ADJUDICATION OFFICER DECISION

Adjudication Reference: ADJ-00004957

Parties: 

Complaint:

Date of Adjudication Hearing: 5th January 2017

Workplace Relations Commission Adjudication Officer: Kevin Baneham

Location of Hearing: Dublin

Procedure:

On the 14^th September 2016, the complainant referred a complaint to the Workplace Relations Commission pursuant to the Redundancy Payments Acts. The complaint was scheduled for adjudication on the 5^th January 2017. The complainant was a Managing Director and the respondent company provided graphic design and displays, and has since entered liquidation. The complainant attended the adjudication, as did a representative of the liquidator.

In accordance with Section 39 of the Redundancy Payments Acts 1967 - 2014 following the referral of the complaint to me by the Director General of the Workplace Relations Commission, 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.

Background:

The complainant seeks his entitlement to a redundancy lump sum payment from the respondent, a limited company now in liquidation.

Summary of Complainant’s Case:

The complainant commenced employment with the respondent on the 23^rd August 1993 and was appointed Managing Director in September 2014. He reported to the board of the respondent limited company and dealt with a person he referred to as the owner. He had previously held sales and project manager roles, and later became sales director prior to his appointment as managing director. The complainant said that he had presented options to the board of directors regarding the development of the respondent, and while the respondent had made commitments, nothing had been forthcoming. He outlined that sales had increased in 2015 and were the best results for seven years. While margins had reduced, they remained strong. It was the owner who managed the finances and issues had arisen with Revenue. The County Sheriff had attended the business and the complainant’s car was repossessed in order to meet an unpaid VAT return. The owner had informed the complainant that an arrangement had been made with Revenue and the complainant was not directly involved or responsible for these interactions. 

The complainant outlined that he tendered his resignation on the 1^st April 2016 and in conversation with the owner of the respondent, he offered to work out his notice period. The owner replied that the complainant could leave immediately and in effect, the complainant was placed on garden leave. The complainant said that he felt that he had no choice but to resign, despite the years he had spent building up the business. He issued his resignation by letter of the 1^st April 2016 and also met with the owner in a local hotel. The complainant expected to work his notice out and had lined up projects to manage in this time. The owner and the complainant discussed his immediate departure from the business, and later returned his company mobile phone and laptop. The complainant outlined that the last pay cheque he received was that of the end of March 2016. The complainant outlined that he was never paid for outstanding annual leave and that he had an entitlement to 30 days per calendar year. The complainant’s gross weekly wage was €1,557.

Summary of Respondent’s Case:

The representative of the liquidator outlined that the respondent company went into liquidation on the 19^th April 2016. As part of the liquidation process, the liquidator had filed a report with the Director of Corporate Enforcement and this included comments made to it by the complainant. The representative of the liquidator said that it was usual for employees to seek the payment of wages, holiday pay and redundancy and it was unusual for an ex-employee to seek such entitlements. He said that other employees of the respondent had attended the creditors meeting and were paid their lump sum entitlements. This is a liquidation in funds. The representative of the liquidator said that it was their information that the complainant had resigned on the 1^st April 2016 and they had no submission to make as to whether he remained in employment as of the 19^th April 2016, the day the liquidator was appointed. He noted that the remaining directors of the respondent had met on the 4^th April 2016 to initiate the winding up process and this was the date of the 14-day notice of the creditors meeting.

Findings and Conclusions:

The complainant’s employment with the respondent commenced on the 23^rd August 1993 and came to an end following his resignation in April 2016. He resigned by letter and also spoke with the person referred to as “the owner” but it is important to record that the complainant’s employer was a limited company. It was of assistance that the liquidator attended the adjudication and it did not contradict any of the complainant’s evidence, except to say that the complainant had resigned prior to the appointment of the liquidator.

