FULL RECOMMENDATION
SECTION 8A, UNFAIR DISMISSAL ACTS, 1977 TO 2015 PARTIES : STUDENTS UNION COMMERCIAL SERVICES LTD - AND - ALAN TRAYNOR (REPRESENTED BY SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION) DIVISION : Chairman: Ms Jenkinson Employer Member: Ms Connolly Worker Member: Ms O'Donnell |
1. Appeal of Adjudication Officer Decision No. ADJ-00002419.
BACKGROUND:
2. The Employee appealed the decision of the Adjudication Officer to the Labour Court in accordance with Section 8A of the Unfair Dismissals Act, 1977 to 2015 on 27 January 2017. A Labour Court hearing took place on 30 May 2017. The following is the Determination of the Court:
DETERMINATION:
This is an appeal by Mr Alan Traynor against the Adjudication Officer’s Decision ADJ-00002419, CA-00003312-00, which rejected his claim under the Unfair Dismissals Acts, 1977 - 2015 (“the Acts”). Mr Traynor submitted a complaint against his former employer, NUI Galway Students’ Union Commercial Services Limited, alleging that his selection for redundancy was unfair and accordingly he was unfairly dismissed. The Adjudication Officer held that he was not unfairly dismissed and rejected his complaint.
The complaint was referred under the Acts to the Workplace Relations Commission on 21st March 2016. The hearing before the Adjudication Officer was held on 29th June 2016 and the Decision issued on 24th January 2017.
For ease of reference the parties are given the same designation as they had at first instance. Hence Mr Alan Traynor will be referred to as “the Complainant” and NUIG Students’ Union Commercial Services Limited will be referred to as “the Respondent”.
Background
The Respondent is a limited company which operates a number of commercial activities to the university community on the campus of NUl Galway.The Complainant was employed as a Sous Chef by the Respondent from 16th August 2004 to 15th March 2016when he was made redundant. He worked 39 hours per week in the College Bar and was paid €692.50 per week.
Summary of the Respondent’s Position
Mr Gareth Williams, Chief Executive Officer, on behalf of the Respondent, told the Court that as with many businesses, the Company's activities were affected by the downturn in the Irish Economy and the prolonged recession which adversely affected consumer spending. The Respondent recorded overall losses in the three years 2014, 2014 and 2015. He said that the College Bar Catering was the least well performing unit of the company, recording consecutive losses since 2013 of almost €700,000.
Mr Williams said that given these extreme financial difficulties the company faced the very real possibility of insolvency and its ability to continue as a going concern.
In 2014, the Company entered into negotiations with NUl Galway to extend its licence agreement to operate commercial services on campus at NUlGalway. The University made itvery clear that, in order to retain concessions on campus each individual unit had to be commercially viable in its own right. On the basis of the conditions being met, the licence agreement was extended in January 2015.
It was against this background that extensive cost saving measures were explored, including redundancies. The positions identified as being redundant included:-
• Duty Manager, The College Bar/Catering Services
• The Supervisor, Smokey's Cafe
• 'Sous Chef', The College Bar
A voluntary redundancy scheme was offered. This was accepted by the College Bar Duty Manager and the Smokey's Cafe Supervisor. The Complainant was declared redundant in February 2016.
- Consultation Meetings
A meeting was held with the Complainant on 13th January 2016 when he was informed that the selection criteria for redundancy included the turnover, profitability and size of the unit or sub-unit, and that while no decision had been made yet, his position had been considered for redundancy. It was explained that the Respondent intended to continue to look at all options and alternatives, and invited him to make any suggestions that might help.
At a further meeting held on 19th January 2016 the Complainant was given the opportunity to suggest potential alternatives to redundancy and to advise him of possible alternatives being considered by the Respondent.
The Complainant was invited to have a colleague in attendance at these meetings, however, he declined to do so. The Complainant made a couple of suggestions which were then discussed -removing the provision of staff meals;restricting the staff meal scheme to staff from particular units;asking the University to waive payment of its concession fee etc. However, Mr Williams stated that either the suggestions were not feasible or any savings resulting from them would be negligible and would not arrest the losses being made.
