Complainant

Respondent

Anonymised Parties

A General Manager

An Engineering Company

Act

Complaint Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under Section 8 of the Unfair Dismissals Act, 1977

CA-00013077-001

10/08/2017

The respondent’s business was established in 1986 and is engaged in mechanical and electrical services for construction projects. Several subsidiaries involving project-management, design and build, R&D, pre-fabrication and commission and validation have been set up under the parent company. These are all under the control of the current owner and Managing Director (MD).   In 2009, the company developed a new product, a panel duct system system that commenced production in 2015.   Because of the potential for significant growth and international sales of this product, the company secured grant aid from Enterprise Ireland. Enterprise Ireland was also instrumental in enrolling the company in Dublin City University’s “Management for Growth Programme” in 2015-2016.   This involved a strategic review of the company and a recommendation that a general manager (GM) be appointed to oversee the operation of the subsidiary businesses and to modernise the management structure. It was also intended that this would free up the MD from day-to-day responsibilities so that he could focus on the growth of the new panel duct product and other development opportunities.

On April 4th 2016, the complainant was appointed as GM on a salary of €140,000.   Depending on the net profit achieved by the company in any year, he could also benefit from a bonus scheme which could deliver up to €50,000 per year. In his evidence, he said that this bonus was guaranteed.

The company went into examinership in December 2016 and on February 13th 2017, the complainant’s employment was terminated due to redundancy. As his contract provided for a notice period of three months, his service ran to May 12th 2017. His complaint is that his dismissal was unfair and that it was not a genuine redundancy, but an adverse response on the part of his employer to his decision to make a bid for the company.

The Complainant’s Role

A copy of the complainant’s job description was submitted in evidence. His responsibilities were those usually associated with that of a group general manager and included day-to-day management of the businesses, sales and marketing, financial and people management and health and safety.   He was also expected to develop the senior team and to work towards the expansion of the company’s products outside Ireland.

Examinership

In the months following the appointment of the complainant as GM in April 2016, the company encountered serious difficulties which resulted in the group going into examinership on December 7th of that year. At the hearing we heard that the role of the examiner is to oversee the business for a period of 100 days, to assess its viability and to review proposals from interested parties prepared to invest in and take over the running of the company. At the end of 100 days, the examiner makes a recommendation to the High Court with regard to which proposal, if any, is the best option to ensure the viability of the business in the interests of creditors, clients and employees. If the examiner is not satisfied that the business is viable, it goes into liquidation.

From the date of the examinership, the MD and the complainant continued to run the business and made efforts to reduce costs. A HR consultant joined the company as an external advisor.   Another consultant, who gave evidence at the hearing, said that he had been involved with the company in 2015 through the Enterprise Ireland intervention. When he heard about the examinership in the media, he said that he phoned the MD to offer assistance. In his evidence, he said that he had worked in the past with two companies in examinership and had steered them through the process. With the help of these two advisors, the MD and the complainant worked on a proposal so that the company could remain in the ownership of the MD.   Their focus was on developing a business case that showed that the company was comprised of a group of viable units. Labour and non-labour costs had to be aligned to a reduced level of activity and investment was required to address present and future liquidity concerns.   The MD also had to show that he was supported by a competent and committed management team.

The business consultant attended the hearing and gave evidence. We were informed that the HR consultant has died.

Suspension of the Complainant

At the end of December 2016, the MD became aware that the complainant was putting together a separate proposal to acquire ownership of the company. The respondent’s submission notes that the MD “was surprised and disappointed that someone whom he had hired less than a year previously to help him develop the business and on whom he relied in developing his own proposal for the Examiner should act in this manner.”

It emerged therefore that the complainant was developing a business case in competition to the MD’s case. To succeed, he needed to secure investment and to get the support of some, if not all the management team. To achieve this, he had off-site meetings with some of the senior managers. On January 10th 2017, the Examiner sent an e mail to the MD. The Examiner referred to a conversation he had with the complainant the previous day.   He said that he was,

“…concerned that potentially, the expression of interest raises conflict of interest issues …In particular, where the GM would be expected to facilitate the due diligence of other interested parties. I am also concerned that the management team and the Board should be working cohesively for the remainder of the examinership.

