ADJUDICATION OFFICER DECISION

Adjudication Decision Reference: ADJ-00000764

Complaint(s)/Dispute(s) for Resolution:

Date of Adjudication Hearing: 22/03/2016 and 13/12/2016

Workplace Relations Commission Adjudication Officer: Joe Donnelly

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 complaint(s) to me by the Director General, I inquired into the complaint(s) and gave the parties an opportunity to be heard by me and to present to me any evidence relevant to the complaint(s).

Complainant’s Submission and Presentation:

Respondent’s Submission and Presentation:

The complainant was dismissed arising from a finding that he had seriously breached the loyalty, fidelity and exclusivity of service provisions in his contract of employment. It was determined that the trust and confidence between the respondent and the complainant had been destroyed by his actions. The complainant’s employment was terminated following a thorough and fair disciplinary process during which the complainant was afforded full natural justice rights.

The complainant was responsible for setting his own hours of work whilst employed by the respondent therefore any issue regarding hours is not one for which the respondent is responsible. Notwithstanding this, the complainant is time-barred under the Organisation of Working Time Act from making a complaint for any period prior to 22 May 2015, without reasonable cause for the delay in making such a complaint, and there is no such reasonable cause in the circumstances.

Decision:

Section 41(4) of the Workplace Relations Act 2015 requires that I make a decision in relation to the complaint 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 Act.

Issues for Decision:

Was the respondent in breach of the provisions of the Unfair Dismissals Act, 1977, when deciding to terminate the employment of the complainant?

Were the complainant’s working hours in excess of the limits provided for in the Organisation of Working Time Act, 1997?

Legislation involved and requirements of legislation:

Section 6(1) of the Unfair Dismissals Act, 1977, states:

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) of the Act states:

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 one or more of the following:

1. The capability, competence or qualifications of the employee for performing work of the kind which he was employed by the employer to do,

2. The conduct of the employee,

3. The redundancy of the employee, and

4. The employee being unable to work or continue to work in the position which he held without contravention (by him or his employer) of a duty or restriction imposed by or under any statute or instrument made under statute.

Section 15(1) of the Organisation of Working Time Act, 1997, states:

An employer shall not permit an employee to work, in each period of 7 days, more than an average of 48 hours, that is to say an average of 48 hours calculated over a period (hereinafter in this section referred to as a “reference period”) that does not exceed –

(a)  4 months, or

(b)  6months –

(I)  In the case of an employee in an activity referred to in paragraph 2, point 2.1 of Article 17 of the Council Directive, or

(ii)  Where due to any matter referred to in section 5, it would not be practicable (if a reference period not exceeding 4 months were to apply in relation to the employee) for the employer to comply with this subsection…

Decision:

The complainant was employed as a Regional Manager with the respondent, a U.S. based supplier of products to the livestock industry. His employment had commenced in October 1999 and it terminated by reason of dismissal in July 2015. His salary was €5,700.00 per month gross.

The hearing was spread over two days. The first day of hearing was on 22 March 2016 in Carlow. Two out of three of the respondent’s witnesses were heard from on that day with the evidence of one being completed. The respondent requested that the next hearing be fixed for Dublin as their witnesses were based in the U.S.A. Difficulties arose with regard to finding a suitable date. Finally on 2 November 2016 the parties were advised that the resumed hearing would take place on 13 December 2016. The respondent’s representatives applied for a postponement on the grounds that their witnesses could not travel to attend on that date due to prior business commitments and that they had previously supplied dates of their availability. The secretariat refused this request and the subsequent appeal. I was asked to review this matter but could find no reason to overturn the secretariat’s decision. When the second day’s hearing opened the respondent’s representative advised that the witnesses were not present for the reasons identified and again requested that the hearing be postponed. The complainant’s representative stated that they had been waiting some time for this resumed hearing and could not agree to a further postponement. Having adjourned to again consider the matter I advised the parties that the decision stood and the hearing would proceed. The respondent’s representative then stated that his instructions were to withdraw from the hearing and he accordingly left the room. The hearing then proceeded with testimony from the complainant.

The complainant’s job was to oversee the work of the sales representatives working in his area. He worked from home and reported to the International Operations Manager who was based in the U.S.A.   A large amount of the complainant’s work was under his own direction. In late 2013 the respondent became aware that the complainant had formed and was a director of another company involved in the agricultural business. There was a conversation between the parties regarding this matter in December 2013 but by that stage the respondent had closed down that enterprise and he so advised.  Nothing further was mentioned by the respondent regarding this matter at that time. Also at that time the respondent circulated contracts to staff in Ireland as prior to that there had been no formal contracts in writing. The contract included a clause which stated that the employee would not compete with the respondent, not engage in any form of business or employment without consent, notify the respondent of any potential or actual conflict of interest and not to assist a third party to do any of these things. The contract was signed by the complainant on 1 April 2014.

