ADJUDICATION OFFICER DECISION

Adjudication Decision Reference: ADJ-00000462

Complaint for Resolution:

Date of Adjudication Hearing: 08/03/2016

Workplace Relations Commission Adjudication Officer: Pat Brady

Procedure:

In accordance with Section 41(4) of the Workplace Relations Act, 2015 and/or Section 8(1B) of the Unfair Dismissals Act, 1977, following the referral of the complain to me by the Director General, I inquired into the complaint and gave the parties an opportunity to be heard by me and to present to me any evidence relevant to the complaint

Complainant’s Submission and Presentation:

The complainant was co-founder of a software start up company and was also a shareholder and Director (Board Member) of the company. He was paid a salary of €70,000 per annum

Difficulties arose with members of the Board over a period and the complainant says that he was not paid any salary for the months of April, August and September 2015 and for that part of September up to his dismissal.

In addition he was entitled, under the terms of his contract to six month’s notice of termination of his employment which was not paid.

Further he says that he is due eleven and a half days annual leave and three public holidays.

He says that over a period there was a converted effort bt members of the Board to remove him as CEO. The company was in financial difficulty and was insolvent.

A Survival plan was devised but the complainant had a disagreement with its contents and had sought further information. This led to a conflict with the Board and at a Board meeting on September 21^st 2015 the complainant indicated his opposition to the plan.

The complainant says that initially he did support the survival plan but he was facing the actual position of the company which was very bad.

On September 23^rd a twenty five page document was produced and the complainant was asked to approve it even though it contained a proposal that he would be removed as CEO. A Chief Operating Officer was appointed from among the Board Members but the recovery strategy was to remain the responsibility of the CEO.

At a meeting of the Board on October 9^th 2015 the Board’s dissatisfaction with the complainant was made clear. This was followed by a meeting with two members of the Board at which the complainant was given an ultimatum to either resign, in which case he would be paid the six month’s notice payment or to stay and be dismissed with no payment being made.

The complainant rejected these options and wrote to the company on October 15^th saying so.

The company convened an emergency Board meeting the following day, October 16^th. The notice of the meeting contained an agenda item; ‘Position of CEO’.

It was again put to him that he should step down, but he refused and he was dismissed.

This was confirmed by letter the following day, October 16^th 2015.

The complainant submitted that this was done in flagrant breach of all fair procedure requirements.

He had not been given notice of any procedure that might lead to his dismissal, there had been nothing resembling a hearing at which he could make his case and he had not been afforded the right to representation or to make his case.

The complainant says that here was no disciplinary process and the characterisation of the matter as a shareholder dispute is wrong. The complainant is an employee I the normal sense who enjoys the full protection of employment law. He says his status as a Director is irrelevant and abuse of process on this scale makes it the dismissal automatically unfair.

Respondent’s Submission and Presentation:

The respondent says that the company was formed in 2012 and initially had three or four shareholders.

In 2013, 2014 and increasingly in 2015 it became apparent that the business strategy was not working. It had consumed €1million in investment and had only generated €10,000 in revenue.

It appeared to the Board that the complainant initially supported its survival plan but it later appeared to the Board that he was not carrying out its instructions.

In summer 2015 there had been a disagreement between the shareholders and on September 4^th the Board put a proposal to the complainant. His reaction was negative and he became belligerent.

He responded with a counter proposal to wind up the company and that he would purchase the company for a nominal sum.

At this point this caused the respondent to feel that the complainant was not serious about the company’s survival and that his counter proposal confirmed that he had a separate agenda and was engineering a situation to acquire the company for himself.

The respondent says that the complainant failed to carry out a number of important functions and the essential conflict lay between the Board’s desire to develop the company as a viable business and the complainant’s intention to close it down.

The respondent says that the behaviour of the complainant and his absolute refusal to cooperate with the Board strategy should be noted. Indeed had the company been wound up the complainant would have lost his job by reason of redundancy.

While he was giving apparent indications of cooperation with the strategy he was prevaricating and in reality not cooperating while the other investors were trying to save the company.

The respondent says its decision to terminate the complainant’s contract of employment was justified and fair and that any defects in the procedure must be mitigated by the seriousness of the company’s position.

Conclusions and Findings.

I have considered all the relevant evidence, oral and written that was laid before me before, during and subsequent to the hearing.

