foot of that agreement the Complainant was employed by the Respondent in 2007 on a contract of service for a period of two years. On the expiry of that fixed term contract the Complainant continued in the employment of the Respondent although his fixed-term contract was not formally renewed at that time.

On or about 1^stMarch 2010, the Respondent furnished the Complainant with a draft of a further fixed-term contract which was expressed to commence on 30^thMarch 2009 and to run for a period of 18 months from that date. The Complainant refused to sign this contract. He nonetheless continued in the Respondent’s employment

Neither the contract entered into in 2007 nor the draft contract proffered to the Complainant in 2010 contained an express term stipulating a retirement age. However, the Respondent had produced a staff handbook in which normal retirement age for all staff was expressly stated to be 65.

The Respondent operated a pension scheme the rules of which stipulated that a pension can be paid to a member at any time between the ages of 60 and 75. The Complainant was a trustee of this scheme.

By letter dated 21^stFebruary 2011 the Managing Director of the Respondent wrote to the Complainant informing him that in the course of restructuring the business his position had been identified as superfluous to its continuing requirements. He was informed that a decision would shortly be made as to the viability of his position. In this letter the Managing Director of the Respondent also referred to the Complainant’s retirement date as being 7^thSeptember 2011. By the same letter the Complainant was advised that with effect from 28^thFebruary 2011 he would be reduced to a three day week and that this would continue until his retirement date. The Complainant’s employment was terminated with effect from 28^thFebruary 2011.

At the time his employment terminated the Complainant was 66 years of age.

Position of the Parties

The Complainant
The Complainant contends that he was not contractually required to retire at any particular age. He denies that the Respondent ever introduced a compulsory retirement age or that any compulsory retirement age applied to his employment. The Complainant further contends that other named employees worked beyond the age at which his employment was terminated.

The Complainant further relies on Directive 2000/78/EC Establishing a General Framework for Equal Treatment in Employment and Education (hereafter the Directive) in contending that the use of age as a criterion for less favourable treatment in employment constitutes unlawful discrimination. He submitted that national law, and in particular the Act, must be interpreted and applied in harmony with the Directive.

The Respondent
The Respondent contends that the Complainant knew, or ought to have known, that his retirement age was fixed at 65. His retirement was delayed until the end of the year in which he turned 65 because of a view taken by the Respondent as to what was meant by the stipulation in the company handbook.

The Respondent contends that the stipulation as to retirement contained in the handbook was part of the Complainant’s conditions of employment and was, in any event, saved by s.34(4) of the Act, which provides: -

• “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.”

The Respondent further contends that a retirement age of 65, or 66, has been applied consistently to other employees. In support of that contention, details were provided to the Court showing the dates of birth and retirement dates for all employees whose employment, according to the Respondent, came to an end by retirement since 2006, as follows: -

Note: The employees referred to are named in information furnished by the Respondent and have been anonymised by the Court

Without prejudice to its contention that the Complainant had actual or constructive knowledge of the requirement that he retire between the ages of 65 and 66, Counsel for the Respondent submitted that the validity of a retirement age is not dependent upon the employee to which it applies having knowledge thereof.

Evidence
Oral sworn evidence was given by the Complainant, Mr Michael Jacob, who was Chairman of Lett Group Limited and the Respondent between 1990 and 2014, and Mr Jim Lett, who was Chief Executive of the Respondent up to 2007. Mr Aodh O’Domhnaill, who is Chief Executive of the Respondent, gave evidence on behalf of the Respondent.

The salient points of the evidence adduced are as follows: -

The Complainant told the Court in evidence that he had never known of the existence of a retirement age in the company. He had been a director of the Respondent up to 1998 but thereafter, while not formally a member of the Board of the Respondent, he attended Board meetings and received copies of all Board papers.

He was employed by the Respondent as a fish buyer and consultant in engineering in 2007 following the restructuring of the company. Prior to that date, he was employed in a similar capacity by Lett and Company limited. The Complainant’s initial employment with the Respondent was on a fixed-term contract for two years. On the expiry of this contract it was ‘rolled over’ and he continued in the employment of the Respondent.

It was the Complainant’s evidence that in 2007 he was asked to remain on by Mr Aodh O’Domhnaill although it was provided for in the Heads of Agreement leading to the restructuring that he would be employed by the Respondent.

