Complainant

Respondent

Anonymised Parties

A Sales Manager

A Company

Representatives

David Pearson JW O'Donovan Solicitors

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-00015729-001

11/11/2017

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

CA-00015729-002

11/11/2017

The Complainant claims that he was employed from 2015 to 2017 as a Sales Manager. The Respondent Company trades in shellfish.

The Complainant claims that he was dismissed without any notice on the grounds of gross misconduct following the discovery by the Respondent that the Complainant had set up a business also trading in shellfish and from the same address as the Respondent. It is claimed by the Respondent that the Complaint used Company resources in the set-up of this new Company.

The Complainant also claims that he was not paid time in lieu for weekend work, which he claims was outlined in his contract of employment.

1.       CA-00015729-001 – Unfair Dismissal

The Complainant was employed as Sales Manager for the Respondent Company from August 2015 to September 2017. The Complainant performed to a high standard in his position, resulting in two pay increases during his time with the Company.

The Complainant was dismissed for gross misconduct and claims that there are two elements to his dismissal that he disputes. The first is the manner in which he was dismissed and the procedures followed to do so. The Complainant also disputes that the allegations against him do not amount to gross misconduct.

The Complainant set up his own Company in 2017, a fact that he says he did not hide from his employer as he believed that there was no conflict of interest as his Company traded in lobsters and the Respondent Company did not trade. The Complainant stated that his Company had not started trading yet and there was no attempt to compete with the Respondent Company. The Complainant had only sent two free samples at this stage to companies in France who did not trade in lobster. The Respondent Company was not licenced to trade in Lobsters and so the two companies would never be in competition.

The Complainant claims that he did not use any trade secrets of the Respondent Company. He used the same company to transport the good to France as they are the only company that so this. This was common knowledge in the industry.

The Complainant stated at the hearing that there is a very laissez faire atmosphere in the Respondent Company regarding policies or procedures. There is widespread use of Company property.

The Complainant stated that the MD of the Respondent Company himself runs other businesses and that the most senior employee runs a farm which is not an issue so he didn’t see the probem. The Complainant stated that he was not trying to hide anything and so registered his company at the Respondent Company address.

The Complaint felt that this was all blown out of proportion as his Company had never traded and could have easily been discussed with the MD.

The Complainant claims that the Managing Director (MD) of the Respondent Company oversaw the investigation and the disciplinary hearing and made the decision to dismiss the Complainant on the grounds of gross misconduct. The Complainant was put on leave on 30th August 2017 pending a disciplinary hearing on 1st September. A file was given to him on 30th August containing the evidence that had been gathered by the MD. Immediately after the hearing on 1st September 2017, the Complainant was required to hand in his work phone and keys and was asked to clear his desk. A couple of hours later, the Complaint received a phone call from the MD informing him that he had made the decision to dismiss him. The MD did all the elements of the dismissal even though there is a second company director who is also the company secretary who could have been involved.

The Complainant said that it was known by the MD that the Complainant was not happy with the MDs management style and because of this and the complaints about his hours, the MD wanted him gone.

The Complaint stated at the hearing that he received a call after his suspension asking if he was leaving as he wouldn’t be collecting supplies. The Complaint felt that his dismissal was a foregone conclusion from the outset. The Complainant also brought his up at his disciplinary hearing.

The Complainant claims that there is no definition of gross misconduct outlined in his contract of employment and no policy in place to define gross misconduct.

The Complainant claims that he was not given the opportunity to appeal the decision to dismiss him.

The Complainant claims that it was alleged breach of the obligation of loyalty and good faith towards his employer that constitutes gross misconduct. The Complainant states that his record as a sales manager, for which he was consistently rewarded year on year with pay increases shows that he was doing his job satisfactorily. The Complainant claims that the consistently demonstrated his loyalty to the Respondent Company by accomplishing tasks that fall beyond the domain of his normal responsibilities. He claims that he worked outside of work hours and carried out extra duties in his own personal time. The Complainant stated that he on several occasions had put his own safety at risk in carrying out his duties.

