Severance payments for executives departing Irish companies in management reshuffles are “business as usual” and confidentiality clauses would also be the norm, employment solicitors say.
Labour law experts say the practice likely saved RTÉ money, remarks that support RTÉ director general Kevin Bakhurst’s rationale for offering such payments to two executives in 2023 and not specifying the individual sums awarded.
Updated legal advice sought by RTÉ on whether details of payouts can be made public was published on Thursday morning.
RTÉ's former director of strategy Rory Coveney and former chief financial officer Richard Collins received exit payments when they departed RTÉ, Mr Bakhurst said last week during a hearing of the Oireachtas media committee.
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This led to further political fallout, heightening pressure on RTÉ after the revelation that another former finance chief, Breda O’Keeffe, received a payout of €450,000 when she left RTÉ under a redundancy scheme in 2020.
Mr Coveney is understood to have received the equivalent of a year’s salary, suggesting his payout was about €200,000, but this has not been confirmed, while RTÉ said Mr Collins departed “by mutual agreement” after months of independent mediation and “with a binding confidentiality clause that was agreed to by both sides”.
Ronnie Neville, a partner in Mason Hayes and Curran’s employment law and benefits team, said the practice of issuing severance payments to former executives in exchange for the waiving of certain rights was normal in employment law.
“Employees of all levels have very strong protection against unfair dismissal after one year and so, if an employer would prefer to secure a speedy, amicable, exit, it is not unusual to pay an ex gratia severance payment, in exchange for which the employee exits by agreement, with a waiver of all claims, in particular, unfair dismissal.”
A single clause in the agreement providing for non-disclosure of its terms is usually reciprocal between the parties, he added.
Ciarán Ahern, an employment law expert and partner at the law firm McInnes Dunne Murphy, told Virgin Media Television’s Tonight programme this week that confidentiality clauses were a “bog standard” feature of agreements underpinning senior executive departures in situations similar to that at RTÉ.
“Under the Unfair Dismissals Act, any dismissal by an employer is automatically presumed to be unfair until the employer proves otherwise, so process is really important in Irish employment law,” he said.
A payment will typically be arranged after “grown-up conversations” between the employer and the senior executive in which a settlement figure is decided upon, Mr Ahern added.
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Similarly, another employment law expert told The Irish Times that confidentiality agreements were “business as usual” in executive reshuffle cases as they protect the commercial information of the employer and also avoid establishing a “custom and practice” for future such departures.
The only arena in which they tend to no longer be used are situations where there has been an allegation of sexual harassment, a phenomenon that drew criticism amid the rise of the Me Too movement.
Otherwise, both payouts and confidentiality clauses are standard elements of the “compromise agreement” reached in situations where a senior executive is said to have resigned “by mutual agreement”, according to the solicitor, who asked not to be named.
In many cases, senior executives would have a lengthy notice period under their employment contract, for which they would have a right to be paid in the absence of an agreed settlement.
Mr Bakhurst said last Saturday that RTÉ had asked for updated legal advice about the disclosures he can make in relation to payouts for executives who were “exited” from the organisation. This was received on Wednesday and has now been published.
In the updated advice, solicitors Arthur Cox reiterated that employees and former employees have a legal entitlement that their personal data – and particularly sensitive personal data – is not made publicly available.
“If such information is published, we remain of the view that this would contravene employees’ contractual and statutory rights thereby exposing RTÉ to avoidable legal challenges,” the law firm wrote.
“There are different reasons leading to settlements with employees. In the case of RTÉ, some employees left following negotiated discussions documented by way of settlement agreements. Settlement agreements are contracts that are regularly entered into where an employment relationship comes to an end and there are claims pending, threatened or likely to arise.”
[ Hiding behind legal advice will not cut it for RTÉ any moreOpens in new window ]
RTÉ's solicitors said such agreements exist, in its experience, “in the public, private and commercial semistate sectors”. In these arrangements, employees receive an ex gratia termination payment but agree to waive their right to pursue any form of legal claim against their employer.
“The terms are generally arrived at having regard for the legal risk associated with terminations or legal claims, the cost of defending such claims and the subsequent award that may be made by the Workplace Relations Commission, the Labour Court or the civil courts. These agreements bring finality and certainty. Confidentiality provisions are routinely contained in such agreements,” the updated legal advice states.
Politicians had earlier called for Mr Bakhurst to prioritise transparency and the restoration of public confidence over adherence to confidentiality clauses despite the director general cautioning that this could land RTÉ with “another big legal bill”.
Minister for Finance Michael McGrath said RTÉ had put itself in a “straitjacket” by agreeing to confidential exit payments, while Minister for Media Catherine Martin said on Monday she was “conscious of the need to respect legal advice, as well as individual employment and privacy rights”, but had reminded Mr Bakhurst of “the important public interest at play”.
RTÉ has written to former members of its senior management team asking them to waive their right to confidentiality over the circumstances of their exit.
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