In March 2010 the Complainant was proffered a draft contract of employment which was expressed to run from 30^thMarch 2009 (the date on which his prior contract expired) for a period of 18 months. He refused to sign that document as there were a number of terms with which he disagreed. In particular, he did not accept the proposed duration of the contract which he accepted coincided approximately with his 65^thbirthday. He said that in so far as this implied a retirement date, it was the first time that he had heard of a retirement date.

Turning to the company handbook, the Complainant told the Court that the first time that he had sight of this document was in 2011, in the course of the proceedings before the Equality Tribunal.

The Complainant named two former colleagues who, he claimed, worked beyond age 66. One of these persons worked to age 70 while the other worked to age 67. In cross examination the Complainant accepted that this latter person in fact ceased to be employed at age 66. These named employees ceased to be employed in 2005 and 2000 respectively.

According to the Complainant other members of the Lett family whose services were not retained following the restructuring of the business received a financial compensatory package. He expected that he would have received a similar package if his services were not being retained.

Mr Jacob told the Court that he was Chairman of the Respondent between 1990 and 2014. He said that he was personally unaware of any particular retirement age for employees. He accepted that the day-to-day management of the company and the responsibility for the development of employment related policies was the function of management rather than of the Board. He said that he would have expected the management to have a retirement age in place but he had no knowledge of whether there was such a policy or of what it was. He was unaware of any issue relating to age having arisen within the Respondent prior to the 2007 restructuring.

Turning to the handbook, Mr Jacob told the Court that he was certain that he had never seen the document relied upon by the Respondent. He said that if he had seen this document he would have been unhappy with its content and would have said so. It was Mr Jacob’s evidence that this document was never seen nor approved by the Board although it would not have required Board approval. He would have expected management to produce an employee handbook.

Mr Jacob described the management of the Respondent as careful reporters.

Mr Jim Lett gave evidence. He was Chief Executive of Lett Group Limited up to 2007. The Lett Group controlled the Respondent up to that time. According to Mr Lett, the first time that he saw the handbook relied upon by Respondent was in the course of the proceedings before the Equality Tribunal. He also considered this handbook inadequate and would not have agreed with its content had he seen it. Mr Lett told the Court that the question of retirement, or matters relating to the age of employees, was never discussed with him while he was in charge of the holding company.

Mr Lett accepted that a named consultant had been engaged by the Respondent in or about 2006 but the focus of his work was directed at reducing costs. He met with the consultant on three or four occasions to discuss his work. He said that he would have expected that employees would be informed of the changes that were being proposed. The consultant recommended the introduction of an annualised hour’s arrangement for employees and he was aware that this change had been implemented in 2008.

Mr Aodh O’Domhnaill gave evidence. This witness is currently Chief Executive of the Respondent and has held that position since 2007. He had been General Manager of the Respondent from 1992. Prior to the restructuring the Respondent was owned and controlled by Lett Group Limited. The directors of the company were all members of the Lett family.

According to Mr O’Domhnaill, it became obvious by 2006 that every aspect of the Respondent’s business would have to be examined. On foot of recommendations made by the consultant referred to in the evidence of other witnesses, it was decided to introduce a staff handbook and to introduce annualised hours. The handbook was produced in 2006, when the company was controlled by the Lett family. It was originally produced on A4 sheets and was formally printed in 2007and some 300 copies produced.

The staff were not represented by a trade union and a works council was established for the purpose of providing a forum for consultation with staff. It was Mr O’Domhnaill’s evidence that the handbook was discussed individually with all staff members. Copies of the handbook were left in the staff canteen in Donegal. Mr O’Domhnaill accepted that the Complainant was based in Wexford and a copy of the handbook may not been sent to that location. Mr O’Domhnaill accepted that it was conceivable that the Complainant has not seen this document. However, the Complainant had a standing invitation to attend Board meetings and did so regularly. He said that the Complainant should have become aware of the existence of the handbook through his involvement with the Board. Mr O’ O’Domhnaill did not take issue with Mr Jacob’s evidence that the handbook had not been placed before the Board.

Mr O’Domhnaill’s told the Court that the handbook’s provision relating to retirement reflected the previous practice in the Respondent. No retirement age was specified in the first contract issued to the Complainant in 2007 because it was for a fixed-term of two years. The second contract, while not specifying a retirement age, was to run for eighteen months to the 29^thSeptember 2010, at which time the Complainant would have attained the age of 65. It was known that the Complainant did not wish to retire and, having obtained legal advice, it was concluded that he would remain aged 65 until his 66^thbirthday and should be allowed to remain in employment up to that date.

The witness told the Court that an advertisement had been placed for a replacement of the Complainant as a fish buyer but the position was never in fact filled.