“(Name of the complainant) appears to believe that there is some pre-determined outcome of the examinership, involving solely you.   In fact, when I met him last Thursday and I advised him of the true position, he asked me did I ‘think he came down in the last shower.’ This is the second occasion that he has put this proposition to me; and he is suggesting that I am not being truthful with him.”

The Examiner concluded this e mail to the MD as follows:

“I have no idea why (name of the complainant) is adopting this unhelpful approach with me but I just wanted to confirm again as per our initial meeting, that there can be no pre-determined outcome from the examinership.   I intend to consider all investment propositions that come forward, in consultation with the directors which would be normal in any examinership.”

With the complainant making a bid for the company, the MD was concerned about his leadership being undermined, the management team being split and a possible serious breach of confidentiality as, according to the respondent’s submission, it was likely that confidential information concerning the company had been unlawfully passed to third parties. He met the complainant on January 11th 2017 and outlined his concerns. From the evidence submitted, it appears that the complainant confirmed that he was preparing his own bid for the company and that he had no confidence in the MD’s ability to lead the business. The next day, the MD wrote to the complainant and informed him that he was suspended on full pay pending the outcome of the examinership process. A copy of this letter was submitted in evidence. While it stated that the suspension was not part of a disciplinary process, the complainant was told that his actions may be in breach of the company’s disciplinary procedure and a decision would be made with regard to future disciplinary action.

On January 24th, the complainant made a non-binding indicative offer through Deloitte in relation to investing in the Company and its related companies as part of proposals for a scheme of arrangement, which, according to a letter submitted in evidence from the solicitors for the Examiner, was reviewed by him “with a completely open mind.”

Redundancies

An extract from a document submitted by the Examiner to the High Court was opened at the hearing.   The cashflow projections showed a continued decline in the company’s revenues; however, the Examiner’s report was positive about the future of the company as long as the cost-cutting proposals were implemented and the required funding was secured.

The complainant had a central role in managing workforce planning and in identifying jobs that could be made redundant or laid off. At the time of the examinership, 82 people were employed. During the period of examinership, 16 people resigned and the complainant identified five jobs to be made redundant, four of which were fixed-term contracts. Four others were to be laid off temporarily.  

The respondent’s submission states that, during an examinership process, it is not unusual for a company to lose business, as customer confidence is eroded. During the examinership of the respondent’s company, a number of significant contracts were lost and turnover in 2017 was €10.9m, compared to €18.4m in 2015 and €12.4m in 2016. The business consultant working with the MD worked on cost-savings and produced a report on February 3rd 2017. He identified the complainant’s job as General Manager as “the highest cost role in the company.   At €150,000 incl. PRSI and excluding benefits this one position alone accounts for approx. 7% of total Administration costs.” In addition to the role of Group General Manager, the consultant recommended that three of the jobs that had been selected for lay-off should be made redundant, generating overall annual savings of around €300,000.

Following a meeting with all the staff in the company on February 7th, the MD met the complainant the next day. He was accompanied by the two external consultants. At this meeting, the complainant was informed that his role would be made redundant and that the majority of his job would be done in future by the MD, with some responsibilities to be taken on by other senior managers. In a letter on the same date, the HR advisor confirmed the situation to the complainant.   Having outlined the difficult financial straits of the company, he said:

“Accordingly, since the role of General Manager is no longer required and is thus redundant, and since you hold the job of General Manager, it is planned that your employment with the company will cease by reason of redundancy with effect from February 10th 2017.”

Before he received this letter, the complainant wrote to the MD arguing that this was not a genuine redundancy and that there was a need for his role. The following day, when he received the HR advisor’s letter, the complainant wrote to say that his redundancy was a “sham,” prejudged and lacking in fair procedures.   His view was that his role would continue once the examinership was completed.

