Complainant

Respondent

Parties

Derek Darbey

St Patrick’s Hospital

Representatives

Self-represented 

Represented by management

Act

Complaint Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under Section 39 of the Redundancy Payments Act, 1967

CA-00057982-001

30/07/2023

In January 2012, the complainant commenced employment with the respondent as an assistant household services manager.  By 2023, he was working as a facilities services manager, on an annual salary of €71,136.  On May 26th 2023, he signed a compromise agreement concerning the redundancy of his job with effect from July 1st 2023.  His complaint is about the failure of the respondent to pay him a salary increase which was applied to the wages of all staff in June and July 2023, and not to include the salary increases in the calculation of his “ex-gratia” or more favourable redundancy payment.

Following a period of absence due to illness from November 2022 until February 2023, the complainant was informed by the HR director that the department in which he worked was being re-organised.  He was instructed to take leave with pay, sometimes referred to as “garden leave.”  Negotiations then commenced between the complainant and his employer regarding the redundancy of the job of facilities services manager.  On May 26th 2023, he reached an agreement with the HR director regarding exit terms.  The complainant agreed to accept statutory redundancy plus an ex-gratia amount based on three weeks’ pay per year of service, plus pay in lieu of notice and pay in lieu of holidays and public holidays not taken up to his last day of employment.  He agreed that his employment would end on July 1st 2023.

Three weeks after he signed the compromise agreement, on June 19th 2023, the HR director sent a memorandum to all staff to inform them that the Board of Governors had approved an increase in basic rates of pay as follows:

3.5% effective from January 1st 2023

2% effective from March 1st 2023

1% effective from October 1st 2023

In the case of monthly-paid employees like the complainant, the first two of these increases was applied to wages at the end of June 2023 and arrears were paid at the end of July.  The complainant argues that, when he and the HR director signed the compromise agreement on May 26th 2023, the HR director must have known that the pay increases were about to be approved.  He bases this argument on his understanding that the Board of Directors met on June 1st 2023 and that documents for approval must be sent to the Board some days beforehand.

The complainant argues that he was entitled to the increases with effect from January and March 2023 until his employment was terminated on July 1st.  The effect of the increases would have meant that his salary increased from €71,136, to €75,063.  He therefore claims €1,718 in arrears of wages.  He also claims that his ex-gratia redundancy payment should have been based on the higher salary and not his salary on May 26th 2023, when he signed the compromise agreement.  The effect of calculating his redundancy payment off the higher salary would have resulted in an additional lump sum of €3,874.

In her submission at the hearing, Ms Flanagan noted that, at clause 2 of the compromise agreement of May 26th 2023, the complainant confirmed that he obtained independent legal advice before he signed the document.  Clause 7 provides that the organisation will rely on the compromise agreement if the complainant subsequently raises a “cause of action” against the organisation.  Clause 8 provides that the complainant accepts that the terms of the agreement are in full and final settlement of any claims arising from the termination of his employment.  Under this heading, the respondent has listed the main employment law statutes including the Redundancy Payments Act 1967 and the Payment of Wages Act 1991.

It is the respondent’s position that the complainant received a substantive ex-gratia redundancy payment and pay in lieu of notice and untaken annual leave and that his statutory redundancy pay was subject to a ceiling of €600 per week.

In conclusion, Ms Flanagan submitted that the complainant signed an agreement in full and final settlement of any future claims against the respondent and that he was paid the correct amount in statutory redundancy. 

As this complaint has been submitted under the Redundancy Payments Act 1967, in the absence of consent from the respondent, I have no authority to consider the complainant’s entitlement to a wage increase which the HR director confirmed to employees on June 19th 2023.  At the hearing, Ms Flanagan did not consent to my consideration of this complaint under the Payment of Wages Act 1991. 

Considering the complainant’s claim that his ex-gratia lump sum should have been based on his salary notified to him (and all the respondent’s employees) on June 19th 2023, I am required to consider this complaint in accordance with the provisions of Schedule 3 of the Redundancy Payments Acts.  Schedule 3 was amended by Statutory Instrument 695 of 2004, the Redundancy Payments (Lump Sum) Regulations 2004.  This provides that, in determining the amount to be paid to an employee in a statutory redundancy lump sum, the ceiling on annual earnings is €31,200, equivalent to €600 per week.  Based on the complainant’s entitlement to two weeks’ pay per year of service plus one week’s pay for 11.5 years, subject to a ceiling of €600, the amount of €14,376 in statutory redundancy that he received is correct.  He received an additional “ex- gratia” redundancy payment; however, this is not subject to any provision in the Redundancy Payments Acts, but is paid to employees as a more favourable benefit than the amount that is required to be paid by law.

For the reasons I have set out above, I decide that this complaint under the Redundancy Payments Act 1967 is not well founded.

Redundancy, ex-gratia payment, lump sum, ceiling on lump sum