Discussion
Section 34(4) of the Act,prima facie,allowed the Respondent to fix a retirement age without contravening the prohibition of discrimination on grounds of age. The jurisprudence of the CJEU on the circumstances in which compulsory retirement is saved by Article 6 of the Directive is relevant only if the Court finds that a retirement age was in fact fixed by the Respondent and that the retirement age applied to the Complainant.

As a matter of general principle, a termination of employment by way of retirement should be distinguished from a dismissal on grounds of age. A retirement occurs where the employment comes to an end pursuant to a condition of employment which limits an employee’s tenure to the point at which they attain a specified age. In that regard, it appears to the Court that the authority conferred on an employer by s.34(4) of the Act is to apply a condition of employment to that effect. Such a term can be provided in an employee’s conditions of employment either expressly or by implication, or it can be provided by incorporation where some other document or instrument, of which the employee had notice, can be read in conjunction with the formal contract of employment. The Court further accepts that an employer’s employment policy in relation to retirement can take effect as a contractual condition of employment which is,prima facie,protected by s.34(4) of the Act. However, in the Court’s view that could only arise where the policy is promulgated in such a manner that the employees to whom it applies either knew, or ought to have known, of its existence.

On that point the judgment handed down by Hedigan J inMcCarthy v HSE[2010] 21 ELR 165 is instructive. In that case a public servant sought to challenge a decision of the HSE requiring her to retire at age 65. The HSE, in common with all public sector employments, maintained an employment policy requiring employees to retire at age 65, in line with certain statutory provisions. Ms McCarthy claimed that the policy did not apply to her because she had never been informed that she would be required to retire at that age and no such term was included in her contract of employment.

It is noteworthy that rather than relying on the existence of the policy,per se,the approach taken by the Court was to consider if the employer’s policy on retirement took effect as an implied term in the applicant’s contract of employment. Having reviewed the evidence and the submissions made by the parties Hedigan J said: -

• “In addressing the substantive issues raised, the crux of the application lies in whether the retirement age of 65 could be viewed as having been implied into the contract as submitted by the respondent. Two alternative approaches were suggested utilising the “officious bystander test” on the one hand and implication by custom on the other. It is my opinion that in the circumstances of the case, the former provides a more suitable formula to determine whether such a term has been implied, although there is necessarily a large degree of overlap. The court is of the opinion that such a term should indeed be implied into the applicant's conditions of employment. The applicant is a highly intelligent woman who is legally qualified. It is difficult to accept that she had no knowledge of the retirement age applicable in that part of the public service in which she worked. Furthermore, irrespective of any actual knowledge of this fact, I would consider the dicta of Maguire P. in O'Reilly that anyone concerned “should have known of it or could easily have become aware of it” to be particularly apt in this case. Moreover in addition to the broad awareness of the retirement age among most working adults, the applicant may be deemed as “on notice” that there was an applicable retirement age by virtue of the superannuation scheme. The superannuation scheme, of which she was a member, made reference to the existence of a retirement age, and more specifically, a cut-off for contributions at age 65. I therefore find that such a term can be implied into the terms and conditions of employment.”

In giving judgement Mr Justice Clarke focused on Mr McCarthy’s‘agreed’or‘contractual’retirement age rather than on the policy in pursuance of which his employer required him to retire.

At paragraph 5.2 of the judgment Clarke J. observed: -

• “I did not understand counsel for Calor to disagree that, at the level of principle, it would amount to discrimination on the grounds of age to terminate someone's employment because the person concerned had reached an age which was short of that person's agreed retirement age.”

• “……the Labour Court considered that there were serious questions concerning the proper interpretation of s.34(4) of the Act having regard to the jurisprudence of the ECJ. It is clear that the Labour Court would have given very serious consideration to making a reference to the ECJ if it had come to the conclusion, as a matter of fact, that Mr McCarthy's retirement age was 60 rather than 65. In that eventuality there would have been no doubt but that Mr McCarthy had been required to retire at his contractual retirement age. The question which then would have arisen is as to whether s.34(4), properly interpreted in the light of the Directive which it seeks to implement in Irish law, provides, in all cases, an immunity in respect of a discrimination claim where someone retires at a contractual retirement age. However, because the Labour Court came to the view that, as a matter of fact, Mr McCarthy's retirement age was 65, the Labour Court did not consider it necessary to deal with s.34(4) on the basis that Mr McCarthy had not, in its view, therefore, been required to retire at his contractual retirement age”.

