In my recent article titled, “Calculation of Compensation Under the Unfair Dismissals Act, 1977: Consistency Now Required”[1], I argued that there needs to be clarification in respect of how compensation awards are dealt with at the WRC and Labour Court. The recent published case of Caroline O’Connell v Lionbridge International Unlimited Company[2] is a case in point.
The background to the case is that the Complainant was made redundant in questionable circumstances. At the hearing of her Unfair Dismissals case the Respondent company conceded that the dismissal was unfair, as such the only matter to be determined by the Adjudication Officer (“AO”) was the remedy and having determined that the most appropriate course was one of compensation, he then moved to set out the amount due to the Complainant under various headings of loss. The determination is lengthy and runs to several pages and it is difficult to accurately refer to the location of the extracts from the determination as the paragraphs and pages are not numbered[3]. However, in determining what constituted remuneration, the AO had to deal with various aspects of the Complainant’s remuneration.
The Complainant’s remuneration package at the date her employment was terminated was comprised of the following: –
- Basic Pay – €275,000.
- Employer Pension Contribution – €13,750.
- Health Insurance – €1,776.
- Mobile phone – €240.
- Restricted Stock Units – unfortunately the decision makes no mention of the amount of these and those that were vested and unvested.
- Discretionary Cash Bonus – On 7 March 2024, in addition to her base annual salary, the Complainant was awarded a discretionary cash bonus payment of €108,075 out of a maximum of €165,000 (being 60% of her bonus eligible salary).
The Complainant was successful in obtaining alternative employment at a greater salary some 25 weeks and four days post the date of termination therefore loss was limited to this period.
Basic Pay
In determining what constituted remuneration for the purpose of the Act the AO found that it amounted to a weekly figure of €5,591.65 (€290,766 per annum), which included “the Complainant’s annual salary, the employer pension contribution, her private health cover and mobile phone expenses”. No issue can be taken with this rationale as pension contributions and health insurance have long been determined to be remuneration.
However, the AO in assessing the complainant’s overall loss at €142,984, calculated same based on gross figures. With respect, this is where the AO has fallen into an error of law. Financial loss under the Act is defined as: –
“financial loss”, in relation to the dismissal of an employee, includes any actual loss and any estimated prospective loss of income attributable to the dismissal and the value of any loss or diminution, attributable to the dismissal, of the rights of the employee under the Redundancy Payments Acts, 1967 to 1973, or in relation to superannuation.
As set out in my previous paper to the IRN on this issue, the Employment Appeals Tribunal had long held that loss should be calculated on net weekly pay[4]. Given the decision in the within case, the AO awarded the Complainant approximately 52% more than was appropriate or some €74,351.68.
There is then the separate issue of when loss began to accrue. The AO held that the dismissal took effect on 8 November 2024 and that financial loss accrued from that date, notwithstanding that the Complainant had been paid eight weeks’ salary in lieu of notice. Even if the AO was correct to conclude that the dismissal took effect on that date, it is difficult to see how the Complainant could at the same time be treated as suffering financial loss from that very date when she had already received payment for the next eight weeks. That payment must, at a minimum, impact upon the assessment of actual loss.
Restricted Stock Units (“RSUs”)
Turning to the matter of RSUs, unfortunately we do not have any indication as the terms of the scheme, the amount of RSUs granted and those that were either vested or unvested. Typically, a senior employee is granted a tranche of RSUs in any given year, but they only vest in part on a yearly basis. For example, an employee may be granted 10,000 RSUs at $1.00 each, however the first tranche of 20% may vest one year from the grant date and so forth until the fifth year when they are all fully vested. Once they are vested, the employee is free to sell or retain them. In dealing with this matter, the AO found as follows: –
“The Respondent highlighted that the Complainant’s employer is Lionbridge International Unlimited Company whereas the RSU Agreement is with Lionbridge Technologies LLC, a Delaware limited liability company.
In circumstances where the RSU Agreement is not with the named Respondent, who dismissed the Complainant, I cannot find that RSUs form part of ‘remuneration’ in respect of the instant case. They represent a separate corporate arrangement rather than a benefit provided by the employer who effected the dismissal”.
