Complainant

Respondent

Parties

Keith  Kerley

Arralis Limited

Representatives

Siobhan McGowan Alastair Purdy & Co

Rebecca De Groot Peninsula

Act

Complaint/Dispute Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under section 77 of the Employment Equality Act, 1998

CA-00046135-001

13/09/2021

This matter was heard by way of remote hearing pursuant to the Civil Law and Criminal Law (Miscellaneous Provisions) Act, 2020 and S.I. No. 359/2020 which designates the WRC as a body empowered to hold remote hearings.

The complainant and two witnesses for the respondent gave evidence under affirmation and all were cross-examined.

The complaint is one of discriminatory treatment on the basis of race.

The complainant submitted that he began with the company in 2017 and over the next few years he was given successive wage increases and there were changes in his responsibilities and job title.  In 2019 he was made General Manager and Director of the Irish office.

The complainant submitted that between 2019 - 2020 he attended many top-level meetings along with other senior managers where they were informed of the share allocations. His stock options were given to him in writing in July 2019.

The complainant submitted that in January 2021 the staff were informed that the Limerick office was closing down and that the staff were being made redundant.  However, following the CEO’s intervention, he outlined new terms that would save the regional office.  This proposal involved three staff being made redundant and one of the local offices being closed. The staff agreed to undertake new roles and responsibilities to save the local office.

The complainant submitted that on 19 February 2021 he was informed that he would now be reporting to someone else, a former sales manager who is now the ‘sales and marketing manager’.  The complainant submitted that this is the first he has heard of this change but that an hour later a company-wide email was sent around with this new reporting structure.  The complainant noted that he raised his concerns with the CEO that this amounted to a demotion and enquires as to whether this change will affect the share options as previously discussed.  He was told that this would not change.

The complainant submitted that emailed HR regarding his grievance about the restructuring and at a subsequent meeting, informed the CEO and HR that although he did not accept the changes he would continue to work.  The complainant noted that this strained the work relationship.

The complainant submitted that a management meeting in April 2021 was the last time that management from the Limerick office were included in meetings at this level.  On 5 May 2021 the letter regarding the stock options was sent out and the complainant was only offered 750 shares not the 3000 outlined at previous meetings.  The complainant submitted that in a meeting the following day regarding the share options, he was told that the CEO had made his decision and to ‘take it or leave it’.

The complainant submitted that one of the staff expressed their concerns to him in his capacity as a director and he sent a letter to the board in Asia outlining the grievances of the Limerick office.  In the response the Chairperson from Hong Kong indicates that the board supports the CEO completely.  The complainant submitted that following receipt of this response, he stepped down as a director that day and submitted his resignation three days later.

Preliminary matter:

The respondent submitted that the complaint is a pre-lodged complaint in that the complainant has filed a claim that he was discriminated against in the allocation of company share options and that this was only a proposal at that time.

The respondent submitted that the proposal had not been finalised at the point of filing of the claim. It had been revised on two previous occasions and has since been finalised with a standard system, based on years of service.

The respondent submitted that the issue of pre-lodged claims has been addressed by the High Court in Brady v Employment Appeals Tribunal [2015] ELR 1. The respondent accepted that the High Court found that the claim was not pre-lodged in circumstances whereby the claimant had lodged his claim during his notice period and therefore his termination was imminent, it is submitted that in this particular case, the respondent was at share proposal stage when the complainant resigned, and later filed the claim.

The respondent also refered to the Tribunal case of Caragh Neeson v John O’Rourke & Sean O’Rourke Chartered Accountants (UD2049/2011) where the question of whether a claim will be judged to be pre-lodged in circumstances where a claimant has lodged claim papers but is still in fact employed by the respondent was considered. In that case, the Tribunal found that the wording of Section 8(2) “demonstrates a manifest intention by the legislature to preclude claims being lodged before the dismissal date.” The Tribunal also went on to state, “if the Tribunal were to look with leniency on premature claims the system could well become clogged up with claims based on the expectation that a dismissal might occur sometime in the future which could later be withdrawn.”

