Complainant

Respondent

Anonymised Parties

{A Plumber}

{A Plumbing and Heating Company}

Representatives

Brendan Hennessy BL Rogers Law Solicitors

Ken Stafford Management Consultancy Services

Act

Complaint/Dispute Reference No.

Date of Receipt

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

CA-00016454-001

20/12/2017

Complaint seeking adjudication by the Workplace Relations Commission under section 7 of the Terms of Employment (Information) Act, 1994

CA-00016454-002

20/12/2017

Complaint seeking adjudication by the Workplace Relations Commission under Section 11 of the Minimum Notice & Terms of Employment Act, 1973

CA-00016454-003

20/12/2017

Complaint seeking adjudication by the Workplace Relations Commission under section 27 of the Organisation of Working Time Act, 1997

CA-00016454-004

20/12/2017

CA-00016454-001

The Complainant is a non-national who was employed as a plumber/installation engineer with the Respondent since 1st October 2014. He was dismissed on 16th August 2017 without any procedures being applied. He was never furnished with written terms of employment of details of a grievance procedure.

The Complainant had a good working relationship with the Respondent during the period of his employment. He suffered an accident on 8th August 2017 when he was lifting a boiler from a wall. He was in pain and arranged to see his GP on 10th August 2017. He was advised to stay out of work for 7 days due to the injury.

On 16th August 2017, he was contacted by the Respondent by phone who told him “ I am going to have to let you go” due to the Complainant setting up a competing business and failing to inform him of this. When the Complainant confirmed he was a Director of the new company, he was dismissed. The Complainant was shocked. There was no discussion or invitation to meet.

The Complainant became a Director of the new company in January 2017 with his wife. The company was set up for the benefit of his wife and child. The Complainant was working 10 hours a day 6 days a week and had no time to be involved in the day to day running of the new company. He assessed inquiries for plumbing services at the end of the day. If a customer requested a call out, the Complainant’s wife would arrange for a plumber to attend.

The Complainant never competed with the Respondent, he did not approach any of his clients or undercut him on contracts. The Respondent says that a customer approached him to say the Complainant was seeking to undercut him in future work. This is inadmissible hearsay from an unknown individual and is a flagrant breach of the rules of evidence and fair procedures. The Complainant disputes this evidence in its entirety.

The Company was registered and advertised openly. There was no attempt to keep this hidden. It is common practice in the construction industry for workers to supplement income with cash “nixers”. The Complainant was supplementing his income in a tax compliant manner.

The Complainant disputes that he was furnished with any contract of employment which is unsigned, nor did he receive a copy of any Employee handbook.

The Complainant had no contract and thus had no grievance procedure. He was not given an opportunity to set out his response or make representations to his employer in breach of fair procedures. He had no notice of the allegations prior to the call from the Respondent. He disputes that he was invited to meet the Respondent nor is there any correspondence from the Respondent regarding the disciplinary procedures. There was no fair or objective hearing or appeal.

The Respondents own submissions show that the procedures have been disregarded in their entirety.

The Complainant relies on Giblin v Irish Life & Permanent PLC and the entitlement of the Complainant to fair procedures and compliance with his contract of employment when conducting a process to determine whether a serious sanction should be applied.

The Complainant was paid 2,667 euro per month. As a result of his injury he was unable to work until November 2017. When he commenced working with the new company he was on a reduced salary of 1,500 euro per month, and seeks the maximum compensation.

The Respondent is a plumbing business and carrying out installation and repair of Heating systems. The Complainant worked for the Respondent since October 2014 carrying out plumbing and general maintenance work.

In October 2017 the owner of the Company was informed that the Complainant was operating his own business in direct competition with the Respondent. He discovered the new company was registered and active since January 2017. The owner immediately telephoned the Complainant to inform him of what he discovered. The Complainant at first denied that he was involved in his own business, then the owner gave details of the information he discovered and the Complainant did not respond. The Respondent requested that the Complainant attend a meeting with him, but the Complainant refused to do so. The owner then informed the Complainant he was dismissed.

The Respondent says the Complainant was furnished with a written statement of his terms and conditions on 24th October 2014. He was also given the Employee Handbook which is referenced in the employment contract. This contains the applicable procedures. The Respondent disputes that there is any basis for this claim, and says it should be dismissed.

The Complainant is claiming minimum notice and the entitlement to this is disputed by the Respondent who says the actions of the Complainant amount to gross misconduct and he is not entitled to notice.

The Respondent has a business card for the new business of the Complainant with his name on it. The Complainant had never disclosed the existence of this business to the company in compliance with his contractual obligations.

At the hearing the Respondent withdrew reliance on hearsay evidence from a party who was not in attendance at the hearing. The Respondent relies on a business card for the new company with the Complainant’s name on it. The owner was not aware of the existence of the company nor of the Complainant’s involvement in this. This fact was not disclosed to him in accordance with the provisions of the Employee Handbook.

