by Breda O'Malley March-04-2015 in Employment Law
Employers need to be wary when imposing conditions on an employee’s entitlement to a bonus. While it is common for bonus schemes to be conditional upon various factors such as performance, attendance or disciplinary record, employers could find themselves in breach of equality legislation if these conditions could amount to discrimination.
In the recent English Court of Appeal Decision in Land Registry v. Houghton (UKEAT/0149/14/BA), the Court found that a bonus scheme, which excluded employees that received a formal warning in respect of sickness absence, amounted to discrimination arising from disability. The employer in this case operated a bonus scheme which paid out £900 to eligible employees in 2012. A rule of this scheme provided that any employee who received a formal warning in respect of sickness absence during the relevant financial year would not receive a bonus. The employees in this instance successfully argued that if they were not disabled, then they would not have accrued the absence in question and therefore would not have received the formal warning. The Court found that this plainly amounted to unfavourable treatment, given that there was no discretion to waive or modify the effect of the warnings, even for disability related absences.
Under Irish law, discrimination is dealt with in Section 6(1) of the Employment Equality Acts, 1998 to 2008 which states that discrimination occurs where:
“…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)”
Section 6 (2) (g) of the Acts defines the discriminatory ground of disability as follows – “as between any two persons… that one is a person with a disability and the other is not or is a person with a different disability”.
Recent decisions of the Equality Tribunal and Labour Court dealing with the issue of disability discrimination highlight the heavy burden of proof in these matters. Section 85A of the Equality Acts sets out the burden of proof which requires a complainant to establish, in the first instance, facts from which it may be presumed that there has been discrimination. If the complainant succeeds in doing so, then and only then, is it for the respondent to prove the contrary. In Melbury v. Valpeters (EDA/0917) the Labour Court elaborated on the interpretation of section 85A stating that:
“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”.
It appears that this hurdle is one on which a number of complainants fall down. For example in EC-2013-128, the Equality Tribunal determined that the complainant, who suffered from Ehlers Danlos Syndrome (a condition which makes him prone to dislocating joints), failed to establish that differences in remuneration (including bonuses and allowances) were attributable to his disability. Similarly, in DEC-E2012-195, the complainant, who suffered from multiple sclerosis failed to adduce facts to satisfy the Tribunal that he was treated less favourably than others on the basis of his disability.
The Tribunal’s careful consideration of Section 85A can also be discerned from the following decisions in which the complainants successfully adduced sufficient facts which established discriminatory treatment at first instance; in Sophie Harrington v. Natus Nicolet Ireland Limited (DEC-E2012-197) the complainant suffered from asthma which was exacerbated by dust from ongoing construction work in her workplace. During the course of her employment, the complainant also developed a serious infection in the aftermath of surgery. Both of the above caused her to remain off work for certain periods of time. Due to her absences, the complainant received a formal verbal warning which eliminated her entitlement to a bonus or pay rise in the applicable financial year. The Tribunal determined that the complainant’s asthma and post-operative infection both constituted disabilities within the meaning of the Acts. The Tribunal further determined that the complainant had prima facie established that she was treated less favourably than other employees who had different disabilities in comparable situations. The complainant was awarded €2,500 in compensation for the effects of her discriminatory treatment.
In Deborah Healy v. TrailerCare Holdings Ltd (DEC-E2011-124) the complainant alleged that she had suffered discrimination in not receiving a holiday bonus in the context of her pregnancy-related illness. While the Tribunal considered that it was best to examine the issue on gender as opposed to disability grounds, it was satisfied that the complainant had established a prima facie case in this respect, which the respondent failed to rebut.
Finally, in Henry Denny & Sons (Ireland) Ltd v. Sinead Rohan (EDA1310) the Labour Court considered an appeal in respect of whether the complainant’s caring responsibilities for her disabled child constituted “associative disability”. In this case, the respondent introduced a bonus scheme for senior managers in 2003. While the complainant received a bonus in February 2004, she did not receive any subsequent payments under the scheme. There was a conflict between the parties as to the reason for the discontinuance of the bonus payment. The complainant alleged that the reason she became disentitled to her bonus was because of her shortened working week due to caring for her disabled daughter. Interestingly, the Court determined that a requirement to work full time is a criterion which could constitute indirect discrimination on the ground of family status if it operates to place persons having family responsibilities along the lines of those of the complainant at a particular disadvantage. Despite the fact that the Respondent claimed her disentitlement to a bonus was simply due to changes in management structure, the Court held that there was not sufficient evidence upon which the complainant’s exclusion could be objectively justified on grounds unrelated to her family status. The Court therefore ordered that the respondent pay to the complainant arrears of her bonus for each of the three years preceding the date on which her claim was presented to the Equality Tribunal.
Conclusion
Employers who are considering imposing conditions on a bonus scheme should carefully consider whether these conditions could be said to be either directly or indirectly discriminatory. Given the contentious nature of this area, specialist advice should be sought when drawing up bonus schemes and particularly when it comes to withholding payments where employees are absent due to ill health or disability.
If you require advice or assistance with this issue, please contact Breda O'Malley in the Hayes Employment Law team on bomalley@hayes-solicitors.ie
Back to Full News
Share this article:
About the Author
Breda O'Malley
Breda is a partner in the Employment Law Team at Hayes solicitors.
Breda advises on the full range employment issues across a broad range of sectors, for established business clients and senior executives.