On February 13th, the MD wrote to the complainant to confirm that his employment was terminated that day by reason of redundancy, and that he would be paid three months’ pay in lieu of notice, bringing his service to May 12th 2017. On February 17th, in response to a letter from the complainant’s solicitor objecting to the company’s decision to make their client redundant, the MD referred to the changed circumstances of his company and said,

“I have no doubt that, if completed today, that sort of investment, hiring a Group General Manager, would not be recommended. If you look at the key elements of the role…these were functions which I carried out successfully when I was building the business and am capable of doing in the future.”

The respondent’s case therefore is that the complainant was made redundant due to the changed financial circumstances they were faced with throughout 2016 and the resultant examinership process. To reduce costs, around 16 employees who resigned were not replaced and the complainant and five others were made redundant. From a cost perspective, the complainant’s role, at €150,000 per year plus benefits, was the most expensive job in the business, and, as it had been done previously by the MD, it would done again by him in the future.

Background to the Recruitment of the Complainant as Group General Manager

In her opening submission for the complainant, Ms Bruton said that when the complainant was recruited, he was informed that his job was to run the various subsidiaries in the company as the MD “did not possess the skills necessary to develop or lead the strategic development of the business.” His responsibilities were further outlined as developing the team and internal processes and generating growth by improving performance and profitability.   At the time of his recruitment, the complainant was shown the March 2015 audited accounts which showed a gross profit of €400,000 and he was convinced by the MD that the company was on a sound financial footing. It was on this basis that he left his job to come and work for the respondent.

Pre-Examinership

When the complainant commenced in the role of GM, he became aware that the respondent had had a terrible financial year and was insolvent. Around May 2016, the complainant said that he advised the MD that they would need to identify sources of investment for the business.   The complainant set about meeting creditors and informing them that the company was seeking investors and he said that he prevented the respondent from going into liquidation at this stage. An investor was secured but pulled out in November 2016, because of due diligence issues. The complainant’s submission says that this investor proposed that the complainant would assume the role of Chief Executive Officer with the MD taking a step back into the role of Head of Research and Development.

Following the exit of the potential investor, the complainant said that he advised the respondent to go into examinership. An interim examiner was appointed in November 2016 and the complainant, the financial controller and members of the management team were responsible for dealing with creditors and for cash management to sustain the company throughout the examinership process. The complainant and four managers proposed a management buy-out so that the company could exit the examinership process and become viable in the future. The complainant’s submission states that when the MD became aware of the proposed management buy-out, he sought to undermine what was “a normal event in an examinership where internal or external investors emerge.”

Suspension

On January 11th 2017, the complainant said that he invited the MD to a meeting in his office to discuss his proposed management buy-out. However, without giving him any warning, the MD arrived with his business and HR advisors. The complainant’s submission states that he was “peppered with questions in relation to his involvement in the proposal to the interim examiner.” He was then informed that he was suspended for the remainder of the examinership and this was confirmed to him in a letter from the MD on January 12th.

From the perspective of the complainant’s case that his dismissal is unfair, this letter is important. I will reproduce a significant portion here. Referring to their meeting the previous day, the MD stated:

“At that meeting, I expressed concerns regarding your behaviour during this (examinership) process. In particular, I advised you that I believed that you were undermining my attempts to save the company and to maintain my ownership and leadership of the company which I had set up and managed successfully for many years.

“During that meeting you confirmed that you had gone behind my back to seek investment in the company and that you did not have confidence in my leadership of the business. You refused to give any commitments regarding your future actions.   As Group General Manager, your conduct would also have a significant bearing on the cohesiveness of the management team at a crucial time for the business where it is essential that everyone is pulling together.

“In the circumstances, I had no alternative but to advise you that you were being suspended on pay for the remainder of the examinership process.

