CAP on redundancy payments not age discrimination

The Labour Court decided that the differences in redundancy payments were permitted by section 34(3)(d) of the Employment Equality Acts.

“the Court has reached the conclusion that the differences in redundancy payments made to the Complainants as compared to their comparators is saved by s.34(3)(d) of the Act.”

Section 34(3) relates to occupational benefits schemes and section 34(3)(d) relates to severance payments.

“s.34(3)(d) of the Act provides that it shall not constitute discrimination on the age ground “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.””

This case was an Appeal by the employer Hospira under Section 83 of the Employment Equality Acts, 1998 to 2011 against a decision of the Equality Tribunal which had held that certain employees had been discriminated against on grounds of their age in the redundancy settlement which they received on the termination of their employment on the closure of the plant at which they worked.

Background to the case:

“The agreed redundancy terms provided for a payment of five weeks’ pay per year of service in addition to statutory redundancy payments. However, in the case of those employees who were close to retirement age it was agreed that they would receive either the terms of the agreed package or the amount of salary that they would have earned had they remained in employment until the normal retirement age of 65, whichever was the lesser. Each of the Complainants [employees who brought the claim to the Equality Tribunal] were in an age category in which their proximity to retirement age meant that they would receive an amount equal to their potential earnings up to age 65 which, in their case, was less than the amount paid to younger workers.”

The Equality Tribunal held that the cap was age discrimination and provided that the employees be paid the agreed package rather than the capped amount.

The company appealed the decision to the Labour Court relying on Section 34(3) of the Employment Equality Acts, 1998 to 2011 and it contended that paragraph s.34(3)(d) provides it with a complete defence to the claim.