EMPLOYMENT APPEALS TRIBUNAL
APPEAL OF: CASE NO.
Eoin Kerrigan UD1921/2011
-appellant
against the recommendation of the Rights Commissioner in the case of:
Eoin Kerrigan
-v-
Smurfit Kappa Ireland Limited, C/O Smurfit Kappa
Group
under
UNFAIR DISMISSALS ACTS, 1977 TO 2007
I certify that the Tribunal
(Division of Tribunal)
Chairman: Ms K. T. O'Mahony B.L.
Members: Mr. J. Hennessy
Mr. F. Dorgan
heard this appeal at Thurles on 14th March 2013
and 25th February 2014
Representation:
Appellant: Mr. David Pearson solicitor, G J Moloney, Solicitors,
City Quarter, Lapp's Quay, Cork
Respondent: Ms Pauline O'Hare, Ibec, Confederation House,
84/86 Lower Baggot Street, Dublin 2
Background:
This case is before the Tribunal by way of an employee appealing a Recommendation of a Rights Commissioner ref: r-105234-ud11JOC, under the Unfair Dismissals Acts, 1977 To 2007. The appellant will be referred to as the claimant herein.
Preliminary issue
The respondent contended that the Tribunal had no jurisdiction to hear the claim under the Unfair Dismissals Acts as claimant had signed a discharge form and accepted a sum of money in full and final settlement of all claims arising inter alia from the termination of his employment:
Evidence onPreliminary Issue
On 7 September 2010 the claimant, who worked in the Waterford office, was called to a meeting in Cork office the next day. The general manager (GM) and the regional sales manager (SM) were present at the meeting on 8 December and the claimant was told that the sales team was being restructured and his position was being made redundant with immediate effect. There was some discussion between the parties and at the end of the meeting SM ushered the claimant to reception. The claimant was shocked and so upset that he had to pull off the road a number of times on his journey back to Waterford. The claimant phoned SM the next day and was invited to a further meeting on 10 September.
At the meeting on 10 September 2010, with GM and SM .the claimant refused to sign Form RP50 as the date of termination and monetary calculations were incorrect. He was handed a Discharge Form to read and having read to where the settlement figure was set out he realised it was also incorrect he did not read any further and refused to sign it. The claimant’s position was that he was told that if he did not sign the Discharge Form he would not receive the ex-gratia element of his severance payment. The claimant denied GM’s assertion that he had gone through the Discharge Form with him.
At a further meeting on Tuesday 14 September 2010 the claimant read the Discharge Form in full and signed it as well as Form RP50. The Discharge Form read:
“I ,(the claimant), hereby accept the sum of €25,280.76 gross in full and final settlement of all claims arising out of my employment with (the respondent) or the termination thereof, both under statute and under common law in all respects for all purposes.
I confirm that this sum is inclusive of but not limited to any entitlements, rights, or claims that 1 have or may have had under the Minimum Notice and Terms of Employment Information Act, 1973-2001, the Industrial Relations Acts 1949-2004, the Unfair Dismissals Acts 1977-2001, the Redundancy Payments Act 1967-2003, the Protection of Employees (Part Time Work) Act 2001, the Protection of Employees (Fixed Term Work) Act 2003, the Payment of Wages Act 1991, the Organisation of Working Time Act 1997 and the Employment Equality Act 1998-2004 etc.
I confirm that this document has been read over and explained to me prior to my signing it and that accordingly I both understand and accept the contents of this document in full.”
The respondent’s position was that the claimant had negotiated the settlement figure. It was common case that the claimant was not advised to seek advice before signing the discharge form.
Determination onPreliminary Issue
In Hurley v the Royal Yacht Club [1997] ELR 225 Buckley J.in the Circuit Court considered a waiver clause in an agreement in the context of the Unfair Dismissals Acts and having concluded that there must be informed consent to such a waiver later in his judgement set out what this requires:
“I am satisfied that the applicant was entitled to be advised of his entitlements under the employment protection legislation and that any agreement or compromise should have listed the various Acts which were applicable, or at least made it clear that they had been taken into account by the employee. I am also satisfied that the applicant should have been advised in writing that he should take appropriate advice as to his rights, which presumably in this case, would have been legal advice. In the absence of such advice I find the agreement to be void”
This statement of the law was applied by Smyth J. the High Court in Sunday Newspapers Ltd v Kinsella and Brady [2008] ELR 53.