It is accepted that the Complainant’s contract of employment did not contain any express term as to retirement. That was in part explained by the fact that his employment was intended to be for a fixed-term and so the stipulation of a retirement age was unnecessary. However, the Respondent relies on the staff handbook as containing the stipulation as to retirement.

The terms of a staff handbook can attain contractual status in a number of ways. The individual contract of employment may refer to the handbook thus incorporating its terms into the contract. A term as to retirement may also be implied in the contract by application of the so called officious bystander test enunciated inShirlaw v Southern Foundaries Ltd[1939] 2 K.B. 206. Here the test was set out in the following terms: -

• “Prima facie that which in any contract is left to be implied and need not be expressed is something so obvious that it goes without saying that if, while the parties were making the bargain, an officious bystander were to suggest some express provision for it in the agreement they would testily suppress him with a comment ‘Oh of course’.”

• “…so notorious, well-known and acquiesced in that in the absence of agreement in writing it is to be taken as one of the terms of the contract between the parties…it is necessary in order to establish a custom of the kind claimed that it be shown that it was so generally known that anyone concerned should have known of it or easily become aware of it.”

The terms of a pension scheme may also be relied upon as either implying a term as to retirement or by incorporating the terms of the scheme into the contract.

A crucial consideration in addressing the question of incorporation or implication is whether the employee knew, or ought to have known, of the term contended for.

Findings on the evidence
The Court was told that the applicable pension scheme in this case provided that an employee may retire at any age between the age of 60 and 75. That did not preclude the employer from fixing a retirement age within that range. It is the Respondent’s case that it did fix a retirement age of 65 when the handbook was produced.

The contract of employment that the Complainant entered into in 2007 did not refer to the handbook. Likewise, the draft contract proffered to the Complainant in 2010 contained no such reference. In these circumstances the terms of the handbook were not formally incorporated as a condition of his employment. That, however, does not dispose of the question of whether a retirement age of 65 (or 66) should properly be implied as a condition of the employment by reason of the Complainant’s actual or constructive knowledge of the term.

The Complainant told the Court in his evidence that he was unaware of any purported retirement age until he received notice that his employment was to end. He further gave evidence that he never had sight of the handbook until it was shown to him in the course of the proceedings before the Equality Tribunal. Mr O’Domhnaill was unable to say if or when the Complainant was provided with a copy of the handbook. His evidence was that copies of the handbook had been left in the staff canteen in Donegal but that a copy may not have been sent to the Wexford offices in which the Complainant was based. Mr O’Domhnaill felt that the Complainant should have been aware of the existence of the handbook and the retirement age that it specified through his attendance at Board meetings. But this contention is undermined by the evidence of Mr Jacob.

Mr Jacob served as chairman of the Respondent from 1990 to 2014 and he was quite clear in his evidence that neither the handbook nor the fixing of a retirement age was discussed by the board or referred to in papers or reports given to the Board.

In these circumstances the Court accepts the Complainant’s evidence that he neither has sight of, nor knew of the handbook until it was produced at the hearing before the Equality Tribunal.

The Court has also considered the submissions to the effect that the draft contract proffered to the Complainant in 2010 impliedly stipulated a retirement age by limiting the proposed tenure of the Complainant to a period of 18 months commencing on 30^thMarch 2009. This draft contract would have brought the Complainant’s employment to an end on 29^thSeptember 2010. He attained the age of 65 on 8^thSeptember 2010. This proposed term could not be interpreted as implying that the Complainant’s tenure was fixed to age 65. Moreover, that document appears to the Court to have been carefully drafted and the absence of any reference to the company handbook, or to any policy on a retirement age, seems remarkable if it was intended that either would have contractual effect.

Finally, the Court has considered the submissions advanced on behalf of the Respondent concerning the existence and effect of a policy on retirement. On that point, no authority was opened to the Court for the proposition that the mere existence of a policy, in and of itself, could attract an immunity against liability for a unilateral termination of employment on grounds of age. All of the authorities opened to the Court relate to cases in which a retirement age was fixed, either by national law, a collective agreement or by the individual contract of employment.

As previously observed, the Court accepts, in principle, that a policy on retirement can take effect as a contractual term if it is promulgated in such a manner that those to whom it applies either knew, or ought to have known, of its existence. In so far as the policy was promulgated through the handbook, for reasons already stated, the Court does not accept that the terms of the handbook were incorporated in the Complainant’s contract of employment or that they became an implied term in his contract.