The respondent submitted that the complainant has filed a claim alleging discrimination, in respect of the proposed distribution of share options. Share options are fully at the discretion of the shareholders, in the matter in which they are allocated. It is further submitted that share options are a right to buy, and were not due to mature for a further five years.

The respondent submitted that it was in the proposal stage in respect of a share option scheme, had put forward two proposals at that time, and have since amended the share option scheme a further two occasions in order to ensure the fairest allocation is applied. The respondent submitted that the complainant has lodged a discriminatory claim on the basis of a draft share option policy.

Substantive matter:

The respondent submitted that it strongly disputes this complaint that the complainant was treated differently due to his race.

The respondent submitted that in accordance with the legislation, it is central to the claim of discrimination under the Act, that one person is treated less favourably than another. The act also requires the identification of a comparator, which the complainant has identified as two managers in the UK office.

The respondent submitted that the complainant has failed to establish a prima facie case of discrimination to show that he was (a) discriminated against on account of a race or (b) discriminated against in his conditions of employment.

The respondent submitted that it is well settled that Section 85(A) of the Employment Equality Acts, as amended, specifies that the burden of proof rests with the claimant at first instance: “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.”

The respondent submitted that the Labour Court clarified the burden of proof in respect of discrimination under the Employment Equality Acts in Mitchell -v- Southern Health Board [2001] 12 E.L.R. 201 follows:

“It is necessary, however, to consider the extent of the evidential burden which a claimant must discharge before a prima facie case of discrimination on grounds of sex can be made out. The first requirement of Article 4 of the Directive is that the claimant must ‘establish facts’ from which it may be presumed that the principle of equal treatment has not been applied to them. This indicates that a claimant must prove, on the balance of probabilities, the primary facts on which they rely in seeking to raise a presumption of unlawful discrimination.”

It is only if these primary facts are established to the satisfaction of the Court, and they are regarded by the Court as being of sufficient significance to raise a presumption of discrimination, that the onus shifts to the respondent to prove that there was no infringement of the principle of equal treatment. The respondent submitted that when applied to the present case, this approach means that the appellant must first prove as a fact one or more of the assertions on which her complaint of discrimination is based. A prima facie case of discrimination can only arise if the appellant succeeds in discharging that evidential burden. If she does, the respondent must prove that she was not discriminated against on grounds of her sex. If she does not, her case cannot succeed.”

The respondent submitted that Mitchell -v- Southern Health Board, albeit that it dealt with discrimination on the basis of sex, is instructive in respect of the burden of proof in all discrimination cases under the Employment Equality Acts.

The respondent also refered to the Labour Court decision of Melbury Developments v Arthur Valpeters (EDA0917) where the Court, whilst examining the circumstances in which the probative burden of proof operates held as follows:–

“Section 85A of the Acts provides for the allocation of the probative burden in cases within its ambit. This requires that the Complainant must first establish facts from which discrimination may be inferred. What those facts are will vary from case to case and there is no closed category of facts which can be relied upon. All that is required is that they be of sufficient significance to raise a presumption of discrimination. However, they must be established as facts on credible evidence. Mere speculation or assertions, unsupported by evidence cannot be elevated to a factual basis upon which an inference of discrimination can be drawn.”

The respondent submitted that discrimination on any basis is one of the most serious of claims to level against an employer, thus the evidential burden of proof is high. It was held in Melbury: “Section 85A places the burden of establishing the primary facts fairly and squarely on the Complainant and the language of this provision admits of no exceptions to that evidential rule.”

The respondent submitted  that in order to demonstrate that the Claimant had received less favourable treatment and that the less favourable treatment arose from one of the protected grounds, the Claimant must first establish a prima facie case of discrimination as held by the Labour Court in Rotunda Hospital -v- Gleeson DDE003/2000: ‘‘Evidence which in the absence of any contradictory evidence by the employer would lead any reasonable person to conclude that discrimination has probably occurred’’.

The respondent noted that the complainant suggested that two UK based staff members (named as comparators) received share options of 1500, when he only received 750 share options. This is not in dispute. What is disputed by the respondent is that race or nationality in any way came into the consideration of the shareholders in allocating share options. The respondent referred to an outline of share option allocation by nationality.  It was submitted that Irish nationals were awarded the top and second level allocation options. It was further submitted that UK and Chinese nationals were also given the third level share option allocation, and six UK nationals were given the fourth level share option allocation.