Mr Williams said that it was explained to the Complainant that whilethe role of Sous Chef would cease to exist,the possibility of redeploying him was under consideration. However, the most suitable option would inevitably necessitate different duties, rates of pay, shift patterns and responsibilities.
At the third consultation meeting which took place on 27th January 2016, at which the Complainant was advised that it was not possible to proceed with any of his suggestions and that, while every effort had been made to find one, no suitable alternative position was available at the time. Therefore, he was being made redundant. The Complainant was given the option to appeal that decision, which he duly did.
Mr Chris Newell, Company Secretary was appointed to hear the appeal, which was held on 25thFebruary 2016. At the appeal the issue of cost saving alternatives was again discussed and the Union, on behalf of the Complainant questioned why no ex-gratia package (as had been offered five years previously) had been offered to attract volunteers, whereby the Respondent could recoup the initial outlay over a period of time.The Respondent stated that it was not in a position to make additional payments as a result of its severe financial difficulties. It reiterated its position in regard to cost savings and stated that there were noother alternative positions in College Bar Catering suitable for redundancy which could lead to a suitable alternative position for the Complainant.
- Appeal of Redundancy Decision
At the appeal hearing the Union submitted that the 'last in, first out' principle had not been observed. It claimed that a third chef has been employed in the previous twelve months who was currently undertaking "chef like duties"and who was being retained ahead of the Complainant. Mr Newell concluded that as theposition of Sous Chef was a stand-alone position, therefore there was no selection pool from which to apply ‘the last in, first out’ principle.
Based on the reasoning set out above Mr Newell found that there were no grounds to overturn the decision to make the Complainant redundant, therefore the appeal was rejected.
- Respondent’s Arguments
Mr Williams contended that the dismissal on redundancy grounds was fair. He held that the Respondent had no alternative but to terminate the Complainant’s employment and make him redundant. He submitted that theperson referred to as "the third chef" was not employed as a chef and did notcarry out chef duties. Her main duties included setting up the College Bar Deli and assisting in carvery service at lunchtime. She was not employed as a ‘Commis Chef’, or another kind of chef, she was not qualified or experienced for such a role and could not stand-in for the Head Chef. She was not completing the tasks previously carried out by the Complainant. She was paid at a level far belowwhat would have been saved if the Respondent had made any of the more senior positions redundant.
Mr Williams explained that a Sous Chef (also sometimes referred to as the 'Second Chef’)acts as the second-in-command in a kitchen, and may be responsible for scheduling the kitchen staff, or substituting when the Head Chef is off-duty. This person is accountable for the kitchen's inventory, cleanliness, organisation, and the continuing training of its staff. The Sous Chef would also be responsible when the Head Chef is absent. Followinghis dismissal, the Head Chef assumed the duties previously carried out by the Complainant and not the junior/inexperienced member of staff. This he had done by changing and extending the length of his own shifts and the Respondent has outsourced a number of activities previously undertaken by the Sous Chef, including the baking of scones and brown bread etc.
Mr Williams stated that since the Complainant’s redundancy, the College Bar had undergone dramatic changes to ensure its survival. He said that the Respondentcontinues to exist because its cost base has been reduced so drastically. He said that it continues its efforts torecover and rejuvenate the business and to safeguard employment in what is now a leanersmaller business.
Summary of the Complainant’s Case
Mr Paul Hardy, SIPTU, on behalf of the Complainant, submitted that the Complainant’s selection for redundancy was unfair and he sought his reinstatement to his previous position.
Mr Hardy submitted that the Complainant’s duties as Sous Chef had been taken over by a person employed in September 2015 whom the Complainant describes as that of 'third chef' or 'commis chef'. This worker’s duties overlapped between his previous duties and hers. She did all the cooking, preparing and serving duties in the College Bar that he and the head chef previously performed.
Mr Hardy stated that the Complainant was not told which other positions were being considered for redundancy and he was not aware of any other members of staff having been invited for consultation on the matter.