The Respondent relies on the website for the new company which describes the services provided which are identical to those of the Respondent. Testimonials on the website which show it was in operation for at least 5 months while the Complainant was in employment with the company and fully operational. The Respondent says this is a gross breach of trust. The Employee Handbook proscribes this behaviour which warrants disciplinary action up to and including dismissal. The seriousness of the breach of trust would inevitably mean dismissal. The Company documentation shows the company was set up 9 months earlier January 2017 with the Complainant as Director. On discovering this the owner was very concerned and upset. He telephoned the Complainant immediately.

The owner informed the Complainant of what he discovered which he denied. After he informed the Complainant about the full extent of the information, the Complainant would not respond to his questions. The owner requested the Complainant to attend a meeting, the Complainant said he was not available and would not attend. He did not explain why.

The Complainant told the company he was sick on 16th October 2017 but had not produced a medical certificate. On the basis that the Complainant would not attend a meeting with him, the owner informed him “we are done” and the Complainant was dismissed. No appeal was lodged by the Complainant in accordance with the procedures.

The Respondent submits that the employee fidelity/confidentiality clause in the Employee Handbook prohibits any employee setting up or running a business which could be a conflict of interest with the company, unless they have obtained prior written permission. The Complainant deliberately concealed his activities from the Respondent as this was utterly in conflict with his employment, it was a deliberate plan to compete with the Respondent and divert work from his employer. The Complainant’s actions once discovered made dismissal inevitable.

I have heard the parties evidence at the hearings on 22nd March 2018 and 2nd May 2018 and considered the additional written submissions of the Complainant’s representative on 29th of March 2018 and 21st May 2018.

The Respondent claims the Complainant committed a gross breach of trust in setting up and operating a competing business while in employment. This company which provides identical services in breach of his duty of fidelity and good faith. The Respondent submits this amounts to gross misconduct and the dismissal is justified.

Under S6 (1) of the Unfair Dismissals Acts 1977-2015 the dismissal of an employee shall be deemed to be an unfair dismissal, unless having regard to all the circumstances, there were substantial grounds justifying the dismissal. The onus lies upon an employer to justify that the dismissal is fair.

Section 6 (4) of the Act provides that the dismissal of an employee shall be deemed not to be an unfair dismissal, if it results wholly or mainly from one or more of the following:

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

(b)    The conduct of the employee,

(c)     The redundancy of the employee, and

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

Regard may be had by the Adjudication Officer of the reasonableness of the employers conduct in relation to the dismissal, together with the extent of compliance or non-compliance with S14(1) or any code of practice.

Employees have a duty of good faith and fidelity to an employer. The extent of this is determined by the provisions of the employee’s contract of employment. The Complainant disputes that he received the contract of employment dated 24th October 2014 and Employee Handbook, which is unsigned which I accept. Nonetheless, there are common-law duties of good faith and fidelity owed by an employee to an employer not to act in conflict with the employer which are well-known and apply regardless of any written contract of employment.

Clarke J in AIB Plc v Diamond & Ors [2011] IEHC 505 stated:

….”An employee owes a duty of fidelity to an employer as part of a mutual relationship at the heart of a contract of employment. That duty of fidelity of an employee, prevents an employee while still employed, from taking actions in competition with the employer concerned”.

The Respondent submitted evidence that a new company operating a directly competing business was set up by the Complainant and his wife on 16th January 2017 while in employment. The Complainant is a Director of the Company and 50% shareholder. Further evidence was given of the new company website which provides plumbing and heating services. In addition, the Respondent provided a copy of an invoice dated 3rd February 2017 of graphics for a company van for the new company.

The Complainant gave evidence that his wife worked full time for the new company, answering the phone. He said his wife can price the jobs without seeing them with his advice. The Complainant accepted that he priced jobs for the new company from time to time in the evening and on Saturdays. He said he worked long days with the Respondent, and says his wife organised other contractors to carry out the work. He said he only carried out 4 jobs for the new company while employed with the Respondent. He was evasive in relation to the provenance of the testimonials on the website, the dates the work was carried out and who completed them. Accounting documents furnished subsequent to the hearing stated that the new company did not have any expense for sub-contractors.

The Complainant alleges he had an accident at work lifting a boiler on 8th August 2017, and was out sick until 11th November 2017 as a result. Thereafter he earned approximately 1,500 euro per month from the new company and suffered financial loss ongoing. When cross-examined as to why he would continue operating the business at a loss as there were plenty of jobs for plumbers between 35,000-40,000 euro per annum available, he said he wanted to continue to build the business and says he was restricted by injury.

The Respondent gave evidence of seeing the Complainant at a wholesaler’s shortly after his dismissal when he was collecting a boiler for the new company. The Respondent submitted a copy invoice issued to the new company for a boiler dated 18th August 2017. The Respondent disputes that the Complainant did not return to work until November 2018 as alleged.

The general principles covering employee obligations to their employer are set out by the EAT in McDermott v Kemek Ltd/ Irish Industrial Explosives Ltd [1996] ELR233 :

1.       It is perfectly legitimate for an employee to aspire to set up in business on this own account.

2.       Such a person would consider it normal to work in the industry with which he was familiar. It would be contrary to public policy to prevent someone from setting up in competition with his existing employer.