“The above action is taken to safeguard the business and is not part of a disciplinary process. However, I advised you also that some of your conduct is a serious breach of your contract and the company’s disciplinary procedure. A decision will be (sic) with regard to the appropriate action to be taken later this week.”

The letter concluded by instructing the complainant not to attend work, to return any company files in his possession, to be available for meetings and to respond when required to company communications.

The complainant’s position is that there was no legal basis for his suspension which, in his view, was unlawful and unwarranted. The justification for his suspension was decided upon before the meeting at which it was communicated to him, without warning and without giving him an opportunity to defend himself. As such, it is the complainant’s case that the suspension was a breach of his right to fair procedures. He argues that there is no basis for the respondent’s contention that the suspension was separate to a disciplinary process given the findings of misconduct against the complainant and the reference to a disciplinary procedure and “appropriate action to be taken later in the week.”

Purported Redundancy and Termination of Employment

A staff meeting was held on February 7th 2017 at the company’s headquarters, and those who could not attend in person dialled in. The complainant was not invited. By e mail afterwards, he received a copy of a note from the MD, summarising what was said at the meeting. All the staff received this note. The MD informed them that the examinership process was going well and would be concluded by March 16th 2017. He acknowledged what he described as “a very tough time for all involved and a sharp learning process.”   He referred to “a small number of colleagues who have chosen to leave and these will not be replaced in the immediate future.” He described these roles as either “fully or partially redundant” and he went on to announce that there would be a “limited number of further redundancies which will take place in the coming days.” He said that the reason for these redundancies was because “the business has down-sized and we do not require the previous number of managerial and other roles in order to compete successfully into the future.”

On February 8th, the complainant attended a meeting in a hotel with the two advisors.   He was informed that an examination of the cost-base of the company had been carried out and that his role, that of group general manager would be made redundant. He was given no documents to corroborate this examination and no opportunity to have an input into the cost-saving review. His redundancy was confirmed in a letter on the same date. The letter stated that,

“…the duties of the General Manager can be readily subsumed into the Managing Director role and other executive management roles, and thereby be effectively accomplished in the future. Accordingly, since the role of General Manager is no longer required and is thus redundant, and since you hold the job of General Manager, it is planned that your employment with the company will cease by reason of redundancy with effect from February 10th 2017.”

The letter concluded by inviting the complainant to “offer suggestions to us as to alternatives to making your role redundant or towards mitigating the effects on you of making the role redundant.” He claims that this suggestion was “farcical at best,” as the decision to make him redundant had already been made and he had been informed that his employment would terminate on February 10th. It is the complainant’s view that the MD wished to terminate his employment and used redundancy as a “device” to achieve that end.

In his submission, the complainant said that he accepted that, in the context of the examinership, there would be redundancies, but not of his own role, or any member of senior management who, in his view, would be crucial to the survival of the company when it came out of examinership. In his evidence, the complainant said that he was dismissed because “I instigated a process to take control of the company.” He argues that his redundancy was due to his involvement in the management buy-out and that it was not a genuine redundancy.

In two letters to the respondent on February 8th and 9th 2017, the complainant set out his response to this “sham redundancy” and the “veneer of consultation” and he reminded the MD and his advisors that, as part of the examinership process, the Examiner had commissioned an independent expert to write a report on the future of the company. In his report, the expert noted that the process of management development had commenced with the appointment of the GM and that he had started working with the line managers to develop a senior management team “which would be coached and developed so as to manage and scale the business.” He went on;

“The purported redundancy, when seen in that context, makes it abundantly clear that there is no substance to your suggestion that the role is redundant. The Expert’s conclusions / comments also make it clear that your statement that ‘due to role refinement measures within the role of Managing Director and other executive management roles, the duties of the General Manager role can be readily subsumed into the Managing Director role and other executive management roles, and thereby be effectively accomplished in the future’ (as recited in your e mail letter of the 8th February) is simply incorrect. It is clear in light of the Expert’s conclusions that my role will not only continue in spite of the examinership or what might come out of it but that it was (and is) of central importance in so far as the future of the company is concerned.”

