Complainant

Respondent

Anonymised Parties

Technical Officer

Property Service Providers

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-00018670-001

23/04/2018

The complainant commenced employment with the respondent in March 2013. The complainant was also a shareholder and Director of the respondent. The complainant held the position of Chief Technical Officer with the respondent and had a salary of €7,835.06 per month. The complainant resigned from his position with the respondent on 25 October 2017 and on 23 April 2018 lodged a claim with the WRC in respect of constructive dismissal.

The complainant had a 35% shareholding in the respondent company which had become a successful service provider in the property sector.

The complainant designed the online system which was the basis for the respondent’s start-up in business.

A disciplinary process was initiated against the complainant in April 2017 which took over a month to complete and led to the complainant being exonerated. The complainant believes that this process was maliciously motivated.

The complainant’s position in the company was continuously undermined and he was excluded from important meetings and decisions.

The complainant’s company credit card was cancelled and promised bonuses withheld.

The conduct of the senior Director and, on his instructions, other management left the complainant with no option but to resign in October 2017.

The complainant initially joined the respondent as a consultant and subsequently became an employee in 2013. The senior Director / CEO transferred part of his shareholding to the complainant.

The respondent’s initial system was designed by the complainant but as the company grew it was replaced in 2015 by another system.

Throughout 2016 it was clear that the complainant was struggling to cope with his role in the company and the CEO attempted to address this issue.

The complainant caused a system outage in March 2017 and this was the subject of a disciplinary process which concluded with no disciplinary action being taken against the complainant.

In 2017 the complainant was exploring alternative employment options including the option of setting up his own company in opposition to the respondent.

On the day of his resignation the complainant entered the respondent’s premises before business hours, removed material, deleted data on his PC and interfered with the CCTV recording system. The complainant left his resignation letter before exiting the building.

The complainant’s claim of constructive dismissal is not sustainable.

It would appear that the complainant and the CEO knew each other over a period of time and had been business partners previously. A new business venture was started by the CEO in 2012 in which the CEO held a 90% shareholding. In 2013 the complainant joined the business initially as a consultant but then as an employee. Towards the end of the year 35% of the shareholding in the respondent company was transferred to the complainant and he became a Director. This resulted in the CEO having 55% 0f the shares, the complainant holding 35% and the remaining 10% being held by a third Director.

It is accepted that the initial operating system employed by the respondent was designed and implemented by the complainant who held the title of Chief Technical Officer.   The company was successful and grew and more staff were recruited. A move was made to larger premises. According to the CEO the initial system was not capable of dealing with this growth and consequently a new system, developed by a third party, was introduced in 2014 / 2015.

Tensions began to develop between the parties in 2016. In December of that year there was a meeting between the complainant and the CEO. The latter termed this meeting as a performance review and following that meeting sent an email to the complainant listing a number of performance issues which were of concern to him. The complainant for his part stated that he was shocked at the contents of the email and he responded with a lengthy reply strongly refuting the allegations made by the CEO. The complainant stated in his email that if the issues were not resolved amicably and promptly that he would bring the matter to the attention of the Chairperson of the board and the other stakeholders. The complainant also suggested that the services of a professional facilitator be sought to help resolve the issues between the parties.   It should be noted that the CEO had approached an experienced business advisor who had agreed to chair board meetings but who was not himself a member of the board.

In January 2017 the CEO stated at a board meeting that he had lost confidence in the complainant.   A facilitator was appointed to mediate between the parties and this process was conducted in February with a number of meetings taking place and options explored. The outcome of this process was agreement in principle to pursue the option of the complainant exiting the business with a redundancy package and a buy-out of his shareholding. The implementation of this agreement was obviously subject to negotiations between the parties on the details of the elements involved and the provision of finance required to implement the final agreement.

In the meantime, the complainant continued his employment with the respondent. During this time the complainant stated that issues of exclusion from meetings / decisions continued. Staff were recruited to the complainant’s sector of responsibility without the complainant’s knowledge. In April a disciplinary process was commenced by the CEO which led to the complainant having to seek legal advice. This process was eventually stopped with the complainant cleared of any wrong-doing. An offer to reimburse the complainant for his legal costs was refused. The CEO for his part stated that the complainant had been responsible for an outage which had caused difficulties for the respondent and that the CEO was duty bound to initiate a process in this regard. The complainant also stated that the CEO conducted negotiations with potential investors seeking capital to expand the business without reference to or involvement with the complainant.

The complainant was of the opinion that this continuous sequence of events undermined his position within the company and he had discussions with a third party regarding changing employment. It would appear that the CEO became aware of this in September 2017 when contacted by the third party who wished to clarify whether hiring the complainant would be an issue. He assured the party concerned that it would not be a problem. The CEO also heard talk about a colleague of the complainant also leaving. No specific complaints had been made by the complainant at that time.