The WRC’s approach to equity-based remuneration has generally turned on whether the benefit in question is realised and quantifiable or speculative and contingent. In Vice President v Professional, Scientific & Technical[5] and in Gráinne Sherlock v Pluralsight Ireland Ltd[6], the WRC excluded unvested stock options on the grounds that their value was uncertain, dependent on future vesting, and not proven as financial loss. Maria Inmaculada De La Torre Ruiz v Hamilton UK Services Limited[7] reaffirmed this approach in 2025, confirming that unvested stock options or share awards cannot be included as remuneration under the Act.
None of these cases simply rejected the notion out of hand for the reason that they were issued by a different albeit related entity. Indeed, it is common course that most, if not all, stock option and RSU schemes are located in Delaware[8] in the USA and generally are the preserve, as in this instance, of a subsidiary company rather than the employing one. This is not to say that the approach taken in this instant case is incorrect. However, it does generally fly in the face of the accepted jurisprudence in this area. Presumably, in this instance, the Complainant’s offer letter contained an offer of RSUs and presumably they formed part of the annual review of pay and conditions of employment. Generally, they are also used as a retention tool, designed to retain senior executives, due to the prolonged timing of the vesting period. Given all of the foregoing, it is difficult to reconcile how a benefit conferred on an employee cannot be deemed remuneration. Further, there is no analysis in the decision as to who was the employer, who conferred the benefit or indeed any of the foregoing presumptions. More clarity is required in this area and it behoves the WRC to apply consistency in this regard.
Discretionary Cash Bonus
On 7 March 2024, in addition to her base annual salary, the Complainant received a discretionary cash bonus payment of €108,075 out of a maximum of €165,000 (being 60% of her bonus eligible salary or 40% of her base salary). She was dismissed on 8 November 2024. By any calculation, this represented a significant and important part of the Complainant’s remuneration.
The AO’s findings in this regard are particularly interesting, as he found as follows: –
“In considering whether the Complainant’s bonus constitutes ‘remuneration’ as set out in the Act, I have carefully reviewed and considered both the Discretionary Management Bonus Plan as well as the written submissions provided to me by both parties after the hearing. The Respondent asserted that the bonus was discretionary and therefore does not form part of remuneration. The Complainant on the other hand stated that the bonus was an integral and regular component of her earnings and should properly be included.
In considering whether the Complainant’s bonus in this case amounts to ‘remuneration’, I note that although the Act states that ‘remuneration’ includes ‘allowances in the nature of pay and benefits in lieu of or in addition to pay’, the definition does not remove the clear difference between pay that is fixed and clearly due to an employee, and payments that depend on conditions being met or remain at the employer’s discretion.
A distinction must therefore be drawn between:
- Guaranteed or contractual earnings to which the employee has an enforceable entitlement; and
- Payments which remain contingent upon the exercise of employer discretion.
This distinction was considered by the UK Court of Appeal in Commerzbank AG v Keogh (High Court, 2017), where the Court examined the nature of discretionary bonus schemes and emphasised that the existence of discretion — even where bonuses had historically been paid — does not of itself create an enforceable entitlement. The Court held that where discretion is genuine and not exercised irrationally or capriciously, an expectation of payment does not convert a discretionary scheme into a contractual right.
While I recognise that Commerzbank is a UK case, the reasoning is persuasive. Specifically, it states that:
- Past payment does not extinguish discretion.
- Expectation does not equate to entitlement.
- A bonus subject to operative discretion remains contingent until declared or crystallised.
Applying that reasoning to the definition of ‘remuneration’ in the Act, and having regard to the following points in respect of the instant case, I note that:
- No 2024 bonus had been declared, approved or quantified prior to dismissal.
- The Respondent’s bonus scheme documentation afforded discretion to them.
- The Complainant’s expectation of payment arose from historical practice rather than enforceable right. While that expectation may have been reasonable, it does not create a statutory entitlement.
Accordingly, I find that the Complainant’s discretionary bonus does not meet the definition.”
It is regrettable that we do not have details of the scheme itself. Rather, we are left with the AO’s conclusion that the scheme was discretionary, despite the fact that no consideration appears to have been given to whether it was paid in previous years, whether it represented a payment by custom and practice or the Complainant’s position that the “bonus was an integral and regular part of her earnings”.