The complainant received no response to his correspondence and his employment was terminated by letter on February 13th 2017. He was not informed that he could appeal the decision to make his job redundant and his solicitors wrote to the MD on February 15th, notifying him that their client intended to submit a complaint of unfair dismissal to the Workplace Relations Commission.

Legal Submissions

The complainant’s position is that the redundancy of his job of General Manager was not a genuine redundancy but was due to the MD’s desire to “push the complainant from his employment due to his participation in potential management buy-out during the examinership process.”   His counsel argued that his dismissal does not come under any of the criteria set out in section 7(2) of the Redundancy Payments Acts 1967-2015 and that it was instead due to perceived misconduct and was used as a device to avoid initiating a disciplinary process.   Ms Bruton outlined what she considered were the facts at the time of this purported redundancy:

The complainant was excluded from the workplace due to an unlawful suspension;

Findings of misconduct were made against him in the letter from the MD on January 12th 2017;

He was not involved in the review process conducted by the external consultants;

He was not allowed to defend his role prior to the decision to make it redundant;

There was no reference in the report of the independent examiner to the eradication of the role of group general manager;

He was given no notification that his role would be made redundant;

There was no consideration of any alternative to the redundancy of his role;

The process that resulted in the termination of his employment was devoid of fair procedures.

In support of their contention that his suspension was unlawful, the complaint’s submission refers to the High Court case of Reilly v the Governor and Company of the Bank of Ireland, [2015], 26 ELR 229 which sets out the limited circumstances in which a suspension should be considered by an employer and the necessity for fair procedures to apply.  

The case of Dower v Waterford News and Star, UD 151/2010, was cited as a case where the Employment Appeals Tribunal (EAT) made it clear that fair procedures are required, even in the context of reorganisation. Here, the EAT held that any reasonable employer would consult with employees whose employment is potentially affected by redundancy and would invite them to make representations so that alternatives to redundancy could be considered.

On the same issue of consultation, counsel for the complainant referred to the High Court case of JVC Europe v Ponisi, [2012] ER 70, where Mr Justice Charleton held that, prior to making an employee redundant, an employer should conduct a fair selection process including a selection process where an employee is involved.

In terms of the breach of fair procedures, Ms Bruton cited the EAT case of O’Kelly v Exil Limited, UD 1086/2017. Here, the employer was found not to have acted reasonably and fairly as there were no meetings with the complainant prior to redundancy and no discussion with the employee about criteria and suitability for alternative positions. Finally, the case of Barry v Precision Software Limited, [2007] ELR 190 was referred to as a case of significance where the EAT held that where an employee is at risk of redundancy, he or she is entitled to be notified of this and entitled to the right to defend their future employment. The complainant’s case is that this right was not respected or adhered to in any manner by the respondent.

As it was submitted that the termination of the complainant’s employment was an unfair dismissal, the complainant is seeking compensation for his losses in accordance with section 7 of the Unfair Dismissals Acts. While he found an alternative role after his dismissal, the complainant said that he had an ongoing loss of €4,533 per month and his loss up to the date of the hearing was €46,444.

The investigation of this complaint was conducted over one and a half days in February and April 2018.   Witnesses for the respondent were the MD and the business consultant who advised him during the examinership process. The complainant gave evidence and a former sales director who resigned in January 2017 was also a witness for the complainant. I do not propose to enter into an exhaustive review of all the evidence and I will instead refer to the salient points which influenced me in coming to my decision.