The respondent submitted that the proposal put to the staff in May 2021 was altered no longer reflected seniority but function and performance. It was submitted that the shareholders determined that engineers designing and developing the products on the ground would be allocated the highest number of shares as an incentive to retain them. It was further submitted that the company is an engineering company, and it is at the discretion of the shareholders how the discretionary share options are allocated.

The respondent submitted that the complainant has not only to establish the primary fact upon which he will seek to rely but also that those facts are of sufficient significance to raise an inference of discrimination. The respondent referreed to the case of Cork City Council -v- McCarthy EDA21 2008 where the Labour Court recommended that:

‘‘The type or range of facts which may be relied upon by a complainant may vary significantly from case to case. The law provides that the probative burden shifts where a complainant proves facts from which it may be presumed that there has been direct or indirect discrimination. The language used indicates that where the primary facts alleged are proved it remains for the Court to decide if the inference of presumption contended for can properly be drawn from those facts. This entails a consideration of the range of conclusions which may appropriately be drawn to explain in particular facts or a set of facts which are proved in evidence. At the initial stage the complainant is merely seeking to establish a prima facie case. Hence, it is not necessary to establish that the conclusion of discrimination is the only, or indeed the most likely explanation which can be drawn from the proved facts. It is sufficient that the presumption is within the range of inferences which can reasonably be drawn from those facts’’

It was suggested that the complainant has merely asserted that he was given less favourable share options and so he was discriminated against. In support of the contention the respondent also referred to the decision of Adejumo v Noonan Services Group Ltd. (E2015-023), where the Equality Officer in assessing whether the claimant had been the subject of discrimination based on his family status and religion held:

“[T]he complainant merely asserts he was subjected to less favourable treatment….It is settled law that mere assertions are insufficient to discharge the initial probative burden required.”

The Respondent submitted that the complainant had been employed with the company for over three years, was a valued employee and had always been treated as such. It noted that the complainant alleged in his claim form he was treated less favourably on the basis of being Irish, than his colleagues in differing jurisdictions.

It was submitted that Arralis Limited is an Irish company with a registered address of 103/104 O’Connell Street, Limerick, Ireland. The Respondent confirms original share scheme was based on performance or value to the company. The amended share proposal of May 2021 did not allocate by hierarchy but on performance. It was further submitted that the respondent that the company employs several different nationalities and ethnicities throughout their operations. There was no distinction between nationalities and the share scheme, other than individual performance, productivity and value, which was determined by the shareholders.

The respondent submitted that the share option scheme May 2021 as not well received across the board. It was subsequently adjusted on two further occasions, settling on a scheme based on length of service, not by role or level, as the fairest option to all staff.

In evidence the complainant outlined the course of his employment relationship with the respondent detailing positions and responsibilities he held and indicating his progression within the respondent organisation.  He provided detail regarding the proposed closure of the Limerick offices and confirmed that the CEO put forward a rescue plan for the offices which entailed a small number of redundancies, but which saved one the local offices from closure.  The complainant outlined that the closure proposal came as something of a shock but that this was avoided with a restructure of the office and the way in which the office integrated with the company on a global basis.

The complainant gave evidence that the change to his role was a demotion when the new reporting structure was considered but that his salary remained unchanged.  The complainant stated that although he didn’t accept the changes, he continued to undertake the work. 

He stated that when he received the share offer, it was much lower than he expected and that this was an issue not only for him but for some of the staff that had previously reported to him too.  He indicated that he had expected to receive an offer of roughly four times that which had been offered to him.  He indicated that when he first started with the company manager at his level expected to receive around 3000 shares but that most of the Irish staff only received an offer of 750.  He noted that one of his colleagues who was a dual passport holder of Irish and British passports was offered 1500.  He indicated that he considered that this was discrimination on the basis of his nationality.  He stated that he sought a meeting with HR and it was attended by the CEO who said that this was the position and he could ‘take it or leave it’.

He stated that he wrote to the Board of Directors who replied that they were fully behind the CEO and arising from that response he stood down as a director and subsequently and submitted his resignation.