On 25 September 2017 the complainant entered the respondent’s premises some hours before business commenced. According to the complainant he deleted some files from his desktop computer that he felt were not relevant to the company. He then deleted CCTV footage and left his letter of resignation under the door of the CEO’s office. His decision to resign was based on the combination of events which he had outlined and which the complainant believed were the result of an orchestrated campaign by the CEO to get rid of him. The complainant accepted that he held on to systems passwords for a time after his resignation for possible use as a bargaining chip.

The CEO in evidence stated that he was shocked when he read the complainant’s resignation letter.   He had difficulty in initially contacting the complainant and following that there was a delay in retrieving all relevant IT information from the complainant. The complainant’s colleague was questioned on the day regarding her knowledge of the complainant’s actions and resigned following this. It was also necessary to engage a firm of IT specialists to forensically examine what files and information had been deleted by the complainant from their systems.

It appears that following his resignation the complainant set up his own company and was joined in the setting up of the business by his former colleague. This company now provides similar services to the respondent company and competes for customers with that company.

The Unfair Dismissals Act, 1977, includes the following definition of dismissal:

The termination by the employee of his contract of employment with his employer, whether prior notice of the termination was or was not given to the employer, in circumstances in which, because of the conduct of the employer, the employee was or would have been entitled, or it was or would have been reasonable for the employee, to terminate the contract of employment without giving prior notice of the termination to the employer…

In bringing a claim for constructive dismissal the burden of proof is on the employee to prove that he had no other option but to resign due to the unreasonableness of his employer. The employer must be guilty of conduct which amounts to a significant breach going to the root of the contract or shows that the employer no longer intends to be bound by one or more of the essential terms of the contract. It is also well established in law that the general rule is that the claimant must exhaust the internal process prior to resignation / referral to a third party.

It is clear from the evidence that the relationship between the complainant and the CEO which initially had been very good had begun to deteriorate. This appears to coincide with the growth of the business and the need to expand the systems and staffing to cope with this growth.   The employer / employee relationship was complicated by the fact that both parties were Directors and shareholders in the respondent company albeit that the CEO had a majority shareholding.   Some disputes originated in the boardroom (e.g. Directors’ bonuses) and were brought into the workplace whilst other disputes (e.g. performance reviews) originated in the workplace and were brought into the boardroom. There is no doubt but that the complainant was incrementally excluded from the decision-making process. The complainant claims that his was done in order to undermine him and eventually to ensure he exited the business. The CEO states that as the business and its systems got more complicated, the complainant appeared more and more to be unable to cope with these challenges.   New professional staff were recruited to deal with these issues and weaknesses in the complainant’s ability to deliver were identified. What is clear is that both parties accepted mediation, the outcome of which was agreement in principle that the complainant would exit the business and a compensatory package would be negotiated to cover both this and the buy-out of his shareholding. The complainant nominated a person to negotiate this package on his behalf and this process continued over a number of months. There were issues with securing the finance to cover this package but figures had been verbally agreed and final documentation was nearing completion at the time of the complainant’s resignation. I note that the draft agreement contained a clause restricting the complainant from engaging in any business activity that would be in competition with the respondent for a period of 18 months.

The complainant accepted in evidence that he had not raised the specific issues as grievances.   Neither had he utilised the Staff Handbook as the procedures in the handbook directed grievances to the CEO and he had consequently refused to sign that document. The Employment Appeals Tribunal in Case No.UD1421/2008 stated:

“In advancing a claim for constructive dismissal an employee is required to show that he or she had no option in the circumstances of his or her employment other than to terminate his or her employment. In effect the relevant section reverses the burden of proof for an employer set out in Section 6(1) of the Act. The notion places a high burden of proof on an employee to demonstrate that he or she acted reasonably and had exhausted all internal procedures formal or otherwise in an attempt to resolve her grievance with his or her employer. The employee would need to demonstrate that the employer’s conduct was so unreasonable as to make the continuation of employment with the particular employer intolerable.”

In this particular case the complainant had engaged over a period of time with negotiating a voluntary exit from his positions of both shareholder and employee of the respondent.   He had not made any formal complaints or lodged grievances as an employee. On the morning of his resignation he entered the premises of the respondent, deleted a significant number of files, edited CCTV footage and left with some property. Moreover, his resignation letter states that he was resigning from his position as Chief Technical Officer and as a Director of the respondent. This letter makes no reference to any grievances or reasons for his resignation. The complainant for a period of time held onto codes and passwords that were important for the respondent’s business. The complainant initiated the process of setting up his new company the day following his resignation and hired his first employee a week later. It is difficult therefore to escape the conclusion that the complainant’s resignation was not forced upon him but was planned in advance with the object of setting up a business in competition with the respondent. I find therefore that his claim of constructive dismissal must fail.

Complaint No. CA-00018670-001:

For the reasons stated above I find this complaint not to be well founded and it fails accordingly.