In June 2015 the complainant’s line manager became aware that the complainant was a director of another company and a search of company records showed that this company had come about by way of a change of name from the company that had been the subject of the discussion in December 2013. This new company provided a range of agricultural products to farmers. There was an international company based in Switzerland, with the same general title as the Irish company, which manufactured and distributed these products. The line manager began an investigation including reviewing the website of the international company to analyse its products and compare them to the respondent’s products. He consulted with the respondent’s Dairy Nutritionist (based in the U.S.A.) in this regard who reported that one of the products would be in direct competition with a number of the respondent’s products.  On 2 July 2015 the line manager telephoned the complainant, informed him of the investigation and of the fact that complainant appeared to be in violation of his contract and advised him that he was being placed on paid suspension with immediate effect. This was followed by a letter of the same date enclosing a copy of the manager’s report stating that his actions appeared to be a violation of his contract. That report further stated:

“This may constitute gross misconduct or other grounds for terminating the employment of Mr. D as set out in clauses 15.2(a), (b) and (c) of the Contract of Employment.”

The letter advised that a disciplinary hearing, conducted by the respondent’s National Sales Manager, would be held on 9 July 2015, the purpose of which was to allow the complainant address the issues raised in the report. The letter also stated that “the disciplinary process will now proceed in accordance with the Company’s disciplinary procedures” and advised the complainant of his right of representation.

In the event the hearing was postponed and eventually took place on 21 July 2015 in a Dublin hotel.

Prior to that the complainant received a phone call from the line manager enquiring as to who would be his representative at the hearing. The manager also asked the complainant how he thought the hearing would go. The complainant felt that this was an inappropriate remark. When the complainant and his representative arrived at the hearing they discovered that the line manager was attending as a notetaker. They objected and, after consideration, that person withdrew. The main points put forward by the complainant at the hearing were that the product marketed by his company was not a competing product, that there was therefore no conflict of interest and that management were aware that other members of the staff employed by the respondent also were involved in outside businesses. The understanding of the complainant was that he would receive the notes of the meeting prior to any decision being issued.

On 24 July 2015 the National Sales Manager sent a letter to the complainant by email informing him that his employment was being terminated with immediate effect on the grounds of gross misconduct and attached a memo from the respondent’s Dairy Nutritionist refuting the complainant’s assertion with regard to the product not being in competition with their products. The complainant was also advised of his right to appeal the decision to a Director.

On 30 July 2015 the complainant replied with notification of his appeal and requesting information on the company’s disciplinary procedures. The Director responded pointing out that the procedures were those referred to in his contract and attached a copy of the LRC Grievance and Disciplinary Procedures in this regard. The complainant, as requested, then forwarded a comprehensive written submission detailing the grounds of his appeal. The appeal hearing, which took place on 30 September 2015, was in the form of a video conference call as the Director was in the U.S.A. Following the hearing there was further correspondence between the complainant’s representative and the Director particularly in regard to the draft minutes of the appeal hearing. On 30 October 2015 the Director wrote to the complainant advising that his appeal had been unsuccessful and detailing the reasons why the various grounds of appeal had been rejected.

The three main reasons on which the complainant bases his claim for unfair dismissal are that the procedures utilised by the respondent were flawed, that the allegations against him were unproven and that the sanction of dismissal was excessive.

Procedures:

The complainant stated that he had never received a copy of the respondent’s Disciplinary Procedures. Section 17.1 of the complainant’s contract of employment states:

“In dealing with grievance and disciplinary matters the Company shall apply the Industrial Relations Act 1990 Code of Practice on Grievance and Disciplinary Procedures or a procedure based primarily thereon.”

From the evidence it would appear that the complainant’s first sight of this document occurred when he notified the respondent of his appeal of the dismissal and requested a copy of the procedure. Section 14(1) of the Unfair Dismissals Act, 1977, states:

An employer shall, not later than 28 days after he enters into a contract of employment with an employee, give to an employee a notice in writing setting out the procedure which the employer will observe before and for the purpose of dismissing the employee.

The respondent was in breach of this section of the Act.

The complainant stated that he was not interviewed as part of the investigation and was only informed of same after the investigation was concluded.

The complainant’s line manager conducted the investigation without reference to the complainant and the decision to proceed to a disciplinary hearing was made by the manager after that investigation. The investigation was not a complete one and was therefore flawed in that regard.

The complainant objected to the fact that the line manager was present to take notes at the disciplinary hearing, particularly having regard to the fact that the manager had enquired in a phone call as to how the complainant felt that the hearing would go.

When the complainant’s representative raised this objection at the start of the hearing the manager concerned took no further part in those proceedings. The complainant was therefore not prejudiced in this regard.