The Complainant was notified by letter of 3rd February 2016 of the decision of the employer 'to make the position of Sous Chef redundant'as 'the current financial situation of the Company has left us with no other alternative'. He appealed the decision on the ground that 'cost saving alternatives have not been adequately pursued'.It was put to the appeals officer that it was not appropriate for a unit losing money to be providing free meals to staff or to provide discounts for Students' Union events.It was also put that the company was forecasting a reduction in the annual deficit from €230,000 to €70,000. These arguments were rejected.
The second appeal ground was that 'no voluntary redundancy option has been explored and no ex-gratia package has been offered'. This argument was rejected.
The third appeal ground was that 'As no suitable voluntary process was explored, the prospect of redeployment or re-assignment is narrowed'. In rejecting this ground, the appeal officer made it clear that, from 13th January 2016, the employer's position was that 'no other position was suitable for redundancy' therefore no voluntary redundancy elsewhere would have been made.
The fourth appeal ground was 'unfair selection for redundancy; the last in, first out principle has not been observed.' It was put to the appeals officerthat the employment of a 'third chef' recruited a mere four months before the redundancy, undertaking similar duties to the Complainant and to whom the duties of his position would devolve was a breach of the'last in, first out' (LIFO) principle. He added that the Complainant’s position was targeted on the basis of its title and the associated level of remuneration, consequently the selection of his position for redundancy was unfair.
The appeals officer concluded that since there was only one Sous Chef, there was no selection pool within which to apply LIFO. Furthermore, he held that the ‘third chef' was not a chef, she 'did not carry out chef duties'. The appeals officer informed the Complainant that it was the Head Chef who would be assuming the duties formerly performed by him and not the 'third chef'.
- Complainant’s Arguments
Mr Hardy contended that theemployer conducted a sham redundancy consultation exercise with the Complainant. He was not given any indication that other positions were being considered for redundancy, there were no redundancy consultation meetings with any other members of staff. On that basis he maintained that the Court should infer that the decision to dismiss the Complainant and him alone for redundancy was taken before the consultation process commenced.He contended thatthe Respondent did not conduct a fair and transparent process applying objective selection criteria in reaching that conclusion, and nor did it even consider selecting ‘the third chef’,an employee of four months' standing with no entitlement to a statutory redundancy payment,or the Head Chef, despite these workers both working in the same unit as the Complainant and with considerable overlap in their duties.
In support of his contention, Mr Hardy citedEmployee v EmployerUD1826/2010 where the EAT held that“objective selection criteria are needed in order to carry out a proper redundancy procedure” and inEmployee v EmployerUD206/2011 the EAT held that:
- “When an employer is making an employee redundant, while retaining other employees,the selection criteria being used should be objectively applied in a fair manner. While there are no hard and fast rules as to what constitutes the criteria to be adopted nevertheless the criteria adopted will come under close scrutiny if an employee claims that he/she was unfairly selected for redundancy... Where there is no agreed procedure in relation to selection for redundancy,as in this case, then the employer must act fairly and reasonably.”
Mr Hardy stated that the Complainantwas unemployed from the date of dismissal until 13th June 2016.However,his new employment is at the considerably lower rate of €9.50 per hour, Moreover,although now back in employment,the Complainantlost protection against unfair dismissal for a year and the right to a redundancy payment for two years.
STATUTORY PROVISIONS
Section 6(1) of the Unfair Dismissals Act 1977 provides that:-
- Subject to the provisions of this section, the dismissal of an employee shall be deemed, for the purposes of this Act; to be an unfair dismissal unless, having regard to all the circumstances, there were substantial grounds justifying the dismissal.
Section 6(4)(c) of the 1977 Act provides that:-
- Without prejudice to the generality of subsection(1)of this section, the
dismissal of an employee shall be deemed, for the purposes of this Act, not to be an unfair dismissal, if it results wholly or mainly from ... the redundancy of the employee...
Section 6(7) of the 1977 Act provides that:-
Without prejudice to the generality of subsection(1)of this section, in
determining if a dismissal is an 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...
Conclusions of the Court
The burden of proof rests with the Respondent to establish that the dismissal was wholly redundancy connected and must justify the selection process whereby the Complainant was selected for redundancy.
