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WRC Finds Withholding of Ex-Gratia Payment, As Employee Refused to Sign Agreement, Amounted to Penalisation

In the recent decision of Robert Farrell v Modus Link Kildare Unlimited Company, ADJ-00032100, the WRC determined that the withholding by the Respondent of an ex-gratia payment because of the Complainant’s ongoing personal injuries claim against the Respondent constituted penalisation under section 27 of the Safety, Health and Welfare at Work Act 2005 (the ‘Act’).

Facts: The Complainant was employed by the Respondent since 1991. He sustained an alleged occupational injury on 26th November 2018. The Complainant was on long term sick leave until February 2020 and on or about 17th June 2019 the Complainant’s solicitors informed the Respondent that they were initiating a PIAB claim in respect of the accident.

On 26th June 2020 the Respondent informed the Complainant that he, along with 13 other permanent employees and some temporary staff, were being made redundant. Procedures followed and on 24th August 2020 the Complainant was made redundant. The Respondent had a company-wide policy in place requiring employees who had been made redundant to sign a discharge agreement. The Respondent sought to make this agreement in “full and final” settlement of all claims, namely, including the Complainant’s personal injuries claim. The Complainant refused to sign and as per company policy and the Respondent therefore maintained that the Complainant was dis-entitled to the ex-gratia payment of €50,309.

The Complainant brought a claim to the WRC for penalisation under section 27 of the Act arguing that withholding the ex-gratia payment due to his refusal to sign the discharge agreement was “in flagrant breach” of the Act. The Respondent argued that the requirement to sign a discharge agreement was a long-standing common practice of the company in redundancy situations, particularly in circumstances where an ex-gratia payment was being offered and submitted that the other 13 employees had signed the discharge agreement. Furthermore, the Respondent submitted that its actions did not constitute “an act of premediated malice”, and the Complainant had failed to establish a causal link between the alleged breach of the section 27 of the Act and the detriment he had allegedly suffered.

Decision: The WRC held that as the Complainant’s solicitors had notified the Respondent of the Complainant’s personal injury claim and therefore a ‘protected act’ had taken place. Having made this determination the WRC then had to consider whether the Complainant had been penalised, ultimately concluding that “…the withholding of the ex-gratia was in effect Penalisation, committed as a consequence of a fixed Employer policy regarding all in Discharge Agreements”. The WRC was satisfied that the Complainant had established the necessary causal link for penalisation. The WRC accepted that it was company policy to require the signing of a discharge agreement, and it also accepted the Respondent’s oral evidence that the managers at the time did not have the discretion to depart from this policy. Despite not being motivated by malice, it found that the wording of section 27(3)(c) was clear and that the initial withholding of the ex-gratia payment constituted penalisation.

The WRC ordered the Respondent to pay the Complainant the ex-gratia sum as soon as possible, and an award of compensation in the sum of €5,000.

Takeaway for the Employers: This is an extremely important reminder to employers regarding the broad parameters of what constitutes ‘penalisation’ under section 27 of the Act. In the above case, the employer should have excluded the existing claim from the Discharge Agreement.

Link  – https://www.workplacerelations.ie/en/cases/2021/november/adj-00032100.html

Authors – Eva Lindsay and Anne O’Connell

27th January 2022

Anne O’Connell Solicitors

19-22 Lower Baggot Street, Dublin 2


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