The Employment Appeals Tribunal (the “EAT”) in the case of Philip Smyth v RSA Insurance[1] awarded the highest award for an unfair dismissal case, €1.25m. To date, that award has not been surpassed but there have been some very significant awards recently[2] and there appears to be a trend amongst the Workplace Relations Commission (the “WRC”) and the Labour Court to take a broader and perhaps a more generous view of the definition of compensation as it is set out under the Unfair Dismissals Act, 1977 (the “Act”) and their role in same. This paper seeks to examine how the WRC is dealing with this issue and questions some of the rationale. The paper does not seek to carry out a full explanation of the law in this area, but merely question some of the recent trends.
Definition of Compensation
Section 7 of the Act, states that:
(1) Where an employee is dismissed and the dismissal is an unfair dismissal, the employee shall be entitled to redress consisting of whichever of the following the adjudication officer, considers appropriate having regard to all the circumstances:
(a) re-instatement by the employer of the employee in the position which he held immediately before his dismissal on the terms and conditions on which he was employed immediately before his dismissal together with a term that the re-instatement shall be deemed to have commenced on the day of the dismissal, or
(b) re-engagement by the employer of the employee either in the position which he held immediately before his dismissal or in a different position which would be reasonably suitable for him on such terms and conditions as are reasonable having regard to all the circumstances, or
(c) (i) if the employee incurred any financial loss attributable to the dismissal, payment to him by the employer of such compensation in respect of the loss (not exceeding in amount 104 weeks remuneration in respect of the employment from which he was dismissed calculated in accordance with regulations under section 17 of this Act) as is just and equitable having regard to all the circumstances,
(2) Without prejudice to the generality of subsection (1) of this section, in determining the amount of compensation payable under that subsection regard shall be had to—
(a) the extent (if any) to which the financial loss referred to in that subsection was attributable to an act, omission or conduct by or on behalf of the employer,
(b) the extent (if any) to which the financial loss referred to in that subsection was attributable to an act, omission or conduct by or on behalf of the employee,
(c) the measures (if any) adopted by the employee or, as the case may be, his failure to adopt measures, to mitigate the loss aforesaid,
(d) the extent (if any) of the compliance or failure to comply by the employer, in relation to the employee, with the procedure referred to in subsection (1) of section 14 of this Act or with the provisions of any code of practice relating to procedures regarding dismissal approved of by the Minister,
(e) the extent (if any) of the compliance or failure to comply by the employer, in relation to the employee, with the said section 14,
(f) the extent (if any) to which the conduct of the employee (whether by act or omission) contributed to the dismissal.
In general, compensation is the most favoured remedy[3] and this is likely to increase given the Supreme Court decision in An Bord Banistiochta, Gaelscoil Moshiolog v The Department of Education & ors[4] (the “O’Suird Decision”) where the Supreme Court reasserted the exceptionality of both the reinstatement and re-engagement remedy.
Whilst the above statutory provision is comprehensive, one cannot say that it is entirely comprehensible and the WRC often faces a difficulty in assessing the amount of compensation due under Sec. 7(1)(c) of the Act. This difficulty is compounded by the fact that the Regulations passed under Sec. 17 of the Act[5] only deal with the calculation of weekly remuneration. Whilst this is relatively straightforward for weekly paid employees, it is considerably more challenging when faced with a senior executive whose paid monthly with a remuneration package comprising of a yearly bonus, stock options, pension contributions, health insurance, a car allowance, not to mention trying to put a cash value on future loss of earnings and the likelihood of re-employment. Whilst it is a tempting argument to assert that SI 287/1977 should be confined to those paid weekly, regrettably Sec. 7 of the Act makes no such distinction.
As if the above is not convoluted enough, an added complication is that the High Court has said that Sec. 7(1)(c) ‘…does not envisage the deciding body being required to always or perhaps ever, engage in a calculation or mathematical formula by which it determines the extent of the financial loss exclusively by reference to the weekly remuneration of an employee’[6]. It is difficult to see how this can be reconciled with the fact that the regulations expressly set out a particular formula as to how to calculate weekly remuneration. However, it may be that the court had in mind the final words of Sec. 7(1)(c), which provide that the loss is to be assessed “as is just and equitable having regard to all the circumstances.” That phrase plainly invites adjudicators to take a broad and balanced view of the case as a whole.
