ADJ-00013105

Complainant

Respondent

Anonymised Parties

An employee

An employer

Act

Complaint/Dispute Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under Section 39 of the Redundancy Payments Act, 1967

CA-00016903-001

17/01/2018

Complaint seeking adjudication by the Workplace Relations Commission under section 6 of the Payment of Wages Act, 1991

CA-00016903-002

17/01/2018

The Complainant commenced employment with the Respondent on 04/08/2015, she was employed as the Managing Director of the Respondent Company reporting to a UK based Group Director. The Complainant managed the Irish operation (a separate Limited Company).

The Complainant was on Maternity Leave and when she was due back on 02/11/2017 she received an email from the UK to say that the Company had gone into liquidation.

The Complainant was due to be paid for three months prior to going on Maternity Leave i.e. November 2016 to January 2017. The Complainant received pay slips for these months but no monies were lodged to her bank account.

On 23rd January 2017, the Complainant sent an email enquiring when she would receive payment for November and December 2016. On the same date the UK based Group MD responded as follows:

Hi Pxxxxx,

Hope you are well – congrats on the new arrival.

Xxx is a lovely name.

As you are aware funds are very tight in the Irish business – we also have add VAT and other legal responsibilities to make payment on.

As soon as there are enough clear funds to make payment – payment will be made – We will update you as soon as this is the case.

Any queries please do not hesitate to call.

On 1st February 2017, the Complainant sent another email to enquire when she would be paid her salary. Salary for January 2017 was now due bringing the total unpaid salary to 3 months, a total of €11,560.04.

Further emails were sent by the Complainant on 8th February 2017, 10th February 2017 and 13th February 2017.

On 13th February 2017, the Complainant received a reply to her email that read as follows:

Hi Pxxxx,

Thanks for your email.

As previously mentioned – as soon as we have cleared funds to pay your salary we will. As a Director of the company you’ll also be aware that we have many legal requirements to meet, these have to be paid also as a priority.

As of to-day the account balance is - € 19.18.

With the company substantially underperforming over the last 12 months running at a total loss of €63,958.09 this has had a huge negative impact on cash flow……. With other creditors chasing €18,704.03 currently owed to them + intercompany loan from Creative Agency Network Ltd €62,681.47.

I will be reviewing the situation later this week and will revert back once we have decided the best direction for the company.

Kind Regards,

On Wednesday 13th September 2017 the Complainant sent another email to the company informing the Group MD that she was due to return from Maternity Leave quite soon and was just ‘touching base’ for an update on the company and her still outstanding salary payment.

There was no reply to this email.

On Wednesday 20th September 2017 the Complainant sent another email, this read as follows:

Hi Guys,

Not sure if you received my last email, just looking for an update on where we are with the Irish company and my overdue salary.

I called the office and Simon’s mobile today, so if you would be so kind as to return my call that would be great.

Kind Regards,

On Wednesday 27th September, the Complainant sent the following email to the two UK based directors:

Can you please contact me when you get this message? I’m keen to get to the bottom of this.

Many thanks.

On 28th September 2017, the Complainant sent the following email:

Hi P,

Just wondering if you can help me. I’m due back from maternity leave soon and have contacted S and C (HR) to discuss the business and returning to work with no avail. I’m assuming the business has ceased trading as there is no sign of the Irish website and my details have been removed from the UK head office website

I checked the companies’ office website and the Irish company is still listed. As I said earlier not really sure what is going on but keen to get to the bottom of it.

It would be great if you can send me my P45, if I have been made redundant so I can claim my entitlement from Social Welfare.

Many thanks for your help.

On 11th October 2017, the Complainant sent the following email:

Please acknowledge this email as my notice to return to work as of 12th October 2017,

Can you please confirm if the Irish business (name inserted) is still trading? As discussed, a couple of weeks ago by phone you were talking about making the company insolvent, if this is the case can you please confirm my redundancy from the business and forward my P45 as soon as possible. At present I cannot claim my social welfare entitlements or move forward until you have confirmed your intentions.

If there is no response to this email or communication in relation to my employment status in the next 14 days, I will be forced to contact the department of social protection and revenue to escalate this matter.

Kind Regards.

