UD658/2012

EMPLOYMENT APPEALS TRIBUNAL

UNFAIR DISMISSALS ACTS, 1977 TO 2007

I certify that the Tribunal

(Division of Tribunal)

Chairman:   Mr E. Harrington

Members:     Mr D. Hegarty

                     Mr J. Flavin

heard this claim at Cork on 7 October 2013

                       and 10 & 11 February 2014

Representation:

Claimant:

                    Mr David O’Dwyer BL instructed by, on the first two days,

                     Mr Diarmaid Ó’Cathain, on the final day, Ms Maria Boyce,

                     both of Diarmaid Ó’Cathain, Solicitor, 30 South Terrace, Cork

Respondent:

         Ms Kiwana Ennis BL instructed by Mr Boyce Shubotham,

         William Fry Solicitors, Fitzwilton House, Wilton Place, Dublin 2

The determination of the Tribunal was as follows:

This being a claim of constructive dismissal it fell to the claimant to make his case.

The claimant began work as technical director in the Cork office of the respondent’s engineering services business in March 2004. The respondent is involved in the mechanical and electrical design of pharma equipment, site placement of engineers and technical support. After some six months the claimant was appointed operations director of the respondent’s Cork office. The claimant reported to the managing director (MD) who also had responsibility for technical support services. The claimant had responsibility for mechanical and electrical design and site placement. The claimant was also appointed as a statutory director of the respondent. From 2009 the split between the claimant’s responsibilities was apportioned 45% to Cork design and 55% to site placement.

From January 2008 until February 2012 the number of site placements within the respondent reduced from 110 to 58 and the number of technical support services staff reduced from 131 to 24 over the same period.

The effects of the economic downturn on the respondent were reflected when, in April 2009, having already suspended bonuses to staff, the board took a decision to impose a 5% pay cut in a drive to cut costs. This pay cut was not imposed on site placements. In the lead up to the imposition of this pay cut the claimant had been unhappy with MD’s response to a meeting the claimant and a colleague had held with the Cork staff at which issues/options leading to the pay cut had been discussed.

On 4 April 2009 the claimant sent an email to MD setting out his dissatisfaction with the pay cut being combined with non-payment of a bonus meant that he did not approve of any salary reduction until the bonus issue was resolved. After some discussion the pay cut was implemented in the May payroll run and on 28 May 2009 the claimant emailed MD to suggest the respondent’s action in imposing the pay cut was illegal under Irish employment law and was placing the claimant in a very awkward position.

Following discussions at board level a further 5% pay cut was implemented in July 2010 and on this occasion there were also a number of positions declared redundant within the respondent. Among the arrangements made at this time was the removal as a statutory director of the board member responsible for technical support services (TSS) and his move to a design position in the respondent’s Dublin office. This TSS role was taken on at board level by MD with input from the claimant until alternative arrangements after two or three months. In correspondence with MD the claimant stated, “I do not accept or agree with this 5% reduction, but in this instance I have no choice.”

In the spring of 2011 the respondent sought to implement further cost reductions and proposed a further 10% pay cut. The claimant wrote to the Human Resource manager (HR) on 7 July 2011 to advise that he did not accept the proposed changes to his terms and conditions and in particular the 10% pay cut. He informed HR that he had sought legal advice on the matter. In the event the pay cut was not implemented as it became clear that its imposition would not gain support amongst the entire workforce.

In August 2011 MD informed the claimant of a decision of the management of the parent company to seek a reduction in the number of statutory board members of the respondent such that the claimant’s resignation from the board was being called for. It was the position of the respondent that, notwithstanding this desire to reduce the number of board members, the claimant’s seat on the board had become untenable in the light of his stated opposition to the board decision to seek the pay cut. The claimant was removed from the board, refused to sign a letter of resignation from the board and regarded his removal as an undermining of his position.

The respondent’s position was further that during the process leading up to the claimant’s removal from the board the claimant sought to pursue the possibility of a redundancy package from MD along the lines of a package obtained by a senior employee who had left before MD joined the respondent. MD sought to counsel the claimant against this approach lest it might leave the claimant with “a target on his back”.

In November 2011 the manager within the respondent with responsibility for TSS resigned and on 7 November 2011 MD met the claimant to discuss the situation. While it was common case that the claimant agreed to take on responsibility for TSS it was the claimant’s position that this was only as an interim measure.

After the failure to implement the third pay cut the respondent sought alternative means of improving their cost structure and this involved the possibility of divesting themselves of certain assets. The respondent began at a very high level such that MD and his superior were the only people in the respondent’s Irish operations to be aware to seek the sale to a third party of Design, Site Placement and Technical Support Services. The third party with whom they engaged was not interested in Design, just SP & TSS.

MD and his superior met the claimant in Dublin on 15 February 2012 to advise the claimant of the proposal to sell SP and TSS to the third party. At this meeting MD told the claimant that the third party wanted the claimant to transfer with SP and TSS as by now the majority of his work was involved in those parts of the respondent’s business. It was also pointed out to the claimant that if he were to remain with the respondent that it would be hard to justify his costs in light of the dearth of design work. It was common case that the claimant said “I can do the maths on this myself”.