The test set out in Hurley is a twofold one. Notwithstanding that the Unfair Dismissals Acts that forms the basis of the claimant’s case was specified in the purported waiver clause it is not sufficient to deny the Tribunal jurisdiction as the second element of the test in Hurley had not been satisfied. In what is frequently a traumatic situation for an employee it is vital that he be advised to seek appropriate advice. It was common case that such advice was not given to the claimant. Accordingly,the Tribunal finds that it has jurisdiction to hear this appeal.
Summary of Evidence in Substantive Case
Smurfit Ireland has three main plants in Ireland, in Dublin, Lurgan and Cork as well some smaller plants including the Mallow Road and Waterford plants. Customers have unique requirements and different plants have their own various technical capabilities, for example the Dublin plant had a six colour printing presswhich can fulfil some customers requirement for different colours on a product and there is a high speed in-line rotary dye cut machine in the Lurgan plant. During 2008 business dropped dramatically and the Cork plant and the smaller plants lost 50% of business. This necessitated an immediate response and a series of redundancies were made. When the Waterford plant was closed its 30 employees were made redundant and its remaining business was transferred to the Cork plant. Later a customer, whose orders comprised 40% of business in the Cork plant, was leaving Ireland and in late 2009 the Cork plant was rationalised from its three eight-hour daily shifts (five days a week) to one daily shift each day. Following from the rationalisation the Cork plant did not have the capacity to do all the manufacturing which resulted in work being transferred to the Dublin and Lurgan plants based on their technical capabilities. The work that remained in Cork was mostly regional work, suited to a single-shift plant operation. Over the period 110/120 employees in the Cork plant, comprising 80% of its workforce, had been made redundant.
The sales team was the last to be restructured as the respondent wanted to keep its customers reassured and looked after. The role of a sales development executives is to manage the key accounts in his area and develop new business. Three sales development executives, including the claimant, reported to the Cork office and each was responsible for a particular area. One was based in Cork, one in Galway and the claimant was based in Waterford with responsibility for accounts in Waterford and the surrounding south east area.They reviewed where the accounts were being manufactured and how best to manage this from a sales perspective. This review took place in mid 2010. The review confirmed a need for a redundancy in the sales structure. While the principal relationship is between the sales development executive and the customer, the customer also contacts and has a relationship with personnel in the plants making their orders.
GM opened a spread sheet to the Tribunal to explain the percentage volumes and values of work done by the three sales development executives reporting to the Cork office. He explained that high sales volume does not equate to high sales value, the sales in Cork were of a high sales value. He explained that they measured work volume per 100 mtrs² or KSM. The reviewed showed that 80% of the Cork based sales development executive’s work was being manufactured in Cork and (13% in Dublin & 7% in Lurgan). Fewer of his customers were affected by the changes than were customers of other two sales development executives. Furthermore, the products he was dealing with were more suited to Cork and the service requirements of the Cork customers were better met. The review showed that 70% of the Galway sales executive accounts were manufactured in Lurgan (7% in Cork & 23% in Dublin). Finally, 25% of the claimant’s accounts were manufactured in Cork (32% in Dublin & 43% in Lurgan). Based on these figures the respondent decided to retain the Cork sales development executive in Cork, to transfer the Galway sales executive to Lurgan and to make the claimant redundant. The Dublin and Lurgan plants could absorb the management of the claimant’s customer accounts and service customer needs for the produce transferred to the within their existing resources. The remainder of the claimant’s accounts was absorbed by the Cork plant. GM’s position was that all this was explained to the claimant at the meeting on 8 September 2010. Based on these GM concluded on 11 August 2010 that the claimant’s position was to be made redundant. The claimant’s performance was not the issue. There was no other vacancy in the company as there had been 140 redundancies. GM did not consider pay cuts.GM adamantly refuted the claimant’s assertion that the Cork sales development executive, who had less service with the respondent, was kept on in the employment because his father was a significant customer of the company.