The Complainant received a reply the same day, this read as follows:

Hey P,

Thanks for your email. With regard to your notice to return to work, I take it this means you intend to return to work on 2nd November 2017 as four weeks’ notice is required. Please can you confirm that this is correct.

Many thanks.

The Complainant replied the same day:

Hi C,

Yes this is correct. I’m due to return to work on Thursday 2nd November 2017.

Can you please confirm that my position is still available to return to the business?

On 2nd November 2017 the Complainant wrote:

Good Morning Guys

As per the email below I’m due back to work this morning.

I’m just touching base to see if you have an update in terms of the business, is it still trading and what is happening with my outstanding salary.

Can you please send me my access to the systems such as email, sales force and Showpad etc., So I can familiarise myself with any product updates?

Look forward to hearing from you.

The Complainant received the following response the same day.

Hi Pxxxx,

Hope you are well.

Thank you for your email.

Unfortunately, due to the insolvent position of the business, we have made the difficult decision to place the business into administration.

We have appointed a liquidator who will be in touch in due course.

Please do give me a call if you want to discuss things further.

Kind Regards.

As of 21st November 2017, the Complainant had not received any information from a liquidator and contacted the Respondent looking for a P45.

The Complainant lodged her complaint with the Workplace Relations Commission on 17th January 2018. 

Preliminary Matters.

1.      The respondent refers to the WRC letter of the 22nd February 2018 (Appendix 1) in which it states in the “Complaint Area” that the matter referenced CA-00016903-002 was “Closed – Out of Time and I refer to section 6 of the Payment of Wages Act 1991. The Respondent respectfully submits that a complaint under this section, if it has been presented after the expiry of the period of 6 months beginning on the date of the contravention to which it relates, is out of time. The Respondent therefore respectively submits that the alleged unlawful deductions set out in the Complaint form dated the 17/01/2018 are outside of the permissible time limit within which to lodge a claim in accordance with section 41(6) of the Workplace Relations Act 2015. As such, it is respectfully submitted that the WRC does not have jurisdiction to hear this claim.

2.      The respondent company was registered in Ireland on the 24th July 2015. The.

The company was primarily engaged in providing a service to customers in the Republic of Ireland.

3.      The Complainant was the Managing Director of the respondent company as well as being an employee. In her time with the company, The Complainant was the sole presence in Ireland of the parent company and according to the respondent, was fully aware of the financial difficulties of the company, which can be seen by the email from Group MD to the claimant dated the 23rd Jan 2017 (10:26). This email is in response to Ms. Keating’s email of the 23rd Jan (10:19). In the Complainant’s email, she refers to her salary not having been transferred to her bank account and further refers to these amounts being outstanding. In the Group MD’s email of the same date and 7 minutes later, he responds to the Complainant’s enquiries noting that “funds are very tight”. The company asserts that by the Complainant’s position in the company, she was not the weaker party in the relationship and by her position, she was fully aware of the financial position of the company prior to and after taking maternity leave from the company. In fact, the respondent’s email dated the 13th February 2017 to the claimant makes this very clear.

4.      The claimant made a further enquiry on the 13th February 2017 (12:23pm), enquiring about her salary again and detailing what were, in the respondent’s calculation, overdue salary payments. 

5.      By email dated the 13th February 2017, (3:30pm), the respondent replied to the claimant’s email referred to in 2.3 above, in which not only was it reiterated that the company was experiencing financial difficulties and pointed out to the claimant;

“As director of the company you’ll also be aware that we have many legal requirements to meet, these have to be paid also as a priority”.  

6.      The respondent then went on in this same email response to detail the financial figures of the company for 12 months, contemporaneous with this email, and the loss the company had been making. These losses were described as “total loss” stated at €63,000 plus impacting cash flow of the company, as well as monies owing to creditors which totalled more than €81,000. The claimant was therefore made aware that the company was not in a position where it had cleared funds in order to pay her salary. In addition, and in relation to the Complainant’s awareness of the Respondent’s Company’s financial situation. 

