Labour Court excludes discretionary bonus and loss of employee incentive scheme from compensation in Gary Rooney v X case

At a glance

• On appeal by X (formerly Twitter), the Labour Court reduced an award for unfair dismissal payable to a former employee to approximately EUR200,000 by excluding equity incentives and a discretionary bonus from the calculations.
• The Workplace Relations Commission (WRC) had originally awarded the employee compensation of EUR550,131 in 2024.
• This decision addressed the treatment of employee equity incentives and discretionary bonuses in the calculation of compensation for a breach of the Unfair Dismissals Acts 1977 to 2015 (UDA).
• Whilst the Labour Court’s decision is a helpful development for employers, as it confirms that equity incentives (such as Restricted Stock Units (RSUs)) and discretionary bonuses will not automatically be included in the calculation of compensation under the UDA, its outcome appears to be heavily influenced by the specific wording and structure of the employer’s remuneration documentation, as well as the contingent nature of the incentive and bonus arrangements.

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Background

Following the acquisition of Twitter by Elon Musk in late 2022, remaining employees received a late-night email stating that the business would become 'extremely hardcore' and that employees should actively confirm their commitment to the organisation by clicking 'yes' within 46 hours. Employees who did not opt in were told they would receive severance. The complainant, a long-serving senior employee based in Dublin, did not click 'yes'. His system access was terminated, and he subsequently received an email confirming his 'decision to resign'. The employee disputed his resignation and sought to remain in employment.

In August 2024, the WRC found that the complainant's failure to click 'yes' did not amount to resignation and determined that the respondent had in fact unfairly dismissed him. In calculating the record award compensation, the WRC considered the complainant's salary and benefits, including equity grants as part of the remuneration package.

Unfair dismissal upheld, but compensation reduced

The Labour Court upheld the WRC finding that the complainant had been unfairly dismissed. However, it substantially reduced the compensation previously awarded by the WRC by excluding both a discretionary bonus and equity from the calculation of remuneration and loss.

Exclusion of discretionary bonus from calculation of compensation

Redress for unfair dismissal under the UDA includes reinstatement, re-engagement or compensation in respect of financial loss incurred by the employee, which is capped at 104 weeks' remuneration. Remuneration includes pay, certain allowances and benefits in lieu of or in addition to pay. As such, maximum compensation accounts for factors which go beyond base salary.

The Labour Court accepted evidence that the complainant’s bonus entitlement did not form part of remuneration for the purposes of calculating compensation. The complainant did not dispute that the bonus was discretionary and that had he remained on in employment he would not have received a bonus for 2022.

The Labour Court emphasised the discretionary nature of the bonus scheme and the fact that payment depended on the achievement of company‑wide financial thresholds. Critically, as those thresholds were not met, no bonus was earned by any employee in the organisation. In those circumstances, the Labour Court concluded that the bonus could not be treated as remuneration for the purposes of calculating compensation under the UDA.

Exclusion of RSUs from calculation of compensation

The complainant had received RSUs over a period of approximately nine years under various equity incentive plans operated by X's US parent company.

The Labour Court placed significant weight on the express terms of the equity documentation, which consistently stated that RSUs were discretionary, forward‑looking incentives designed to attract and retain talent, rather than remuneration for work performed. The agreements expressly provided that RSUs were not part of 'normal or expected compensation' and were not to be taken into account for the purposes of calculating severance, dismissal or termination payments and, consequently, the Labour Court excluded RSUs from the calculation of remuneration for the purposes of the UDA.

The Labour Court also noted that the complainant had signed and accepted these terms on multiple occasions, benefited financially from RSU awards over many years, and had confirmed his understanding of the nature of the arrangements, notwithstanding arguments that the complainant had not received legal advice prior to signing up for the RSU schemes and the equity awards were paid via payroll mechanisms.

In those circumstances, the Labour Court concluded that RSUs were excluded from calculation of remuneration for the purposes of compensation under the UDA.

Importantly, the Labour Court rejected the argument that these exclusions unlawfully contracted out of statutory protections. It held that the equity agreements did not exclude access to the unfair dismissal regime itself as they merely defined the RSUs in a manner which did not constitute remuneration under the UDA, rather than blocking access to entitlements under the UDA.

Award

Using base salary and benefits only, the Labour Court calculated the complainant's losses and awarded total compensation of EUR201,458, significantly reducing the award originally made by the WRC.

Practical implications

The case supports the proposition that properly drafted equity documentation may legitimately exclude share-based incentives from compensation calculations.

Pay Transparency Directive and Gender Pay Gap Reporting

The exclusion of RSUs for the purposes of calculation of remuneration under the UDA contrasts with the broader definitions of 'pay' or 'remuneration' contained in the EU Pay Transparency Directive (Directive) and the definition of remuneration under the Employment Equality Acts 1998 to 2021 (EEA). As the decision in Rooney did not address whether RSUs are encompassed by the definition of remuneration under the UDA, it is unclear what effect this decision will have on equality claims.

'Pay' under the Directive encompasses 'the ordinary basic or minimum wage or salary and any other consideration, whether in cash or in kind, which a worker receives directly or indirectly (complementary or variable components) in respect of his or her employment'. This is aligned with the definition of remuneration under the EEA, which: 'does not include pension rights but, subject to that, includes any consideration, whether in cash or in kind, which the employee receives, directly or indirectly, from the employer in respect of the employment'.

Under current gender pay gap reporting obligations, employers with 50 or more employees in Ireland are required to report on gender pay gap metrics, including the percentage of all male and female employees who received benefits in kind (RSUs being in that category). Ireland is strictly required to transpose the Directive into national law by 7 June 2026. However, in March 2026 the Department of Children, Disability and Equality confirmed that Ireland will miss the transposition deadline, with only a General Scheme relating to recruitment pay transparency (Article 5) having been published to date. It remains to be seen how RSUs will be treated under the enhanced pay transparency framework once final legislation is enacted.

As employers prepare for these enhanced obligations, the Rooney decision serves as a timely reminder that how remuneration is defined and, critically, which components of a total compensation package fall within or outside that definition, can have far-reaching consequences, not only in unfair dismissal claims but also in the broader context of equal pay compliance and gender pay gap reporting.