Whilst he may have as he put it, “carefully reviewed and considered” the bonus plan, none of the foregoing questions are examined in the decision.
The AO then goes on to draw the distinction between what he deems “Guaranteed or contractual earnings to which the employee has an enforceable entitlement” and payments which remain contingent upon the exercise of employer discretion. In making this determination, he previously concludes that the Act “does not remove the clear difference between pay that is fixed and clearly due to an employee, and payments that depend on conditions being met or remain at the employer’s discretion”. Having done so, he then goes on to state that “this distinction was considered by the UK Court of Appeal in Commerzbank AG v Keogh (High Court, 2017)”.
There are a number of problems with this conclusion.
Firstly, there is no existing statute which provides for such a distinction to be drawn and it is not the role of AOs to infer or draw such distinctions.
Secondly, whilst the AO is correct in stating that the Act itself makes no distinction between fixed pay and pay that is variable dependent on performance or at an employer’s discretion, the Statutory Instrument[9] which sets out how weekly pay is to be calculated does, yet no consideration appears to have been given to this. Indeed, the Statutory Instrument specifically envisages a situation where an employee’s “remuneration includes commissions (being piece rates or commissions related directly to his output at work) or bonuses”[10]. The consideration of bonuses is therefore specifically provided for and given that the bonus payment in 2024 was paid in March, it falls within the 26-week period ending 13 weeks before the date of dismissal, which the statute provides for.
Thirdly, there is no UK Court of Appeal or High Court case of Commerzbank v Keogh (2017). It is difficult therefore to reconcile how the AO determines that its “reasoning is persuasive” when it does not exist. Perhaps the AO meant to cite the 2006 UK Court of Appeal case of Commerzbank AG v Keen[11] which was a case that dealt with a discretionary bonus scheme in a bank. However, the facts of that case are distinguishable from the present in that this case dealt with the question of whether an employee could rely on the Unfair Contract Terms Act 1977, a UK Act, as a potential remedy for an unreasonable term in a contract of employment. It is not based on statute as any claim for Unfair Dismissal before the WRC is.
All told, it is difficult to discern how the Adjudication Officer arrived at the conclusion that a discretionary bonus did not constitute remuneration, particularly in circumstances where the relevant Statutory Instrument expressly provides for the consideration of bonuses. The reasoning appears to rely on a UK authority which, on examination, does not exist in the form cited. Even allowing for the possibility of a misquotation, the possible case relied on is not relevant to statutory appeals. In those circumstances, the AO clearly fell into an error of law, the consequence being that the Complainant was unjustly deprived of additional, and potentially substantial, compensation.
Statutory Redundancy
In my previous paper on this topic I noted that the treatment of redundancy payments in unfair dismissal awards has been inconsistent. Earlier EAT decisions took conflicting approaches. In Employee v Employer[12] and in Employee v An Employer[13], redundancy payments were either included within or deducted from the unfair-dismissal award. In contrast, Employee v Employer[14] and Employee v Employer[15] held that redundancy and unfair-dismissal payments were separate entitlements, awarding compensation in addition to statutory redundancy lump sums.
In this case, the AO held that having regard to the definition of “financial loss” that he was satisfied that “the statutory redundancy lump sum should not be offset against the Complainant’s compensatory award. It remains a separate statutory entitlement”.
The AO sought to distinguish JVC Europe Ltd v Panisi[16] on the basis that it involved an award at the statutory ceiling of 104 weeks’ remuneration and that it was only in such circumstances, where there was said to be a risk of “double recovery”, that the question of deduction properly arose. With respect, that is not what was stated in Panisi. In Panisi, Charleton J stated in clear terms: “As there was no redundancy, but as there was a dismissal, Mr. Panisi has now no entitlement to the redundancy money or the ex gratia payment.” The judgment does not state that redundancy monies fall to be deducted only where the award would otherwise exceed 104 weeks. That qualification appears to have been added by the AO rather than drawn from the authority itself.
There is also a conceptual difficulty in the AO’s reliance on “double recovery”. Double recovery is not confined to cases where the statutory maximum would otherwise be exceeded. It concerns recovery twice for the same loss. The 104-week cap is a statutory ceiling on compensation; it is not a test for whether double recovery arises. The two concepts are distinct, yet they appear to have been treated as though they were one and the same.
