EMPLOYMENT APPEALS TRIBUNAL
CASE NO.
UD1245/2014
TE52/2015
CLAIM OF:
Brendan Neary
-claimant
against
C&F Automotive Limited T/A Iralco
-respondent
under
UNFAIR DISMISSALS ACTS 1977 TO 2007
TERMS OF EMPLOYMENT (INFORMATION) ACT 1994 TO 2012
I certify that the Tribunal
(Division of Tribunal)
Chairman: Mr. T. Ryan
Members: Mr P. Pierson
Mr J. Maher
heard this claim at Mullingar on 10th December 2015, 25th February and 11th and 12th May 2016
Representation:
Claimant: Mr Peter Jones, Peter D Jones & Company, Solicitors, Church Avenue, Mullingar, Co Westmeath
Respondent: In-House Legal Adviser
Background:
These claims came before the Tribunal by way of a direct claim by the employee under the Unfair Dismissals Acts and an appeal by the employer (respondent) under the Terms of Employment (Information) Acts against Rights Commissioner Recommendation reference: r-147731-te-14/SR.
The company manufactures decorative trims for cars. The claimant commenced employment with the company as a Quality Engineer in late 2012. He received a contract of employment detailing his terms and conditions for this position. He became Acting Quality Manager from March 2013 and was formally appointed to that role in July 2013. The claimant was again issued with terms and conditions for the role of Quality Manager. The claimant was subsequently demoted in December 2013. The claimant stated that from January 2014 he began to perform the role of Continuous Improvement Team Lead whereas the respondent’s witness stated that he reverted to his original role but tailored to make the most of the claimant’s skillset. The claimant’s position was selected for redundancy in March 2014.
Summary of evidence:
The Operations Manager gave evidence that the respondent company purchased a second company following its liquidation in 2008. In August 2008 meetings were held with the workforce and proposed changes to terms and conditions of employment were put forward including a change to the selection criteria for redundancy. The employees voted to accept these changes. Going forward the selection of positions for redundancy could be made on the basis of what best suited the business needs of the company.
Throughout 2012 and 2013 the respondent company experienced financial difficulties and it suffered significant financial losses in 2013. Many difficult decisions were taken by the company to stem those losses including making twenty positions redundant in October 2013.
In 2014 the company continued to take steps to reduce costs including making further redundancies in March and April 2014. Seventeen positions were selected at that time including the claimant’s position.
SOB, who held the position of Acting General Manager from October 2013 to March 2014, gave evidence that he was asked by the owner of the company in October 2013 to investigate reasons for losses suffered by the company. He reported back to the owner after about six weeks having identified two areas, one of which was the amount of rejected parts being returned from customers on quality grounds. This resulted in a debit being applied to customers’ accounts.
SOB reviewed these costs with the claimant at a meeting on the 16th December 2013 during which he reviewed the claimant’s performance for the probationary period as Quality Manager. He explained to the claimant that over the course of the calendar year there was €1,000,000 worth of debits although in cross-examination he accepted that the claimant was not fully responsible for this figure. However, he stated that the trend of debits was increasing during the claimant’s tenure as Quality Manager. He explained to the claimant that the owner felt that he was not making the required impact in the role. The company held a “B” rating with customers at the time the claimant took up the position but by December 2013 it held a “C” rating.
In his review, SOB found that the claimant was unsuccessful in the role due to the spiralling costs of quality. The claimant was to revert to his original role as Quality Engineer but as the claimant worried about what his peers would think they agreed to develop a new role for the claimant entitled Continuous Improvement Team Lead. It was SOB’s evidence that this was the claimant’s original role but tailored to make the most of the claimant’s skill set. However, it was his evidence that although they conversed on a number of occasions they never finished defining the role.
SOB gave evidence that at the time the claimant’s position was selected for redundancy in March 2014 the claimant held the position of Quality Engineer which was not a customer-facing role. The company is impacted if a customer-facing position becomes vacant. SOB stated that he examined the business to identify which roles could be selected for redundancy without drastic consequences to customers. He made the decision to select the claimant’s position for redundancy based on business needs. As part of the selection process he met with each functional Head of Department to identify which positions could be made redundant. At that time SB was the claimant’s Head of Department having been appointed to the role of Quality Manager on the 6th January 2014.
SOB refuted that he had said at a social occasion on the 13th December that SB was to become the new Quality Manager and stated that he did not know this until the 23rd December 2013.
The claimant’s witness MR was interposed at this time. He was an employee of the respondent company at the time of attending an informal social function on the 13th December 2013. He engaged in conversation with SOB and SB. He recalled that there was a rumour circulating at that time that SB was taking up the position of Quality Manager. He asked SB and SOB if there was any truth to the rumour. SB told him that it was true but not yet official and therefore needed to be kept quiet. SOB also confirmed to him the rumour was true.
SB, the Quality Manager, gave evidence that she had no recollection of the conversation as alleged by MR. She commenced in the role of Quality Manager on the 6th January 2014 but she had previously worked for the respondent. The owner of the respondent company asked her by telephone if she would be interested in returning to the company. Subsequently, she met with the owner of the company on the 14th December 2013, at which time she was offered the Quality Manager’s position. SB submitted her notice to her employer on the 16th December 2013.