7.      While the company accepts that the claimant is entitled to a redundancy payment under section 7(2)(a) of the Redundancy Payments Act 1967, the Company asserts that despite this fact, it was not and is not in a position to discharge any redundancy payment due to the fact that it ceased trading and there was in effect no position available for the claimant on her return date. The Company can demonstrate by its accounts the fact that the company was in financial difficulty and could not pay its debts as they fell due. The fact that the Company did not formally de-register the Company and remove it from the Company Registration Office has no practical bearing on the financial status of the Company as described in its accounts. 

Redundancy Payments Act 1967 

Section 7(2)(a): 

“the fact that his employer has ceased, or intends to cease, to carry on the business for the purposes of which the employee was employed by him, or has ceased or intends to cease, to carry on that business in the place where the employee was so employed”  

1.      The Company respectfully submits that given the financial standing of the company prior to November 2016, in which the salary of the respondent had become due up to the month of January 2017, at which point 3 monthly salaries were owing, the Respondent Company was not in a position to have cleared funds sufficient to discharge any salary for the months here mentioned and this being the cause of the Claimant’s complaint under section 6 of the Payment of Wages Act 1991. The respondent asserts that the position held by the Claimant had effectively become redundant on her return date for November 2017. 

2.      Before the claimant entered into an employee contract, she had discussions with the Respondent Directors in the UK and negotiated terms in which she was to be a Managing Director, employee and shareholder. The Claimant was also the joint signatory on monthly accounts and had at all times actual knowledge of the financial picture of the respondent company in which she was the sole representative in the Republic of Ireland. The Claimant also had a seat on the board of the UK Company. Due to the financial difficulties, the company experienced, the UK company, which is a separate entity to the respondent Company, created a €68,000 debt in their accounts to provide a loan to the respondent company in order that the claimant’s salary be paid, despite the company experiencing financial difficulties. This, along with the clear communications to the Claimant of the financial difficulties of the respondent company is a clear demonstration that the respondent conducted itself as a responsible employer. 

3.      The Respondent claims that due to the financial status and condition of the company in 2016 to the return date of the claimant, the respondent had discharged liabilities due which were in priority to employee salaries, such as is evidenced by email dated the 23rd November 2016 and sent to the Complainant. 

4.      In support of the genuine redundancy that existed under section 7(2)(a), it is submitted that the case of Bennett v Bunzl Ireland Limited [UD2409/2009] demonstrates the recognition by the EAT of the business and financial circumstances of a company in relation to a genuine redundancy. 

Conclusion. 

The Respondent respectively submits that a genuine redundancy existed under section 7(2)(a) of the Redundancy Payments Act and that the claimant, in her position within the Company, had actual knowledge and constructive knowledge of the financial status of the respondent Company. It is also respectively submitted that the Claimant has no claim to bring under ref CA-00016903-002 in that it is out of time and the WRC has no jurisdiction to hear such matter and that the claim under reference CA-00016903-001, although a genuine redundancy, the respondent company is not in a position to discharge said redundancy or payment under the Act as it has, for all practical purposes, ceased trading and is informally insolvent, and does not have the finance from which to discharge any further debt apart from those due to Revenue. Under these circumstances and with the evidence gathered and recounted within this submission, it is respectfully submitted that the Claimant’s complaint should fail.

In relation to the preliminary argument that the Adjudication Officer did not have jurisdiction to hear the case because it was out of time.

The Complainant went on Maternity Leave in December 2016 and returned in November 2017, this period of protected leave is not included in the six months’ time limit stated in the Payment of Wages legislation. I therefore have jurisdiction to hear the complaint made under this legislation.

There appears to be acceptance by the Respondent that there is entitlement to a redundancy payment.

The Complainant is a director of the company and is also an employee of the company. I did ask at hearing was there a contract of employment and was told there was. The Respondent representative stated that he did not have a copy but would send this to me without delay. This did not happen. As an employee, the Complainant has a right to a redundancy payment under Section 7 of the Redundancy Payments Act,1967.

If the Respondent company were not in a position to pay the Complainant for three months, why did they issue pay slips to her? 

I order the Respondent to pay all outstanding wages to the Complainant, the sum of €11,560.04.

I order the Respondent to pay a statutory redundancy payment to the Complainant, I believe this sum is approximately €3,300.

Both amounts shown above should be paid to the Complainant within 30 days of the date of this notice.

Key Words: Redundancy Payments Act,1967: Payment of Wages Act 1991.