The Relevant Law

The Unfair Dismissals Act 1977 – 2015

It is the complainant’s case that, in terminating his employment, the respondent breached sections 6(1), 6(3) and 6(7) of the Unfair Dismissals Acts 1977 – 2015, (“the Act”). Section 6(1) provides that a dismissal is unfair, “unless, having regard to all the circumstances, there were substantial grounds justifying the dismissal.” The burden of proof therefore rests with the respondent to establish the substantial grounds justifying the dismissal of the complainant in this case. The respondent’s position is that redundancies were required to reduce costs so that the business could be re-configured and a plan presented to the examiner to avoid liquidation. The complainant’s job was the most expensive role in the company and it could be absorbed by the MD, who, up to 10 months previously, had been carrying out most of the responsibilities of the general manager role.

Section 6(3) of the Act 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.”

In the case under consideration, “the circumstances constituting the redundancy” was the contraction in the respondent’s business and this applied equally to more than 20 other employees in the same employment. Sixteen people resigned and were not replaced and six roles were made redundant.   Employees were reduced from a total of 82 in January 2017 to 57 at the beginning of September that year. The complainant’s job was not singled out for redundancy and I am satisfied that the main provision of section 6(3) does not apply to his circumstances. It follows therefore that sub-sections (a) and (b) of this section are not applicable.

Section 6(7) provides that, in considering a complaint of unfair dismissal I, as the adjudicator, may have regard,

“(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 in section 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) of section 7(2) of this Act.]”

Essentially, this section provides that I can consider the employer’s adherence or failure to adhere to a procedure that the employee has been notified of that will be used in the event of a decision to terminate his employment. The complainant’s contract of employment which was produced in evidence shows that a disciplinary procedure was enclosed when the contract was issued.

The Redundancy Payments Acts 1967 – 2012

The complainant did not have the requisite two years’ service to give him an entitlement to a payment under the Redundancy Payments Acts 1967 – 2012. However, the definition of redundancy, as set out at section 7 of these Acts is the starting point for a consideration of the respondent’s position. Section 7(2) sets out five definitions of redundancy.   For our purpose here, we need to concern ourselves with the definition at subsection 7(2)(c):

“…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—  

(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) to be done by other employees or otherwise…”

Was the Complainant’s Job Redundant?

In his evidence, the MD said that turnover at the company for the 12 months to March 2015 was €18.4m and that revenues were positive for 2016. By March 2016 however, turnover had dropped to €12.7m and the company recorded a loss of €1.2m, more than the profits recorded in the three previous years. He described the circumstances of his company’s demise as “a perfect storm,” where there were difficulties on a project that was expected to generate considerable revenue and payment on another project was delayed. In his evidence, the business advisor said that while the order book looked strong, orders didn’t materialise and projects that had started were cancelled.   Credit became extremely tight as suppliers began demanding cash payments. The business advisor explained that examinership impacts on the ability of a company to get work, as at the beginning, clients are supportive and even shocked, but then the key factor is risk, as a client doesn’t know if a contractor will remain in business to complete a job. The company retained some long-standing and loyal customers, but other contracts were lost. The MD said that he took no income from the business and he put his own money in to relieve cash-flow problems. He was entitled to rental income of €100,000, which he did not draw down. In August 2015 and January 2017, he borrowed from his brother to pay the employees’ wages.

An examiner was appointed on December 8th 2016. The job of the examiner is to identify investment opportunities and to assess proposals from any person who might take on the running of a company in financial difficulty, so that it can continue as a going concern. With the assistance of the business and HR consultants, the MD worked on a proposal to retain his company and to demonstrate to the examiner and ultimately, to the High Court, that he had the resources to remain in control of his business. In his evidence, the MD said that at the end of December 2016, an employee informed him that the complainant was engaged in a similar endeavour.