There is then the further difficulty that, having found that the Complainant was unfairly dismissed rather than genuinely made redundant, it is hard to see how the statutory redundancy payment can simply be treated as irrelevant to the assessment of loss on the basis that it is a “separate statutory entitlement”. If there was no redundancy in substance, the fact that the monies were paid under another Act does not mean that such monies are irrelevant when calculating what loss was in fact suffered.
Further, in Kaye McDonnell v Sodexo[17], the same AO treated the ex gratia element of a termination package as affecting the unfair dismissal award, while leaving the statutory redundancy element untouched. He held:
“Given the ex-gratia payment she received, which included an amount in excess of her statutory entitlements, and in the absence of any documentation to demonstrate that she was looking for work between the date of termination with the Respondent and when she found her new role, I do not make any award for the period from September 2020 to July 2021.”
The difficulty is that no clear statutory basis is identified for taking the ex gratia payment into account while not treating the statutory redundancy payment in the same way. That distinction is not explained. Nor, in McDonnell, did the AO seek to justify that position by reference to any 104-week ceiling or any supposed issue of double recovery arising only at the statutory maximum. That tends to undermine the reasoning advanced in O’Connell, where the non-deduction of statutory redundancy was linked to the fact that the award did not approach the 104-week cap.
Conclusion
The decision in O’Connell v Lionbridge illustrates, yet again, the absence of a coherent and principled framework governing the assessment of compensation under the Unfair Dismissals Act, 1977. On any objective analysis, the determination raises fundamental concerns: the calculation of loss on a gross rather than net basis, the treatment of loss as accruing from the date of dismissal notwithstanding eight weeks’ pay in lieu of notice, the exclusion of equity-based remuneration on questionable grounds, the treatment of discretionary bonus absent proper statutory analysis, the reliance on a non-existent case and the inconsistent approach to statutory redundancy.
Each of these issues, taken individually, is problematic; taken together, they underscore a system that lacks predictability.
For practitioners, employers, and employees alike, the difficulty is not merely academic. The absence of consistency produces materially divergent outcomes on similar facts, undermining confidence in the adjudicative process. Where statutory instruments expressly address elements, such as bonuses, where payments in lieu of notice plainly bear on actual loss, and where long-standing jurisprudence has settled issues such as net versus gross loss, departures from those principles, without clear reasoning, amount to errors of law rather than mere differences of interpretation.
Ultimately, the difficulty lies, not solely with individual adjudication officers, but with the broader legislative and jurisprudential landscape. The governing statutory instrument is outdated, appellate guidance is limited and, again, contradictory and first-instance decisions frequently diverge without reconciliation. In those circumstances, it is unsurprising that inconsistent approaches persist.
What is now required is clear appellate clarification, as a start from the Labour Court, but it would be very helpful if it came from the Superior Courts, on the core components of compensation: the proper basis for calculating financial loss, the treatment of variable and equity-based remuneration and the interaction between statutory redundancy and financial loss. Absent such guidance, inconsistency will continue to prevail, to the detriment of legal certainty and fairness in the administration of employment law.
Alastair Purdy SC.
[1] See Industrial Relations News, IRN 42, 20 November 2025
[2] ADJ-00057077 – 1st March 2026
[3] See criticism of the approach of the Labour Court in their determinations by Bolger J. in Hanley v PBR Restaurants Ltd (Trading as Fish Shack Café) [2025] IEHC 224 and Charpentier v Verizon Ireland Ltd [2025] IEHC 628
[4] Based on an approximate net marginal tax rate for a higher earner
[8] There are various reasons for this, including judicial expertise and the fact that Delaware law allows companies to issue multiple classes of stock, but Delaware also does not does not require companies to publicly list directors, officers, or shareholders in annual filings. This confidentiality protects sensitive information regarding company leadership and compensation structure.
[9] S.I. No. 287/1977 – Unfair Dismissals (Calculation of Weekly Remuneration) Regulations, 1977
[10] S.I No.287/1977 – Unfair Dismissals (Calculation of Weekly Remuneration) Regulations 1977 s 7(b)