The complainant stated that the decision by the National Sales Manager was incorrect as he took into consideration a report from the respondent’s nutritionist obtained after the hearing and also included a further alleged breach of contractual obligations that had not formed part of the notice convening the disciplinary hearing.

The report of the nutritionist is dated 23 July 2016, two days after the disciplinary hearing. It was obviously not put to the complainant at the hearing. The letter of dismissal also states that “you were discovered to be in violation of clause 3.3(k) at the disciplinary hearing”. This clause had not been mentioned in the report that led to the disciplinary hearing. The procedures in that respect were therefore flawed.  

Allegations:

The complainant has argued that the allegation that he was involved in marketing a product that was in direct competition with the respondent’s products is incorrect. The product referred to is a slurry enhancer and is sold on the Irish market by a third party under an agreement with the complainant’s company. He had originally got involved with it through his interest in farmyard Health and Safety, particularly with regard to slurry. The complainant further stated that the website referred to does not belong to his company but is controlled by the UK based arm of the international company. Finally the complainant contends that other employees have business interests outside of their employment.

The respondent’s position is that the contents of the product are similar to their products and have been scientifically adjudged as such by their nutritionist. The website listed the competing products available in Ireland. The respondent had already conveyed their concern to the complainant in respect of involvement with other businesses and his contract of employment specifically forbade such involvement. Any other employees who have outside interests have notified the respondent of same and in most cases they are complimentary to their positions with the respondent.

The respondent, in reaching their conclusions as regards the products being similar and therefore in competition with them, relied twice on the analysis conducted by their in-house nutritionist. This person did not give evidence to the hearing. His second input to the disciplinary portion of the process was not made available to the complainant either prior to or at the disciplinary hearing. Based on the evidence before me it has not been proven that the products concerned were directly competitive. In addition, it would appear that some of the other employees have business interests outside of those that could be considered complimentary to the respondent’s business.

Proportionality of Sanction:

In relation to the proportionality of the sanction the LRC Code of Practice does include a choice of disciplinary actions that may be applied. The respondent stated that the decision to opt for dismissal was based on the fact that the complainant was a director of a competitive company, that his association with this company had been the subject of queries from his own staff and because he was a senior member of management with the respondent, therefore a higher standard was expected from him. However, on the previous occasion that the respondent became aware of the complainant’s involvement in an outside business the matter had been raised in an informal manner at the end of another meeting and nothing put on record as regards concerns that the respondent might have in this regard. There is an obvious contrast between the two approaches.  

The respondent also invoked Clause 15.2 of the contract which states that the company may terminate employment where the employee is guilty of gross misconduct or gross negligence. No examples of what constitutes gross misconduct are included in the contract and in any event the decision to terminate employment is still discretionary.

Complaint No. CA-00001020-001:

Based on all of the above I find that the dismissal was unfair and the complaint under the Unfair Dismissals Act, 1977, succeeds.

There is, however, the question of the complainant’s contribution to this situation. Clause 3.3(i) of the complainant’s contract states:

“not without the prior written consent of the Company engage in any form of business or employment other than your employment with the Company or the Group (whether inside or outside your normal hours of work).”

The background is that these new contracts were circulated to staff at the end of 2013. The complainant had concerns in relation to his contract and some alterations were made prior to him signing it in April 2014. This clause is quite specific and does not mention competitive companies or conflict of interests. The complainant had the contract in his possession for three months and queried clauses that he was unhappy about. It is clear therefore that he should not have been in any doubt as regards the potential conflict that this clause and his continued involvement with the other product would cause. Clarification at the very least was called for. I therefore find that the complainant made a significant contribution to the situation leading to his dismissal.

Taking everything into consideration I order the respondent to pay the complainant the sum of €57,500.00 as compensation in this regard.

Complaint No. CA-00001020-002:

This is a complaint under the Organisation of Working Time Act, 1997, to the effect that the complainant was required to work excessive hours and not provided with the opportunity to take daily breaks. The complaint was lodged on 22 November 2015. The complainant was suspended from duty on 2 July 2015. No application was made in relation to the extension of the time limit of six months prior to the date of filing of the complaint. The respondent argued that the complainant was one of two senior managers in Ireland and was responsible for setting his own hours and ensuring legal compliance in that regard. No complaint had been received by the respondent’s head office from the complainant in relation to this matter.

Section 3(2)(c) states that Part II of the Act does not apply to:

A person the duration of whose working time (saving any minimum period of such time as is stipulated by the employer) is determined by himself or herself, whether or not provision for the making of such determination by that person is made by his or her contract of employment.

No direct evidence was made at the hearing in regard to this matter.

Having regard to the above I find this complaint not to be well founded and it therefore fails.

Dated:   10^th March 2017