The testimony of the witnesses for the respondent (the CEO and the head of HR) broadly confirmed the details given by the complainant although differed on the ‘take it or leave it comment’ which was denied.  The CEO outlined how he had come under pressure from the shareholders to wind up the operations in the Limerick offices as there were not proving profitable.  Notification issued to the employees that the office was closing but he stated that he put a counterproposal to the shareholders to downsize and change the operation of the Limerick offices with a view to retaining an office there.  He noted that although the division made a loss in 2021 it will make a profit in 2022.

The second witness for the respondent worked in HR.  She indicated that the complainant was willing to work under the new terms and that there was no mention of a grievance at all.  She indicated that the complainant was offered the grievance procedure after writing a letter to the shareholders.  She noted that it was agreed that the issue would go to an outside person, and external consultant, for consideration and that the complainant was offered the assistance of the EAP service.

This witness stated that when the complainant handed in his resignation, he was asked to think about it and given an option to retract his resignation and go through the grievance procedure regarding the share option issue.  She indicated that she only accepted his resignation when he confirmed that the was not going to retract it.  When asked under cross examination whether she followed the grievance procedure steps in relation to the share option issue, she indicated that to the best of her memory, it was never identified to her as a grievance.

Under Section 6(1)(a) of the Employment Equality Act, 1998 states the following:

6.—(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,

The complainant has submitted that the respondent discriminated against him when it reduced his share offer and yet offered another employee of dual nationality a higher proportion of shares. The respondent submitted that this was simply a proposal and that the issue had raised difficulties across the company.  The respondent submitted that the share offer underwent two further revisions before the final disbursement of share options sometime after the complaiant had left the company.

In the case of Melbury Developments Limited and Arturs Valpeters (EDA0917), the conclusions of the Labour Court begin with the following passages:

Section 85A of the Act provides for the allocation of the probative burden in cases within its ambit. This requires that the Complainant must first establish facts from which discrimination may be inferred. What those facts are will vary from case to case and there is no closed category of facts which can be relied upon. All that is required is that they be of sufficient significance to raise a presumption of discrimination. However they must be established as facts on credible evidence. Mere speculation or assertions, unsupported by evidence, cannot be elevated to a factual basis upon which an inference of discrimination can be drawn. Section 85A places the burden of establishing the primary facts fairly and squarely on the Complainant and the language of this provision admits of no exceptions to that evidential rule.

In this case it was submitted that the Complainant was treated badly by the Respondent and the Court was invited to infer that he was so treated because of his race. Such an inference could only be drawn if there was evidence of some weight from which it could be concluded that persons of a different race or nationality were or would be treated more favourably. All that has been proffered in support of that contention is a mere assertion unsupported by any evidence.

In the instant case, the complainant has submitted that a share option proposal was made to him and discriminated against him on the basis of his nationality.  The Commission was invited to infer that this amounts to discrimination.  The submission of the respondent was that the share offer proposal underwent two further iterations before it crystalised and was adopted by the respondent during the intervening year after the complainant resigned.

It was also submitted that the Irish company employed a number of people all but one of whom were offered 750 shares in the proposed share offer.  The other person, who was named as a comparator, has dual Irish and British citizenship and was offered 1500 shares.  It was submitted by the respondent that as he had an engineering background, and desirable skills he was offered more shares in the proposal in question.

Section 85(A)(1) of the Act outlines the burden of proof in Employment Equality cases and states 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.

On the basis of the foregoing, the case put forward by the complainant is that he was unfavourably treated in relation to a proposal which never crystalised and that the treatment was on the basis of a person who had both his own and another nationality.  On this basis, it is hard to conclude that the complainant has raised anything other than the ‘mere speculation’ to which the Labour Court referred to in Melbury.  Therefore, having considered all the written and oral evidence, I find that the complainant has not established facts from which it may be presumed that there has been discrimination in relation to him and I find that the complainant was not discriminated against by the respondent.

Having regard to all the written and oral evidence in relation to this matter, my decision is that the complainant has not been discriminated against by the respondent.

Employment Equality – Discrimination – Nationality ground – Burden of Proof not established – no discrimination.