It was planned for the claimant to be involved in contacting seven key clients the following day prior to the signing of the heads of agreement with the third party as certain of the clients needed to agree to assign their contracts with the respondent in order for those contracts to transfer to the third party. In the event the claimant was out sick the following two days. At 17-53 on 16 February 2012 the claimant sent HR an email in the following terms:-

HR

FYI – I am not well today due to work related stress and the shock news regarding the companies (sic) decision to exit me to the third party cleaning and security company

Claimant

On 20 February 2012 MD sent the claimant an email titled “People to speak to re third party”. In this MD apprised the claimant of who had been spoken to, who still had to be spoken to and gave the claimant an outline of the text to be used when speaking to clients about the transfer.

Also on 20 February HR wrote to the claimant setting out the details of his proposed transfer to the third party. The plan was for the proposed transfer to be effected on or around 30 March 2012.

MD the claimant and two directors of the third party had arranged to meet a major client of the respondent on the afternoon of 28 February. On 27 February at 11-16 MD emailed the claimant suggesting that they should meet in advance to discuss what needed to be said. The claimant replied the following morning at 09-25 with the attendees from the client and the questions the client wanted answers to. He concluded by saying he would meet them in reception at 3-15pm. The respondent’s position was that the meeting did not go well with the claimant taking little or no part in discussions until near the end raising an issue over professional indemnity insurance. At the end of the meeting the claimant left with one of the attendees from the client and was not available for debrief with the third party in a situation where the client had asked what would happen if they did not agree to the contract being assigned.

During the series of meetings to introduce the third party to their clients MD was asked by a TSS client about some information which had been requested from the claimant by the local purchasing officer on 13 February 2012 and was still outstanding. On 9 March 2012 MD emailed the claimant asking him to contact the client as a matter of high priority. During earlier exchanges the claimant had suggested that the purchasing officer wanted to micromanage procurement issues. Following the claimant’s attempts to deal with the problem a complaint was lodged by the client with MD and concern about the management of the account was raised with the third party.

As a result of issues raised during this client interaction MD’s superior both phoned and emailed the claimant on 16 March 2012 instructing him to remain in the office the following week and not to visit clients. On 23 March 2012 the claimant left the office and soon thereafter the respondent received an email from the claimant’s solicitor notifying them of the intention to launch the within proceedings.

Determination:

Whilst it was common case that the claimant was very good at his job both in running the Cork design operation as well as the site placements the Tribunal notes that there were issues going back as far as 2007 where the claimant appears to have failed to follow instructions from MD. Whilst the claimant may have sought to justify his actions on those occasions there was no suggestion that the respondent was factually incorrect in its assertions.The Tribunal is satisfied that, once the claimant sought to actively oppose the decision of the board to seek the 10% pay cut despite being a member of that board which had made the decision, regardless of any requirement from the UK to reduce the number of board members, the respondent regarded the claimant’s position on the board as untenable. In saying this, the Tribunal recognises that the claimant’s objection at board meetings to pay cuts may of course be consistent with the proper exercise by him of his duty as director, but once the board reached a decision, the shareholders may have been dissatisfied with the claimant continuing as their appointed director in circumstances where he was unwilling to co-operate with the board’s decision.

The MD gave the claimant responsibility for TSS in November 2011. The Tribunal, having heard the evidence of both parties, concluded that that this was intended to be a permanent arrangement rather than a stop gap measure. The Tribunal accepts the evidence of MD that when he gave the claimant responsibility for TSS that he regarded the likelihood of the sale to the third party of going ahead at only 3 or 4 out of 10 i.e. less than likely to go ahead. The claimant accepted at the meeting on 15 February 2012 when he was informed of the proposed transfer that there was no prospect of his being able to justify his costs were he to have remained with the respondent. The respondent was given no opportunity to investigate the matters which led to the claimant being instructed to remain in the office before he chose to leave the employment. The Tribunal notes that some 120 employees transferred from the respondent to the third party and is satisfied that the respondent had concerns about the claimant’s conduct and its potential to have a deleterious effect on the success or otherwise of that arrangement.

The Tribunal concluded that the claimant did not wish to transfer and work for the third party. He regarded the proposed transfer as incompatible with his experience and skills, which he believed in turn could lead to a severe diminution in his earnings... He had been upset by his removal as director and he had felt undermined by lack of advance notice of the proposed sale of the division of the respondent’s business to the third party. However, the Tribunal concludes that the decision to remove him from the Board was not unreasonable and there were good commercial reasons not to give the claimant advance notice of negotiations in relation to the proposed sale.

The claimant did not at any stage avail of the respondent’s grievance procedure nor did the respondent have any advance notice that the claimant intended to regard himself as constructively dismissed.

For all these reasons the Tribunal is satisfied that the claimant has shown neither a contractual breach nor unreasonable behaviour on the part of the respondent such as to justify a claim of constructive dismissal. Accordingly, the claim under theUnfair Dismissals Acts, 1977 to 2007 must fail.

Sealed with the Seal of the

Employment Appeals Tribunal

This   ________________________

(Sgd.) ________________________

     (CHAIRMAN)