Due to commercial sensitivity and the fact that the sales people knew the prices and customers their employment is terminated “pretty much immediately”. It was common case that last-in-first-out principle applied on a site by site basis and the claimant was the only sales development executive and employee in the Waterford area. SM’s evidence was that he escorted the claimant out of the premises out of courtesy and respect for him.
The claimant did not accept that each sales development executive had a defined geographical area; some Dublin sales development executives were allowed to keep their customers in Cork and Waterford and worked in his area. When work was farmed out to Dublin and Lurgan in 2009 he followed the work and travelled to those plants at least once every month and reported to managers in Dublin, Cork and Lurgan and was expected to sell products for all three plants. He believed he had to optimise on both volume and value and achieve high margins. He could not understand the timing of his redundancy as only a few days before the decision was taken he was given a new car. During the changing times in the company he constantlyreassured his customers.
He was very shocked when he was informed about his redundancy at the meeting on 8 September and had been walked out of the office. His confidence was shattered. He was told not go to the office on 9September and heard that his customers were being contacted. He wasembarrassed and felt that people might draw some inferences. The decision to make him redundant had been taken without consulting him with him. Voluntary redundancy, pay cuts or alternative positions had not been considered. He felt the whole pool of sales development executives should have been looked at. The claimant accepted that he had received outplacement assistance but he had asked for it.
His contract of employment provides for at least one month’s notice of the termination of his employment. Notice could be waived and/or payment in lieu of notice could be accepted by mutual agreement. The claimant did not agree to waive his notice and wanted to work out his notice but unlike the employees in the previous redundancies, he was not allowed to work out his notice.
Determination on Substantive Issue
There was an 80% reduction of workers in the Cork plant. On the reduction of work in the Cork plant from three to one shift per day some of the Cork work was transferred, based on customer requirements and the technical capabilities of the receiving plants, to Dublin and Lurgan. The next and final stage of the restructure, dealt with the restructure of the sales development executive and in this area the selection of the claimant for redundancy was based on the percentage sales volumes of the three sales development executives reporting to the Cork office. The decisions at both stages were based on objective criteria. In the circumstances the
The Tribunal accepts the claimant’s evidence that he was only given the first page of the document entitled Compulsory Redundancy/Restructuring Terms, (drawn up in August 2009 as a result of negotiations at the Labour Relations Commission at the time of previous company redundancies) and that he had not been given the second page whereon it was stated that LIFO would apply. However it was common case that redundancies occur and LIFO applies on a site by site basis. Thus, for the aforementioned reasons the selection of the claimant for redundancy was not unfair.
As there was a lack of fair or any procedures surrounding the dismissal this is an appropriate case to exercise the discretion conferred on the Tribunal by Section 6 (7) of the Unfair Dismissals Acts 1977 as substituted by section 5 (b) of the Unfair Dismissals (Amendment) Act 1993, which states:
Without prejudice to the generality of subsection (1) of this section, in determining if a dismissal is unfair dismissal, regard may be had, if the rights commissioner, the Tribunal or the Circuit Court, as the case may be, considers it appropriate to do so:
(a) to the reasonableness or otherwise of the conduct (whether by act or omission) of the employer in relation to the dismissal.
In exercising this discretion the Tribunal finds the respondent’s failure to apply any fair procedures was unreasonable and renders the dismissal unfair. Accordingly, the appeal under the Unfair Dismissals Acts 1977 to 2007 succeeds and the Tribunal awards the appellant the sum of €10,000.00, in addition to a sum equivalent in amount to his redundancy lump sum and ex gratia payment.
Sealed with the Seal of the
Employment Appeals Tribunal
This ________________________
(Sgd.) ________________________
(CHAIRMAN)