Having considered the evidence of the parties, I find that the complainant has established his entitlement to a redundancy lump sum payment pursuant to the Redundancy Payments Acts. I make this finding for the following reasons. As argued by the complainant, he tendered his resignation on the 1^st April 2016 with the intention of serving out his notice. He says he expected to work the month out. It was the owner who told him that he could go immediately. It is important to note that the complainant was the Managing Director and reported to a board of directors. His employer was the respondent company. While the owner told the complainant he could leave immediately, there is nothing from the employer itself to indicate this. Separate legal personality of companies is a fundamental legal principle and it is wrong to impute comments made by a single director as actions of the employer, the limited company. It stands that the complainant was serving out his notice as of the director’s meeting of the 4^th April 2016 and as of the appointment of the liquidator on the 19^th April 2016.

 Furthermore, I am satisfied that the complainant is entitled to a redundancy lump sum payment on the following grounds. In order to be entitled to statutory redundancy, the complainant must have been dismissed by reason of redundancy. Section 9 of the Redundancy Payments Act provides for situations where an employee is dismissed by an employer within the scope of the Acts. Section 9(1)(c) provides that an employee shall be taken to be dismissed by his employer if “the employee terminates the contract under which he is employed by the employer in circumstances … such that he is entitled to terminate it by reason of the employer’s conduct.” As referenced by Anthony Kerr “Irish Employment Legislation”, the Employment Appeals Tribunal in McCann v. Vantage Wholesale Ltd (RP 253/2001) held as follows:

“The word conduct in subsection (c) above does not mean conduct which is necessarily blameworthy, but conduct that can be looked at factually. In the present case the employer’s conduct comprised closing the business. The respondent wanted to continue the claimant as a debt collector with no sales function, and while debt collection had probably always been one of his functions, the primary and no doubt major aspect of his work was selling. Therefore, the nature of his contract of employment was being changed from a long-term sales job, with some debt collecting, to a short-term job of debt collecting with no future sales functions… In terms of the law of contract, the appellant was entitled to treat this action as repudiation of the contract of employment. In other words, the employer had made it clear that it was not going to be continually bound by the existing contract of employment. Given these principles it seems clear to [the Tribunal] that the appellant was “entitled” to treat the employer’s actions as a repudiation, and therefore the case falls within section 9(1)(c) of the Acts.”

In considering the wording of section 9(1)(c) and McCann v. Vantage Wholesale Ltd, I was struck by the complainant’s evidence that he felt that he had no choice but to resign. He gave an example of, as Managing Director, he sought to advance development plans for the respondent but he did not receive support from the board to bring these plans to fruition. He gave the alarming example of the County Sheriff seizing assets of the respondent, including his company car. I was struck that the complainant did not have notice of this action or the underlying debt issue. Taking these circumstances together, I find that the respondent acted in such a way as to repudiate the complainant’s contract of employment. He has, therefore, established an entitlement pursuant to the Redundancy Payments Acts to statutory redundancy.

The complainant is entitled to a redundancy lump sum payment in accordance to the following criteria:

Date of commencement: 23^rd August 1993

Date of termination: 19^th April 2016

Gross weekly pay: €1,557

This award is made subject to the complainant having been in insurable employment under the Social Welfare Acts and it should be noted that a statutory wage ceiling of €600 per week applies.

Decision:

Section 39 of the Redundancy Payments Acts 1967 – 2014 requires that I make a decision in relation to the complaint in accordance with the relevant redress provisions under that Act.

 I decide that, pursuant to the Redundancy Payment Acts, the complainant is entitled to a redundancy lump sum calculated according to the following criteria:

Date of commencement: 23^rd August 1993

Date of termination: 19^th April 2016

Weekly gross pay: €1,557

This award is made subject to the complainant having been in insurable employment under the Social Welfare Acts during the respective period of employment and subject to the statutory wage ceiling of €600 per week.

Dated:   12^th June 2017

Workplace Relations Commission Adjudication Officer: Kevin Baneham

Key Words:

Redundancy Payments Act

Notice

Dismissal arising from the conduct of the employer

McCann v. Vantage Wholesale Ltd (RP 253/2001)