Before he was suspended on January 11th 2017, the complainant worked on a proposal to reduce headcount. A schedule of the employees in the company dated December 14th 2016 was submitted in evidence. Three people are identified as having resigned, and four are selected for temporary lay-off. Five jobs were selected for redundancy. I referred earlier to the report prepared for the MD by the business consultant on February 3rd 2017, in which he identified four other permanent roles that, in his view, were “no longer appropriate given the immediate and medium term needs of the company.” One of these was the job of Group General Manager, which, at a cost of €150,000, excluding benefits, accounted for 7% of total administration costs.   In his evidence, this advisor said that the previous year, the main company was doing well and the plan was to invest in the panel duct business and for the MD to dedicate himself to developing this product. When the cash flow difficulties emerged in 2016, he said that the “focus on growth was suspended and the focus was now on survival” and “the business couldn’t afford such a calibre of general manager.” In his evidence, the advisor said that the MD was reluctant to make the complainant redundant, as he saw him as a key resource, and that he had high hopes for what he could bring to the company.   “As time evolved,” the advisor said, “the decision was taken out of (the MD’s) hands.” His report of February 3rd records the agreement of the MD to make the job of group general manager redundant because, “the Company cannot carry the burden of these costs going forward and the bulk of the duties of this role can be assumed by yourself. The remaining duties will be spread between the roles of QS and Contracts Managers.”

In St Ledger v Frontline Distributors Ireland Limited, UD 56/1994, the chairman, Mr Dermot McCarthy remarked that redundancy “has two important characteristics, namely, impersonality and change.” In 2003, the view of the Employment Appeals Tribunal (EAT) in this and other cases led to the amendment of section 7(2) of the Redundancy Payments Act and the insertion of the statement underlined above which emphasises that redundancy is impersonal, and “not related to the employee.” The focus of redundancy must, in the first instance, be on a job. Its purpose is to eliminate a job or to effect change on a job and not a person. At the hearing of this complaint, we heard that the job of group general manager has not been replaced, that the MD has absorbed its responsibilities into his own role and that he has shared out some aspects with senior managers. I accept the evidence of the MD when he said that, if the examinership had commenced in April 2016, he would not have appointed a group general manager. I understand that the proposal submitted by the MD to the Examiner in March 2017 was accepted and that this included a number of redundancies, including the redundancy of the job of Group General Manager. I am satisfied that the complainant’s job was redundant, and that its elimination was necessary because the company had to be re-structured on a more cost-effective basis.

Impartiality

While I have determined that the complainant’s job was redundant, I recognise the extraordinary circumstances he was in. On January 11th 2017, four weeks before he was made redundant, he was suspended because he gathered a group of senior managers together to make a bid for the company. While this is part of the cut and thrust of commercial life, it was apparent at the hearing that it came as a shock to the MD, who said he was “gutted.” When he was asked by counsel for the complainant if he was concerned that he wouldn’t be part of the business in the future, the MD said “that wasn’t the issue.” The issue he was concerned about was what he considered to be “serious disruption in the team” where some managers were invited to support the GM and others were loyal to him. He referred to his concerns about confidential information being passed to third parties – investors and advisers being pursued by the complainant - and he considered that this action could have been illegal.

In his evidence, the MD said that to attract investors, the company had to “put out a collaborative management team” and that the complainant was “undermining my attempts to save the company.” At the meeting on January 11th, the complainant answered in the affirmative when he was asked if he had provided confidential information to a third party. In the view of the MD, this was a breach of the complainant’s contract of employment.

When it was suggested to him by counsel for the complainant, that, as the decision-maker with regard to the redundancy of the complainant’s job, he was not impartial, the MD said that this “was regrettable, but it had to be done.” He said that the business could not justify having a general manager and that “the decision came down to one thing – finance.”

Asked about the meeting of February 7th, at which complainant was informed that his job was redundant, the MD agreed with Ms Bruton when she said that the complainant wasn’t given a copy of the report of February 3rd in which the business consultant recommended that his job be cut. It is apparent that in the lead-up to his termination, he wasn’t given any information to show how the respondent reached the decision to dismiss him or, if alternatives were considered. The business advisor who was at the meeting on February 7th said that at the end of the meeting, the complainant requested the notes that the HR consultant used at the meeting and that these were given to him.