Financial Loss
Financial loss is defined in Sec. 7(3) of the Act:
“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;
“remuneration” includes allowances in the nature of pay and benefits in lieu of or in addition to pay.
Financial loss is therefore limited to actual loss.
Actual Loss
In common law, one of the fundamental rules of damages for breach of contract is that compensation is awarded only for the loss suffered. The purpose is not to punish the party in breach, but to compensate the innocent party and to place them in, in so far as money can, the same position as if the contract had been properly performed. This is undoubtedly what the legislature had in mind when they specifically added the word ‘actual’ to the definition of financial loss in Sec. 7, i.e. the person should be no better off. The EAT, having had to assess what constitutes actual loss, determined that they should work from the net weekly pay figures. Thus, in the case of Employee v Employer[7] the EAT determined that the claimant’s compensation should be calculated on the basis of net weekly pay. The claimant had argued for a gross weekly figure of €950, but the Tribunal held that both the Rights Commissioner’s and Tribunal’s determinations were correctly based on a net figure of €730. It expressly noted that the award was “based on payments which were already net of tax,” confirming that the EAT viewed loss under the Act in terms of net pay.
This calculation of loss based on net weekly pay figures seems to have been lost on the WRC. In contrast, the WRC’s approach, as seen in Ray Walsh v Econocom Digital Finance[8] and Maria Inmaculada De La Torre Ruiz v Hamilton UK Services Ltd[9], is to assess compensation based on gross pay. It seems there has been a distinct shift from the EAT’s net-based loss calculations to a gross pay standard now used in WRC determinations. This approach has been followed by the Labour Court. Thus, in assessing the loss due to the Complainant in Hyph Ireland Ltd v Michael Kiely[10] where the Labour Court awarded €445,440, the Court worked off the Gross Pay. This does not appear to be consistent with the Act.
Estimated Prospective of Future Loss
The WRC is also required to assess “any estimated prospective loss of income attributable to the dismissal.” This exercise is, by its nature, speculative, and the task of the WRC is to determine what is just and equitable in the circumstances. The calculation must be based on net pay figures. This is self-evident, as Adjudicators are charged with assessing the ‘actual loss’ that the complainant has sustained[11]. If gross pay were used, the complainant would effectively be compensated for income they could never have received, which would have been paid in income tax, leaving them in a better position than before the dismissal. Unfortunately, there appears to have been some slippage in the consistent application of this principle[12].
Deductions
- Social Welfare:
Social Welfare payments used to be deducted from any award of compensation. This changed with the 1993 Amendment which inserted a new Sec. 7(2A) into the Act. This provides that, in calculating financial loss, payments to the employee under the Social Welfare Acts in respect of any period post the dismissal and any payment under the Income Tax Acts arising by reason of the dismissal, shall be disregarded.
2. Redundancy Payments:
As noted above, Sec. 7(3) also includes any loss “…. of the rights of the employee under the Redundancy Payments Acts, 1967 to 1973, or in relation to superannuation”. This definition thus allows adjudicators to compensate complainants for the loss of their rights under the Redundancy Payments Acts. What this means precisely is not that clear. Obviously, every employee who has 104 weeks continuous employment qualifies for statutory redundancy in the event that their role becomes redundant. This section specifically refers to ‘their rights’. However, it is likely that the right to a statutory redundancy payment never arises for the majority of employees. Therefore, it might well be argued that this section envisages a right that has actually vested, i.e. that the persons role was redundant, but they were denied their statutory payment, akin to the notion of a vested stock option (discussed below). In other words, it is a right that, but for the employee’s dismissal, they would have received it and they cannot lose a right that they would never have received. Thus, the section envisages an adjudicator assessing whether the person was denied a redundancy payment as a result of their dismissal. Howe if no such redundancy would have occurred then the person could not have been denied a right. Notably, the section makes no reference to ex-gratia payments in excess of statutory redundancy.
The treatment of redundancy payments in unfair-dismissal awards has been inconsistent. Earlier EAT decisions took conflicting approaches. In Employee v Employer[13] and in Employee v An Employer[14], redundancy payments were either included within or deducted from the unfair-dismissal award. In contrast, Employee v Employer[15] and Employee v Employer[16] held that redundancy and unfair-dismissal payments were separate entitlements, awarding compensation in addition to statutory redundancy lump sums.