The company was in a state of turmoil when she returned and the company had a “C” rating with customers. During cross-examination she accepted that the “C” level rating was unconnected with the claimant’s performance.
It was the claimant’s evidence that at the time that he took up the position of Quality Manager the rating of the company with nearly all of its customers was at “C” level. This rating was in place prior to the claimant taking up the role of Quality Manager from his predecessor.
The claimant’s direct line manager was MD who was the Plant Operations Manager. The claimant was informed at the time of promotion that MD would carry out his performance review. MD departed the company’s employment on the 6th December 2013. However, he conducted a review of the claimant’s probationary period on the 2nd December 2013. During the review they discussed costs incurred by the company although this was not noted in MD’s email which followed that meeting. They also spoke about the fact that the debit note situation was trending downwards under the claimant’s management. The claimant was informed that he had successfully passed the probationary period associated with the role of Quality Manager. An email dated 2nd December 2013 from MD to the claimant confirmed this stating:
In general your performance to date is up to standard and I am happy that your probationary period is successful.
It therefore came as a shock to the claimant to be informed by SOB on the 16th December that he had unsuccessfully completed the probationary period for the position of Quality Manager and that he was being relieved of the position as decided by the owner of the company. The claimant had not received any advance warning that the required standard was not being achieved. He gave evidence of efforts he had undertaken to address costs incurred on grounds of quality.
The situation was confirmed in a brief email to the claimant on the 6th January 2014 stating three areas where the claimant’s performance did not meet the role requirements.
While he did not invoke the grievance procedure the claimant did reply by document dated the 7th January 2014 outlining a detailed response as to why he should not be removed from the position of Quality Manager and refuting the issues raised about his performance.
He stated in the penultimate paragraph:
Whilst I do not accept that the company have any grounds to demote me, in the best interests of my family, and given the current economic climate, I feel I have no choice but to bear the disappointment, humiliation and upset of reverting to my former post of QE, however, it is utterly unreasonable for the company to expect that I agree to a €25,000 reduction in salary when I have not in any way failed in the delivery of the improvements and quality benchmarks expected of me.
It was the claimant’s evidence that SOB told him that if he did not accept the demotion he did not have a job. The claimant’s evidence was that he was initially told that he would revert to his previous role of Quality Engineer with a salary of €45,000 but he was subsequently offered the Continuous Improvement Team Lead position with an increase in salary. He stated that while SOB broadly outlined the role to him in an email he did not actually receive the terms and conditions for this role. During cross-examination it was put to the claimant that he accepted by letter dated 7th January 2014 that he was reverting to his original role with new responsibilities.
The claimant continued to perform the duties of Quality Manager until he was informed by email on the 5th January 2014 that SB was starting in the role the next day.
The Human Resources Manager gave evidence that she and the Finance Manager advised the claimant that his position was redundant in a meeting on the 6th March 2014. She was informed the previous day by SOB of the redundancies and instructed to prepare the letters for the meetings. The claimant was provided with the pre-prepared letter at that meeting and in hindsight the Human Resources Manager realised that she should have tailored the letter and used the word “redundancy” in the letter provided to the claimant.
It was the claimant’s evidence that he was not given advance warning of the redundancy. He was simply asked to the meeting, informed that the company was going through financial difficulties and told that his position had been selected for redundancy with immediate effect. The claimant was completely shocked and was not given an opportunity to bring a representative to the meeting, or to put forward suggestions of alternatives to the redundancy.
The claimant was placed on garden leave and paid until the 6th May 2014 to allow him to seek new employment. He gave evidence of his financial loss and his efforts to mitigate that loss which included securing new employment.
Determination:
For a redundancy defence to succeed it must result from, as Section 7 (2) of the Redundancy Payments Acts 1967, as amended, provides, "reasons not related to the employee concerned". Redundancy is impersonal. Indeed impersonality runs through the five definitions of Redundancy set out at Section 7 (2) of the Redundancy Payments Act 1967, as amended by Section 4 of The Redundancy Payments Act 1971 and Section 5 of The Redundancy Payments Act 2003, provides:
"For the purposes of Subsection (1) an employee who is dismissed shall be taken to be dismissed by reason of redundancy if for one or more reasons not related to the employee concerned the dismissal is attributable wholly or mainly to-
(a) the fact that his employer has ceased, or intends to cease, to carry on the business for the purposes of which the employee was employed by him, or has ceased or intends to cease, to carry on that business in the place where the employee was so employed,
or,
(b) the fact that the requirements of that business for employees to carry out of a particular kind in the place where he was so employed have ceased or diminished or are expected to cease or diminish,
or
(c) the fact that his employer has decided to carry on the business with fewer or no employees, whether by requiring the work for which the employee had been employed (or had been doing before his dismissal) or to be done by other employees,
or
(d) the fact that his employer has decided that the work for which the employee had been employed (or had been doing before his dismissal) should henceforth be done in a different manner for which the employee is not sufficiently qualified or trained, or
(e) the fact that his employer has decided that the work for which the employee had been employed (or had being doing before his dismissal) should henceforth be done by a person who is also capable of doing other work for which the employee is not sufficiently qualified or trained.”