Having considered the submissions made the Courtis satisfied that the Respondent was faced with having to reduce costs and the decision to make three employees redundant in early 2016 was taken for economic reasons. Therefore the Court is satisfied that a genuine redundancy situation existed at the time. In circumstanceswhere redundancy is unavoidable, the employer is obliged to establish reasonable and objective criteria for selection and must apply those criteria fairly. Therefore, the Court must examine whythe Complainant was selected for redundancy.
InMulcahy v Kelly[1993] E.L.R. 35, , the EAT held that “it is well established that there is an obligation on an employer to look for an alternative to redundancy”. It held:-
- “Having heard the evidence presented the Tribunal is satisfied that a redundancy situation existed in September 1990 when the decision was made to terminate the claimant's employment. It is our opinion that the claimant's dismissal resulted wholly or mainly from reasons of redundancy.
Notwithstanding that the claimant's selection for redundancy was not in contravention of a procedure or an established custom and practice of the employment relating to redundancy, there is an obligation on an employer to look at all employees as possible candidates for redundancy.”
In its determination inGillian Free v Oxigen EnvironmentalUD 206/2011, the Employment Appeals Tribunal noted that“when an employer is making an employee redundant while retaining other employees, the selection criteria being used should be objectively applied in a fair manner. While there are no hard and fast rules as to what constitutes the criteria to be adopted nevertheless the criteria adopted will come under close scrutiny if an employee claims that he/she was unfairly selected for redundancy….where there is no agreed procedure in relation to selection for redundancy….then the employer must act fairly and reasonably”.
The provisions of Section 6(7) of the Act (as amended) in relevant part as follows:-
- (7) Without prejudice to the generality of subsection (1) of this section, in determining if a dismissal is an 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, and
(b)to the extent (if any) of the compliance or failure to comply by the employer, in relation to the employee, with the procedure referred to insection 14(1) of this Act or with the provisions of any code of practice referred to in paragraph (d) (inserted by the Unfair Dismissals (Amendment) Act, 1993) ofsection 7(2) of this Act.”
- (a)to the reasonableness or otherwise of the conduct (whether by act or omission) of the employer in relation to the dismissal, and
In the instant case, the Court is satisfied that the Respondent did follow a consultation process with the Complainant to inform him that his role in the Company was being considered for redundancy. The Complainant was given the opportunity to make suggestions as to why he should be retained and on alternatives that might be considered. However, the Court is not satisfied that the Respondent has demonstrated that it gave due consideration to the suggestions made and/or to the possibility of alternative employment options that may be available.
The Court notes that at the consultation meeting held on 13th January 2016, reference was made to consideration of options and/or suggestions being put forward by both sides. At the consultation meeting of 19th January 2016, the Respondent explained to the Complainant that a number of alternatives were under consideration and that the most suitable possible alternatives was redeployment, which may even entail different duties, pay rates, shift patterns and responsibilities. By 27th January 2016 the Complainant was informed that no suitable alternative position was available and he was being made redundant.
The Court notes that the Complainant had almost twelve years’ service. The Respondent had a number of business units and had fluctuating numbers of staff employed. The Court was presented with no information to demonstrate that the Respondent carried out a thorough exercise to consider alternative options/suggestions. The Court can accept that had such an exercise being carried out it may not have identified any alternative positions suitable to the Complainant, however, it seems clear that no such exercise was engaged in. On that basis the Court finds that the approach adopted by the Respondent was somewhat arbitrary and therefore by reference to Section 6(7)(a) of the Act, the dismissal of the Complainant was unfair.
Determination
In all the circumstances of this case, the Court finds that the Complainant was unfairly dismissed.
The Court requires the Respondent to pay the Complainant the sum of €12,000 being the amount the Court considers just and equitable taking account of the statutory redundancy payment already paid to him. Accordingly, the Decision of the Adjudication Officer is overturned.
The Court so Determines
Signed on behalf of the Labour Court
Caroline Jenkinson
LS______________________
7 June 2017Deputy Chairman
NOTE
Enquiries concerning this Determination should be addressed to Louise Shally, Court Secretary.