The turning point seems to have arrived with Michael O’Brien v Furlong Flooring Ltd[17], where the EAT confirmed it had no jurisdiction to offset redundancy payments as they arise under different legislation and may include State-funded elements. This decision specifically referred to the, then in place, redundancy rebate, which has since been abolished. Notably, the employer member of the Tribunal dissented.
This reasoning appears to have shaped a small number of Adjudicators approach. In Kieran Murray v Sherry Garden Rooms Ltd[18] , Adjudication Officer (“AO”) Kevin Baneham ruled that there is no statutory or equitable basis to deduct redundancy payments, a view later followed in Mary McInerney v Isobel O’Dea[19] and Lindsay Dicken v Velocity EHS Ireland[20]. In both McInerney and Dicken, the WRC held that redundancy is based on service, whereas unfair dismissal compensation reflects loss, and therefore one cannot reduce the other.
In Anne Morris v Limerick Chambers of Commerce[21], AO Ewa Sobanska noted that statutory notice pay of eight weeks was factored into the loss calculation, but doesn’t seem to have made any deduction for the redundancy payment of €19,915 when awarding six months’ salary worth €17,420, aligning broadly with the Murray approach.
In James Watt v Ryan Investments Ltd[22], Sarah Daly BL argued that Murray was incorrectly decided and that the Act refer to any financial loss attributable to the dismissal — contending that because the complainant received €21,621 in redundancy, that payment was inherently connected to the dismissal, and that there was therefore no loss. The AO rejected this argument, finding that income and accrued statutory redundancy rights are distinct elements and should not be conflated.
Outliers to this approach within the WRC are Orla Sheehy v Megagen Implants UK LTD[23] and Donal Finnegan v Liffeyfield Limited t/a Bonnington Hotel[24]. In Sheehy, AO Michael McEntee made an award “Allowing for a deduction to reflect the Statutory redundancy already paid”, and in Finnegan AO John Harraghy gave an award that took “into account the payment of €8,002 already made” which was a redundancy payment. No reason is provided by the AOs in either decision as to why they don’t follow the logic in Murray.
Overall, both the EAT and the WRC have displayed inconsistency in their treatment of redundancy payments when assessing compensation for unfair dismissal. While decisions such as Murray, McInerney, Dicken and Morris treat redundancy and unfair-dismissal payments as distinct and non-offsettable, Sheehy and Finnegan have taken the opposite approach by deducting redundancy sums or factoring them into the award. This demonstrates an ongoing divergence in how adjudicators interpret Sec. 7 of the Act. If the starting point in assessing compensation is to establish the complainant’s actual financial loss, statutory redundancy payments cannot logically be treated as a completely separate entitlement. Sec. 7(3) refers to the loss of the right to a redundancy payment, not to the payment itself, and allowing a complainant to retain a redundancy lump sum while also receiving a full 104 weeks award of compensation would them in a better financial position than if no dismissal had occurred. Such an outcome would conflict with the principle of “actual loss.”
Equally, allowing statutory redundancy to be treated as non-offsettable while ex-gratia payments can be deducted does not appear to represent a coherent or defensible legal distinction. In Kaye McDonnell v Sodexo[25], the Complainant received an ex-gratia lump sum equivalent to one year’s pay, which included her statutory entitlement. AO Breffni O’Neill found that the dismissal was unfair but accepted that the lump sum covered the loss. As both an ex-gratia payment and statutory redundancy are monetary sums arising from the same termination, it is difficult to see how one can properly be deducted while the other cannot.
3. Stock Options
As part of considering future loss, the WRC will have to consider, bonuses, average overtime pay, any fringe benefits, such as VHI, death in service benefit, car allowances and stock options.