The Tribunal must be satisfied that where an employee is dismissed by reason of redundancy that there must be a redundancy and the redundancy must be the main reason for dismissal.
Was the claimant dismissed by the respondent for performance issues, under the cloak of redundancy?
The dismissal of an employee under the cloak of redundancy is considered by Charleton J in clear, concise and unambiguous terms in the case of JVC Europe Limited V Jerome Panisi 2011 125CA wherein he states "it has been made abundantly clear by that legislation [Unfair Dismissals Act 1977] that, redundancy, while it is a dismissal, is not unfair. A dismissal, however, can be disguised as a redundancy; that is not lawful"......... He goes on "Redundancy, cannot, therefore be used as a cloak for weeding out of those employees who are regarded as less competent than others......if that is the reason for letting an employee go, then it is not a redundancy, but a dismissal".
The respondent was fixated (understandably) with the ‘C’ rating yet there was no evidence produced to the Tribunal that the claimant was responsible for this rating. Even if he was, this should have been dealt with by monitoring his performance and dealing with it in that manner.
This is a performance issue and should be dealt with as such, if appropriate. In this Tribunal's view this is what Charleton J had in mind when he referred to a "dismissal being disguised as a redundancy..[which is]..not lawful"
The Tribunal does not accept that the Respondent acted fairly and reasonably in this case for the following reasons:
- The claimant was informed by email dated 2nd December 2013 from MD that his probationary period had been successful;
- The claimant was understandably shocked to be told on the 16th December 2013 that he had unsuccessfully completed the probationary period for the position of Quality Manager and that he was being relieved of the position as decided by the owner of the company;
- The claimant had not received any advance warning that the required standard was not being achieved. The claimant gave evidence of the efforts he had undertaken to address costs incurred on grounds of quality.
- The Tribunal is satisfied that the respondent had decided, on the 13th December 2013 to replace the claimant as Quality Manager with SB, and the Tribunal accepts as persuasive, the evidence of MR in this matter.
- The claimant was given a pre-prepared letter on the 6th March 2013 that his position was being made redundant. He was not given an opportunity to make representations as to how his job might be saved.
The Tribunal finds that the claimant was unfairly selected for redundancy and is satisfied that the respondent has contravened Section 6 (3) of the Unfair Dismissals Act 1977 which states:
‘Without prejudice to the generality of subsection (1) of this section, if an employee was dismissed due to redundancy but the circumstances constituting the redundancy applied equally to one or more other employees in similar employment with the same employer who have not been dismissed, and either—
(a) the selection of that employee for dismissal resulted wholly or mainly from one or more of the matters specified in subsection (2) of this section or another matter that would not be a ground justifying dismissal, or
(b) he was selected for dismissal in contravention of a procedure (being a procedure that has been agreed upon by or on behalf of the employer and by the employee or a trade union, or an excepted body under the Trade Union Acts, 1941 and 1971, representing him or has been established by the custom and practice of the employment concerned) relating to redundancy and there were no special reasons justifying a departure from that procedure,
then the dismissal shall be deemed, for the purposes of this Act, to be an unfair dismissal.’
Employers must act reasonably in taking a decision to dismiss an employee on the grounds of redundancy. Indeed Section 5 of the Unfair Dismissals (Amendment) Act 1993 provides that the reasonableness of the employer’s conduct is now an essential factor to be considered in the context of all dismissals. Section 5, inter alia, stipulates that:
“…..in determining if a dismissal is an unfair dismissal, regard may be had……to the reasonableness or otherwise of the conduct (whether by act or omission) of the employer in relation to the dismissal”
The respondent falls well short of proving that a redundancy situation existed and that redundancy was the main reason for the dismissal.
As clearly set out in JVC Europe Limited v. Panisi [2011] IEHC 2011 it is not permissible to dress up a dismissal for performance as a dismissal for redundancy. The claimant was not consulted properly or at all in relation to the impending redundancy of his position. He was not given an opportunity to make proposals about how his position might be saved, or to propose alternatives to redundancy.
Having regard to all the circumstances, the Tribunal is unanimous in finding that the claimant was unfairly selected for redundancy under the Unfair Dismissals Acts, 1977 to 2007. The Tribunal deems compensation the most appropriate remedy and, having regard to all the evidence, including the claimant's efforts to mitigate his loss, awards the claimant Fifteen Thousand Euro (€15,000.00).
The Tribunal upsets the Rights Commissioner Recommendation (reference: r-147731-te-14/SR) because the claimant should not have been demoted from the role of Quality Manager, in the first place. Therefore the terms and conditions of employment as provided for that role still stood at the time of the termination of employment.
Sealed with the Seal of the
Employment Appeals Tribunal
This ________________________
(Sgd.) ________________________
(CHAIRMAN)