This was not a normal redundancy situation. Before he was suspended, the MD said that he had stopped sharing information with the complainant and, in his efforts to put together a bid for the company, the complainant had covert meetings with certain managers. Relations between them had been sundered and It is difficult to contemplate how they could have worked together in the post-examinership phase. In this context, the “impartiality” referred to in the St Ledger v Frontline decision was compromised.

The Process Leading to the Redundancy of the Complainant  

I find myself in agreement with the complainant’s assertion when he said that he was suspended “to neutralise” his efforts to take over the company. Referring to their meeting on January 11th, in his letter the following day, the MD states:

“During that meeting you confirmed that you had gone behind my back to seek investment in the company and that you did not have confidence in my leadership of the business. You refused to give any commitments regarding your future actions.   As Group General Manager, your conduct would also have a significant bearing on the cohesiveness of the management team at a crucial time for the business when it is essential that everyone is pulling together.

“In the circumstances, I had no alternative but to advise you that you were being suspended on pay for the remainder of the examinership process.

“The above action is taken to safeguard the business and is not part of a disciplinary process. However, I advised you that some of your conduct is in serious breach of your contract and the company’s disciplinary procedure. A decision will be (sic) with regard to the appropriate action to be taken later this week.

“In the meantime, I must advise that you should take no further action to destabilise the management team.”

When he was removed from the business, there was no barrier to the complainant continuing to prepare his bid for the company; he simply didn’t have the same access to company information and, in this respect, he was in the same category as an external investor. He submitted his proposal to the examiner on January 24th.

While his counsel referred to his suspension as “unlawful,” nothing was done by the complainant or his solicitors at the time to assert his rights or to prevent his employer from keeping him suspended. It is my view that the complainant clearly understood the reason for his suspension – and this is the same reason given by the MD, which was to exclude him from the business for the remainder of the examinership process.

There is no doubt that the complainant’s decision to submit a proposal to take over the company changed his relationship with the MD. It also changed his status in the company, as he became an adversary rather than a trusted lieutenant. There is a sense in which the parameters of employment law do not extend to this kind of a break-up. However, as the respondent decided to make the complainant’s role redundant, rather than remove him from the company by any other means, I have to consider if this is what a reasonable employer would do.

I accept that, from a technical perspective, the complainant’s job was redundant, but I am concerned about the fact that the relationship between him and the MD had become irretrievable, and, as a result, the decision was not impartial.   I also accept the complainant’s case that no process was followed leading to the redundancy, and the complainant was not consulted about the decision. In retrospect, even if they had ended up parting company, I think that consultation, and some discussion between the two could have resulted in a better outcome than the one that emerged.

In conclusion, while I understand the rationale behind the decision of the respondent to terminate the complainant’s employment, I find that the process that led to his termination was opportunist and unfair. As a result, I find that this was an unfair dismissal.

I have concluded that the dismissal of the complainant was unfair. Of the redress options available, the complainant selected reinstatement and compensation. My view is that compensation is the only feasible option.

The complainant’s submission shows that he commenced in a new role on May 2nd 2017, shortly before his notice expired. He said that he has an “an on-going loss of income of €4,533 monthly.” No evidence of his current earnings was produced at the hearing.

When he was recruited, the complainant said that he was informed that he would receive a “guaranteed” annual bonus of €50,000. The respondent produced a schedule at the hearing, setting out how this bonus was to be calculated, but I am satisfied that the complainant never received this document. In any event, common sense and commercial reality dictate that a bonus is only paid out on foot of a profit. At the time of his dismissal, at the end of his first year in employment, the company did not make a profit. For this reason, I do not intend to take the bonus into account when determining the amount of compensation to award.

As a skilled and experienced executive in the engineering sector, the complainant will take up new opportunities and I am confident that, in less than two years, he will exceed the salary he was paid when he commenced working with the respondent in April 2016. I have decided therefore, that the respondent is to pay the complainant compensation of €30,000, estimated on his reduced gross income in the six months following the termination of his employment.

Examinership, unfair dismissal, redundancy