In the case of Florish v Alienvault Inc[26], the EAT distinguished between vested and unvested stock options and determined that the “the unvested stock options at the time of the dismissal should not and do not form part of the assessment of loss in this case”’[27]. There are few cases on the matter of stock options, but they clearly meet the definition of remuneration under the Act and therefore have to be considered. Simply put, unvested stock options are options that have been granted but not yet earned – they will become earned in time, depending on the employee being employed at the time they vest. To this extent, they can be said to be no different to other forms of remuneration such as pension or death in service benefit. On the other hand, vested options are options that the employee has actually earned. Once vested, they have exercise them, i.e. buy them at the pre-determined ‘strike’ price any time before they expire and to that extent they own them. The WRC’s approach to equity-based remuneration has turned on whether the benefit in question is realised and quantifiable or speculative and contingent. In Vice President v Professional, Scientific & Technical[28] and in Gráinne Sherlock v Pluralsight Ireland Ltd[29], 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 reaffirmed this approach in 2025, confirming that unvested stock options or share awards cannot be included as remuneration under the Act.
Gary Rooney v Twitter International Unlimited Company[30], while superficially appearing to depart from this pattern, does so on factual rather than legal grounds. The payments in Rooney – the “Equity Grants/Deferred Cash Consideration”—were not unvested or contingent stock options, but cash payments made via payroll representing a vested entitlement linked directly to employment. Therefore, they were treated as part of the complainant’s ordinary remuneration.
The WRC continues to exclude unvested or speculative stock options from compensation calculations, but where an equity-related benefit is realised, vested, or paid as cash, as in Rooney, it may properly be included as part of an employee’s financial loss. Whilst this approach is consistent with that of the EAT, the difficulty lies with the definition of ‘actual loss’. It is easy to conclude that something that is not earned cannot represent a loss. However, options both vested and unvested are given by way of an initial grant to employees. As such, they represent some form of benefit to be earned in future and are ‘granted’ as both a reward and retention tool. Vesting occurs over a certain period, normally 4 to 5 years but it can be longer. Arguably, they will not be granted if the company does not want to retain the person for that period. Thus, if they are dismissed within that vesting period, they lose the value of those unvested options and they do so as a result of their dismissal. The loss therefore derives from and is attributable (per Sec. 7 of the Act) to the dismissal[31].
Conclusion
Recent WRC and Labour Court decisions reveal a marked drift from the statutory principle that compensation under the Act must reflect actual loss. The relatively new but growing practice of basing awards on gross rather than net pay and of declining to offset redundancy payment, represents a legally unsound interpretation of Sec. 7 of the Act. These decisions risk transforming compensation into an exercise in enrichment.
While adjudicators may well be motivated by equitable considerations, such as the taxation of awards and the complainant’s ability to mitigate their loss in an economy of full employment, such reasoning cannot override the clear wording and purpose of the Act. In order to advise clients properly, practitioners in this field are entitled to a coherent and consistent approach from the WRC and Labour Court based on the Act and previous jurisprudence. As it stands, they are left wondering who will be the adjudicator and advising on the basis of what they have held in the past. The issue of the non-deduction of statutory redundancy payments from awards and the non-inclusion of unvested stock options requires some intervention by the Superior Courts.
Comment – Alastair Purdy SC
Aside from the above, I read with interest the views of Mr. Ger Deering and Mr. Kieran Mulvey as reported in IRN[32] both of whom were speaking at a special conference to mark the 10 – year anniversary of the WRC. Mr. Deering questioned the need to name people involved in WRC cases. This is a welcome comment as there is no doubt that many complainants are reluctant to take cases for fear of being named, thus affecting their future employability. Whilst justice must be seen to be administered in public, there appears something very wrong in indirectly penalising someone for exercising their statutory rights.
IRN noted that lawyers were the most prominent critics of the workplace reform project and that the EAT was ‘favoured more by the legal profession than the social partners. I am not sure I can agree with this opinion. It cannot be said that the EAT was more intimidating than the present fora. Further all practitioners (in the field of employment law) recognised that having five separate bodies, (the Equality Tribunal, Rights Commissioner, Labour Court, Labour Relations Commission and the Employment Appeals Tribunal) adjudicating on various employment disputes was untenable. Lawyers were concerned, rightly, that the removal of a large body of legal knowledge, present in the EAT and replacing it with primarily non-legal practitioners could lead to issues. Equally a concern was conflating the excellent Industrial Relations work of the Labour Court with what is essentially the determination of cases based on statute.
As is evident from this article, some of those concerns, regrettably, have been realised. All practitioners, be they lawyers or otherwise, are entitled to have some consistency of determination and a proper application of the law.
