This article focuses on the European Court of Justice ruling in the Von Colson case (1984) and how it is currently applied in Labour Court cases to assess compensation.


Introduction

Successful actions under employment legislation generally result in an award of financial compensation to the claimant. There are, however, exceptions to this general principle. An unfair dismissal claim, for example, may result in the reinstatement or re-engagement of the claimant. An employment equality claim may involve an employer being ordered to put in place transparent written procedures in addition to an award of compensation.

When compensation is ordered, different pieces of employment legislation may in turn vary on the basis for the award. Under the unfair dismissal legislation, for example, compensation is generally in respect of the financial loss sustained by the claimant as a result of the dismissal. With employment equality claims, compensation is awarded for the effects of the acts of discrimination or victimisation on the complainant.

Where the legislation transposes an E.U directive, the case law of the European Court of Justice (ECJ) may also influence the outcome. The Labour Court in Ireland, for example, routinely cites the ECJ decision in the case of Von Colson and Kamann v Land Nordrhein-Westfalen ([1984] ECR 1891) in connection with compensation awards.

This case concerned two female social workers who were denied appointment to the Prison Service in a region of Germany because of perceived problems and risks working with male inmates. The relevant Labour Court in Germany found that discrimination had taken place but that under existing German law, it could only order the reimbursement of travel expenses incurred in pursuing the application for the post. Accordingly, it decided to refer a number of questions to the ECJ for a ‘preliminary ruling’ (or legal guidance) on the adequacy of the application of the equal treatment directive into German law. On this particular aspect of the case, the ECJ held that if a Member State chooses to penalise discrimination by the award of compensation, then in order to ensure that it is effective and that it has a deterrent effect, that compensation must in any event be adequate in relation to the damage sustained and must therefore amount to more than purely nominal compensation such as, for example, the reimbursement only of the expenses incurred in connection with the application.

There follows a summary of two recent decisions of the Labour Court on appeal where this principle set out in the Von Colson case is considered and applied, with contrasting outcomes.


1. Case Name and Reference: Clearpoint Trading as Mr Binman and Bien (WTC/09/268, Determination No.DWT1062, June 25th 2010)

Court or Tribunal: Labour Court

Legislative Reference: Organisation of Working Time Act 1997

Jurisdictions/Subject Matter: Excessive working hours and compensation

In this case, a Rights Commissioner (RC) awarded the complainant €5,000 in respect of breaches of Section 15 of the Organisation of Working Time Act 1997 (OWT), finding that he had regularly been required to work in excess of the maximum average of 48 hours per week set by the legislation for a significant proportion of his employment with the respondent employer. Both parties appealed this decision to the Labour Court on the question of the compensation awarded.

The respondent employer argued that although there was a breach of the legislation, it was minor in nature in terms of the number of hours worked above the statutory maximum. Thus it submitted that the award was excessive and should be reduced. By contrast, the complainant gave evidence that he had not wanted to work these excessive hours and his health had suffered as a result. He also said that he had been repeatedly compelled to work overtime hours without the appropriate notification from his employer as required by Section 17 of the OWT Act and that he had received no premium payment for overtime worked. He claimed that these breaches of the legislation had occurred throughout his employment and thus that the compensation awarded by the RC was inadequate and should be increased.

The Court examined the pattern of hours worked by the complainant and determined that the breaches of the legislation concerning working hours were significant and persistent. It noted that the working time legislation transposed an EU directive which, amongst other things, was intended to limit average weekly working hours to protect the health and safety of workers. The Court stated that when considering an award of compensation, it is also required to follow the decision in the Von Colson case that sanctions imposed must be effective, proportionate and dissuasive and must act as a disincentive against future infractions by the employer concerned. Taking these factors into account the Court decided to increase the compensation awarded by 50% to €7,500.


2. Case Name and Reference: Frylite Dublin Ltd and Silgalis (ADE/09/47, Determination No.EDA108, June 21st 2010)

Court or Tribunal: Labour Court

Legislative Reference: Employment Equality Acts 1998 - 2004

Jurisdictions/Subject Matter: Race discrimination and compensation

In this case the complainant appealed to the Labour Court on the amount of compensation awarded by the Equality Tribunal under the Employment Equality Acts 1998 – 2004. In finding that the complainant had suffered discrimination on the race ground under Section 6 of the Act, an Equality Officer (EO) of the Tribunal had awarded the complainant €2000. The respondent employer did not appeal this finding.

The complainant had been involved in an accident concerning a work vehicle. He maintained that his employer’s response was to propose deductions from his wages in the amount of €150 per week on his gross earnings of just under €500 per week in order to pay for the damage, without conducting a proper disciplinary investigation. He claimed that he was threatened with dismissal if he did not agree to such disproportionate deductions, but that he was not advised at any stage of the company’s disciplinary or grievance procedures. He said that as a result he was forced to leave his employment. It was submitted that Irish nationals were not and would not have been subject to the same treatment in relation to deductions from wages and that this constituted discrimination on the race ground. Finally, it was argued that the level of compensation awarded by the EO was not adequate and reasonable in all the circumstances of the case and therefore did not comply with the standard set out in the Von Colson case and should be increased.

The respondent stated that the accident had occurred outside of working hours, significant damage had resulted and the complainant had abandoned the van in question at the scene, causing his employer considerable inconvenience. It was stated that the company handbook specified that damage to vehicles as a result of an employee’s carelessness would result in liability to pay and that the level of deductions to be imposed related only to the gravity of the offence and not to any discrimination on grounds of race. Indeed, the respondent suggested that the complainant had breached his contract of employment by his actions and could have been dismissed, but the company chose not to take such action. It accepted that its employment documentation was incomplete and that this was the reason that it had not appealed the EO’s decision. It had since put in place comprehensive formal procedures with translation services available for foreign nationals. Finally, the respondent suggested that the complainant’s appeal was in reality an attempt to recover his legal costs and the Court had no jurisdiction to allow this.

The Court noted that the EO had concluded that the level of deductions imposed on the complainant was considerably higher than those imposed on Irish nationals and therefore amounted to race discrimination. The respondent had chosen not to appeal this finding so that the Court was in effect confined to considering whether the ‘quantum’ of compensation was sufficient. It stated that it has jurisdiction by virtue of Section 82 of the Act to make an order of redress for the effects of acts of discrimination including a compensatory award.

Where compensation is chosen, the Court confirmed once again that it is bound by the decision of the ECJ in the Von Colson case to make an award that compensates the complainant for economic loss, reflects the gravity of the infringement and acts as a disincentive against future infractions. In relation to the suggestion that the complainant’s appeal was an attempt to recover legal costs, the Court specifically stated that it has no power under the employment equality legislation or by virtue of the decision in the Von Colson case to make an award of costs or expenses or to increase an award on appeal for this reason.

Turning to the adequacy of the compensation ordered by the EO, the Court noted that the complainant fully accepted that his behaviour was responsible for the accident and that he had failed to report it to the Gardai. It took into account the respondent’s submission that it considered it had grounds for dismissal as a result but decided to off-set the costs of the damage instead. It noted too that as a result of the complainant’s refusal to accept the deductions proposed and his subsequent resignation, no money was ever recovered. Finally, in an interesting turn of the principle in Von Colson, it stated that it was satisfied that the award of compensation made by the EO itself had a deterrent effect as the respondent employer submitted details of new policies and procedures that had since been introduced.

As a result, the Court declined in this case to increase the compensatory award and affirmed the original decision.