3.       However, an employee’s duty of fidelity continues so long as he remains in employment. There may be a point at which preparations to set up a new business might be incompatible with continuing to serve the existing employer.

4.       If an employer believes that an employee’s actions in pursuit of his ambition have so become incompatible, he owes the same duty not to dismiss unfairly as he would in any other type of case.

The Employment Appeals Tribunal in Looney & Co. Ltd v Looney (UD843/1984) stated:

“It is not for the Tribunal to seek to establish the guilt or innocence of the claimant, nor is it for the Tribunal to indicate or consider whether we, in the employer’s position, would have acted as (the Respondent) did in his investigation, or concluded as he did or decided as he did, as to do so would substitute our mind and decision for that of the employer. Our responsibility is to consider against the facts what a reasonable employer in (the Respondent’s) position and circumstances at that time would have done and decided and to set this up as a standard against which the employer’s action and decision be judged”.

The test of reasonableness was set out in Noritake (Irl) v Kenna (UD88/1983) namely:

1. Did the company believe that the employee mis-conducted himself as alleged: If so,
2. Did the company have reasonable grounds to sustain that belief? If so,
3. Was the penalty of dismissal proportionate to the alleged misconduct?

It is clear from the evidence adduced that the Complainant’s involvement went far beyond preparations for a new business. I accept the submissions of the Respondent owner and find his evidence consistent and credible. I find that it was reasonable for the Respondent to believe that the Complainant was actively competing with the Respondent company. The gross profit for the first year of trading for the new company ending 31 December 2017 is nearly 50,000 euro.

In Forder v AV Pound & Co Ltd (UD927/11) the EAT found that it was not unfair to dismiss an employee who was acting in competition with her employer and was misusing confidential information.

When the Complainant refused to meet the Respondent to discuss the matter, he dismissed him on the spot for gross misconduct. This was in breach of his own company disciplinary procedures and Statutory Instrument 146/2000. At a minimum, fair procedures should have been applied by the Respondent in view of the seriousness of the situation when dismissal is being considered. The Complainant should have been notified of the charges against him in advance, allowed to obtain representation or bring a witness to a disciplinary hearing, allowed a proper opportunity to address the allegations made, and to appeal any adverse outcome.

The dismissal for gross misconduct of the Complainant was procedurally unfair. There is no doubt the Complainant substantially contributed to his dismissal. The Complainant claims he was unable to work due to injury until 11th November 2017. However, evidence was adduced by the Respondent of him working in August 2017. His earnings in the new business are at half the rate of equivalent roles for plumbers, he says this is because of restriction due to an alleged injury which is a separate issue. Nonetheless is well established that if an employee is not available for work he cannot be compensated for his loss. In light of the evidence given on mitigation, I award the Complainant 4 weeks financial loss of 1,167.00 euro.

The dismissal is procedurally unfair. The Complainant did not return to work until November 2017. He says he is not fully fit for work and in light of evidence on mitigation, I award 4 weeks financial loss of 1,167.00 euro gross.

CA-00016454-002

The Complainant was employed by the Respondent from 1st October 2014 to 16th August 2017 as a Plumber. He earned 2,700 euro gross per month.

The Complainant says he was never given a written statement of terms of employment in accordance with the Act.

The Respondent provided a copy of a written statement of terms of employment dated 24 October 2014.

There is a continuing obligation on an employer to provide a written statement of terms of employment. I accept the Complainant’s evidence that he did not receive a written statement of terms of employment while employed. This has now been rectified by the Respondent.

I find the Complainant’s claim well founded and award 1 week’s wages of 675 euro to the Complainant to be paid by the Respondent as compensation for the breach.

The complaint is well founded and I award 1 week’s wages to the Complainant of 675 euro and direct this be paid by the Respondent.

CA-00016454-003

The Complainant was employed by the Respondent from 1st October 2014 to 16th August 2017 as a Plumber. He earned 2,700 euro gross per month.

The Complainant says he was never paid his minimum notice following his dismissal.

The Respondent says the dismissal is justified and no notice is due.

Following my finding in CA-00016454-001 that the Complainant is unfairly dismissed on procedural grounds, I find this complaint is well founded and direct payment of 2 week’s notice to the Complainant of 1,350 euro gross by the Respondent.

I find this complaint is well founded and direct payment of 2 week’s notice to the Complainant of 1,350 euro gross by the Respondent.

CA-00016454-004

The Complainant was employed by the Respondent from 1st October 2014 to 16th August 2017 as a Plumber. He earned 2,700 euro gross per month.

The Complainant says he never received his breaks while in employment.

The Respondent says the Complainant never raised this issue previously and he personally witnessed him having his breaks.

Under the Organisation of Working Time Act 1997, the onus is upon an employer to produce records to evidence compliance with the Acts. No records have been produced. The period in issue is 2 months. Given the evidence of the Complainant has been discredited in many respects at the hearing, I do not find there is evidence to substantiate the complaint.

The complaint is not well founded.