There are simple fixes though. A first step would be to allow practitioners to by-pass the first instance necessity of going to the WRC on Unfair Dismissal and Discriminatory Dismissal disputes, as was the case with the Rights Commissioner. These are generally the more complicated cases and by their very nature take longer to hear. They are taking a long time to deal with and are proving very costly for complainants in both time and money – a one stop venue in the Labour Court would solve this by speeding these cases up, something that the Workplace Relations Act 2015 promised to do but which has failed to have been delivered upon. This would also make it easier for Complainants to access representation, as the current system militates against complainants getting proper access to justice due to its expense, again, something that the 2015 Act, sought to remedy. Lastly, having a dedicated division(s) of the Labour Court to deal with Unfair and Discriminatory Dismissal Claims and having a specialist separate division to deal with Industrial Relations disputes would allow for greater consistency in decisions.
The views expressed here are solely those of the author and not representative of Alastair Purdy LLP solicitors.
Alastair Purdy SC.
[1] Philip Smyth v RSA Insurance Ltd UD1673/2013
[2] See Gary Rooney v Twitter International Unlimited Company ADJ-00044246 [2024] where the adjudicator awarded €550,131; Hyph Ireland Ltd v Michael Kiely UDD2533 where the Labour Court awarded €445,440 and A Sales Executive v A Software Company ADJ-00027573 [2022] where the Adjudicator awarded the Complainant €329,1999 representing 75% of his financial loss.
[3] Note that there is no breakdown in the WRC annual reports as to the remedy and this is merely by way of experience.
[4] An Bord Banistíochta, Gaelscoil Moshíológ v The Department of Education & ors [2024] IESC 38
[5] Unfair Dismissals (Calculation of Weekly Remuneration) Regulations, 1977 S.I No. 287/1977
[6] Brady & anor v Minister for Social Protection & anor [2016] IEHC 553 per Baker J at [23]
[7] Employee v An Employer I1/2012
[8] Ray Walsh v Econocom Digital Finance Ltd ADJ-00029093 [2022]
[9] Maria Inmaculada De La Torre Ruiz v Hamilton UK Services Ltd ADJ-00049851 [2025]
[10] Hyph Ireland Ltd v Michael Kiely UDD2533 [2025]
[11] The Workplace Relations Act 2015, refers to Complainants, prior to this it was Claimant.
[12] Op.Cit. at 2
[13] Employee v Employer (UD787/2007)
[14] Employee v Employer (UD1880/09)
[15] Employee v Employer (UD1848/2010)
[16] Employee v Employer (UD1321/2012)
[17] Michael O’Brien v Furlong Flooring Ltd (UD768/2013)
[18] Kieran Murray v Sherry Garden Rooms Ltd ADJ-00028766 [2022]
[19] Mary McInerney v Isobel O’Dea ADJ-00038044 [2023]
[20] Lindsay Dicken v Velocity EHS Ireland ADJ-00058415 [2025]
[21] Anne Morris v Limerick Chambers of Commerce ADJ-00036284 [2023]
[22] James Watt v Ryan Investments Ltd ADJ-00039164 [2023]
[23] Orla Sheehy v Megagen Implants UK LTD ADJ-00032606 [2022]
[24] Donal Finnegan v Liffeyfield Limited t/a Bonnington Hotel ADJ-00055992 [2025]
[25] Kaye McDonnell v Sodexo ADJ-00032098 [2022]
[26] Florish v Alienvault Inc. (UD800/2015)
[27] For a discussion of this topic see Alastair Purdy – ‘Employers Beware! Stock Options could be considered remuneration when defining compensation in an Unfair Dismissal Case. Irish Employment Law Journal, 2005, 2(1),17-23-2005.
[28] Vice President v Professional, Scientific & Technical ADJ-00020363 [2019]
[29] Gráinne Sherlock v Pluralsight Ireland Ltd ADJ-00044941 [2024]
[30] Gary Rooney v Twitter International Unlimited Company ADJ-00044246 [2024]
[31] There is also an argument that the vesting period, represents an extended notice period but this is solely the view of the author and has not been tested. This is so because of the fact that they are given as a retention tool. A further examination of this point is beyond the scope of this article.
[32] See IRN 36 9th October 2025