There are three considerations in evaluating whether a dismissal has been fair.

The first is whether an employer had good cause to initiate the process, the second is whether the procedure was fair by reference to the well established principles of natural and constitutional justice, and finally, there is the matter of whether the sanction is proportionate and justified on the facts of the case.

In our law the fairness of the procedure has equal if not greater status in such cases because constitutional rights are in play. Even ‘smoking gun’ situations do not rob a citizen of their right to a scrupulously fair process. ‘Smoking guns’ may not always be what they seem.

I note the very substantial conflict between the parties in this case. Evidence was given by one of the Directors of the significant level of his own investment and his potential financial exposure. He, and doubtless others had understandable concerns.

They saw themselves as being embroiled in a battle with the CEO who was also a shareholder and Director.

The complainant’s Contract of Employment was exhibited in evidence. There is no doubt that this was a contract of service and that the complainant is entitled to the protection of employment rights law.

Independent of the policy battle being waged between the parties the manner in which the decision to dismiss the complainant was taken was an egregious breach of those rights.

The complainant was called to a meeting, given no prior notice that his dismissal might become in issue, given an ultimatum to resign or be dismissed, and then he was dismissed without payment of notice.

The letter of termination contains barely three lines and states that the company ‘has instructed our lawyers to contact your lawyers to resolve the details pertaining to your termination’, whatever exactly this might mean, as the clear effect of the letter was to execute the termination.

While the Board appears to have been caught in the emotion of the dispute with its CEO, and the acute difficulties in which the company found itself this appears to have blinded it to its obligations under Irish law when proposing to terminate the employment of an employee.

The Minute of the Board meeting reads as follows;

‘A’ commented that an organisation cannot have a leader who does not support its strategy. The question now is how to deal with this, does the company give [the complainant] 6 months notice and honour his contract or should the company dismiss him for non-performance.

‘B’ agreed that [the complainant] should be dismissed

‘C’ abstained

A agreed to remove [the complainant] at 4pm today Friday 16 October

A was invited, acting as Chairman to reach agreement with [the complainant’s] solicitors

The dissenting Director (‘C’ above) expressed a ‘preference for an agreed termination arrangement to be reached rather than his removal’. There seemed to be some support for this view but it is contradicted by a later comment that indicates that the matter would proceed as originally decided.

Whatever may have been intended by this it did not change the ultimate outcome for the complainant.

I find that the complainant was unfairly dismissed and his complaint under the Unfair Dismissals Act succeeds. I was urged by the respondent to take into account the complainant’s contribution to the situation. I decline to do so on the basis that my decision is based on the serious breach of process which resulted in the dismissal. Regardless of the alleged behaviour of an employee they must be entitled to fair procedures under law.

Difficulties over payments not made to the complainant for wages also seemed from the evidence to be part of the outworking of the fractured relationship between the Board and the complainant. However, I find that the periods for which the complainant has claimed wages were worked and those wages are due.

I uphold both complaints under the Payment of Wages Act in respect of the wages due for the months of April, August, September and up to October 16^th 2015 and also the six month’s notice payment due under his contract.

Likewise I find that the complainant is owed six days annual leave and three days in lieu of public holidays. The respondent, in a subsequent submission sought to offset periods of time it asserted that the complainant was not at work (eleven days in September and twelve in October). However, no evidence other than its opinion that this time was not worked was adduced in respect of this claim at the hearing. No records were available to support the claim.

I therefore also uphold both complaints under the Organisation of Working Time Act.

Decision:

Section 41(4) of the Workplace Relations Act 2015 requires that I make a decision in relation to the complaint(s)/dispute(s) in accordance with the relevant redress provisions under Schedule 6 of that Act.

Section 8(1B) of the Unfair Dismissals Act, 1977 requires that I make a decision in relation to the unfair dismissal claim consisting of a grant of redress in accordance with section 7 of the 1977 Act.

I award the complainant €30,000 compensation for the unfair dismissal. This is an award for the breach of his rights and is not subject to tax.

I also award him six month’s salary in lieu of notice due under his contract of employment.

I further award him fourteen week’s’ pay due to him for the months of April, August, September and up to October 16^th 2015.

I award him nine days pay due for annual (six days) and public holiday (three days) entitlements under the Organisation of Working Time Act.

Dated:   2^nd June 2016