Nevertheless, the decision inMcCarthy v HSEindicates that an employer’s retirement policy could be implied into a contract of employment by application of either the ‘custom and practice test’ or the ‘officious bystander test’, referred to earlier. The Court is satisfied on the evidence that the existence of such a policy was not so well known and acquiesced in as to attract a contractual status by application of either test.

In reaching that conclusion the Court has considered the submissions made on behalf of the Respondent to the effect that a retirement age of 65 or 66 has consistently applied since the adoption of the retirement policy in 2006. The information upon which those submissions are based has been tabulated earlier in this Determination. Two points of significance arise from an examination of this information. Firstly, all but one of the employees referred to ceased to be employed after the Complainant’s employment came to an end and after the within proceedings were initiated on 7^thOctober 2011. That person, it should be noted, ceased to be employed not at age 65 or 66 but at age 62. Secondly, none of the employees referred to ceased to be employed on either their 65^thor 66^thbirthday, as would usually be the case where the tenure of employed is fixed by reference to a retirement age.

The Complainant did not know of any retirement policy pursued by the Respondent. Nor did Mr Jim Lett, who was Chief Executive of the Respondent until 2007, after the putative adoption of the policy in 2006, know of its existence. Significantly, Mr Jacob, who was Chairman of the Respondent at all times material to this claim, was also unaware of the existence of such a policy. Moreover, no evidence was proffered from any former or current employee of the Respondent concerning the degree of knowledge amongst the workforce of either the existence or import of a retirement policy independently of what was contained in the handbook.

Outcome

Retirement
Having regard to the totality of the evidence adduced the Court cannot accept that the Complainant had actual or constructive knowledge of either the handbook or of a fixed retirement age of either 65 or 66. The Respondent had ample opportunity to inform the Complainant of a requirement that he retire at age 65 or 66 over the currency of his employment. No evidence was adduced of the Complainant having been so informed or having been provided with any document from which such a requirement could have been discerned. There was no express term in his conditions of employment requiring him to retire at either age and, in the Court’s opinion, no such term can be regarded as having been implied or incorporated on any of the accepted tests.

In these circumstances the Court must hold that the Respondent had not fixed a retirement age in respect of the Complainant and that he was dismissed because of his age. In these circumstances s.34(4) of the Act cannot avail the Respondent.

Three day week
In the course of the hearing of this appeal no evidence was adduced concerning the circumstances in which the Complainant’s working week was reduced to three days per week. The documentary evidence provided to the Court indicates that the reason given for that decision was the trading and financial circumstances in which the Respondent found itself at that time. Since there is nothing to indicate that this was not the real reason for the decision the Court is unable to find that this constituted discrimination on grounds of age.

Redress.
The Court has considered the adequacy of the redress awarded by the Equality Tribunal. It is clear from the evidence that the Complainant was originally employed by the Respondent on foot of the agreement leading to the restructuring of the business in 2007. There is nothing in the evidence to indicate that the parties envisaged or intended that the Complainant would remain in employment for as long as he wished.

Having considered all of the surrounding circumstances the Court has come to the conclusion, as a matter of probability, that at the time the Complainant’s employment terminated, the Respondent was entitled to conclude that the requirement for the position that he occupied had ceased or diminished having regard to the prevailing economic and commercial circumstances of the business. It is also accepted that he was not directly replaced. In these circumstances, had the Respondent not mistakenly believed that the Complainant could be compulsorily retired he would, as a matter of probability, have been dismissed on grounds of redundancy at or around that time. The Complainant appeared to have implicitly accepted the reality of that situation in that the thrust of his representations to the Respondent were directed at obtaining an ex grata redundancy payment. In these circumstances his potential loss arising from his dismissal must be regarded as significantly reduced.

Furthermore, the Court has differed from the decision of the Equality Tribunal in finding that the Complainant did not suffer discrimination in being placed on a three day week

The Court has concluded that an award of compensation for the effect of the discrimination found to have occurred in the amount of €24,000 is fair and equitable in the circumstances of this case. This award is not in the nature of remuneration.

Disposal
In light of its decision on the facts of the case it is unnecessary for the Court to address the legal submissions made by the parties on the compatibility of s.34(4) of the Act with the provisions of the Directive.

The Complainant’s appeal is disallowed and the Respondent’s cross appeal is allowed in part. The decision of the Equality Tribunal is amended in the terms of this Determination.

Signed on behalf of the Labour Court



Kevin Duffy
31st July 2015______________________
SCChairman



NOTE

Enquiries concerning this Determination should be addressed to Ceola Cronin, Court Secretary.