When asked about how he has mitigated his loss, the Complainant stated that since his dismissal, he has tried to get this business set up and has done odd jobs landscaping and that his family has helped him out.

In summarising, the Complainant stated that he had lost his job over a different product that wasn’t in conflict with his employers business. He stated that he did not see any conflict and so did not hide anything from his employer.

He stated that he did a trial to test if the Company would work and it didn’t work and it didn’t warrant dismissal and could have been discussed and resolved informally.

The Complainant stated that it only took two hours for his dismissal letter to be drafted and he got no opportunity to appeal.

The Complainant was committed to the Company and bought a house in the areas and would ever try to harm the Company in any way.

2.       CA-00015729-002 – Hours of Work

The Complainant claims that according to his contract of employment, he was entitled to time in lieu for weekend work. The Complainant claimed that the Respondent does not keep a timekeeping record for office staff. The Complainant claimed that when he addressed this issue with the Managing Director, he was informed that this lieu time was given back during the low season as the Complainant was expected to be in the office for normal working hours, but that the quieter season consisted of his time in lieu. The Complainant claims that he worked 6 hours extra each week for the busy period of 6 months per year for the two years that he was employed. The Complainant stated that he reached the figure of 6 hours primarily due to the management of deliveries.

1.       CA-00015729-001 – Unfair Dismissal

The Complainant was employed under a Three Year Fixed-Term Contract commencing on the 4th of August 2015 and terminating on the 3rd of August 2018 as Sales and Marketing Manager/Administration Assistant.

In accordance with clause 1.1 of his contract the Complainant carried out other work for the company as required as a Full-Time Fixed Term Contract Employee particularly during the “off-season”. As with all other employees the Complainant worked for the Respondent doing such work as might be required from time to time being work additional to his primary sales and marketing manager functions.

Clause 7 of the Employment Contract provides:

7.1          “You may not without the prior written consent of the company engage in any form of business or employment other than your employment with the company whether inside or outside your normal hours of work.”

Clause 8 of the Employment Contract provides:-

8.1          “You may not during or after the termination of your employment with the company disclose to anyone other than in the proper course of your employment any information of a confidential nature relating to the company its customers or its business.”

Clause 11 of the Contract deals with the termination of employment and reads in part:-

11.1        “This Contract may be terminated by the company without notice or payment in lieu of notice if you are guilty of any gross, default or misconduct or any of the reasons specified in Section 6.4(a), (b) and (d) of the Unfair Dismissals Act 1977 in connection with or affecting the business of the company or in the event of any breach or non-observance by you of any of the stipulations contained in this agreement, which is materially detrimental to the interest of the company.”

In August 2017 an envelope addressed to the Complaint and a registered business which was not the Respondents was received by the Respondent company at its address. The Respondent identified that a new limited liability company was registered in the Companies Office on or about the 27th of June 2017. This Company had the Complainant registered as a shareholder and director.

The MD of the Respondent Company at this point investigated the Complainant’s activity on the server and he found evidence that he presented to the Complainant. The MD then found two sample orders sent to two clients in France. They used the same transport company as the Respondent’s transport company.

The Complainant was subsequently invited to a Disciplinary Meeting to be held on the 1st of September 2017 and was provided with a letter to that effect with the material supporting the allegations. There was no written disciplinary procedure but a copy of SI146/2000 was attached to the invitation letter.

The Letter of Invitation specifically indicated that the Complainant needed to address allegations of gross misconduct, the breach of the Terms and Conditions of his Contract of Employment and his obligations of fidelity, loyalty and good faith. The Complainant was expressly advised that the purpose the meeting was to afford the Complainant an opportunity to respond fully to the allegations and to make such representations as he wished relating to the specific allegations and his duties to the Company generally.

Furthermore the Complainant was advised that he could be accompanied by a fellow employee to the Disciplinary Meeting.

No suspension occurred. The investigation occurred while the Complainant was on holidays for two weeks and after he came back for a further two weeks.

The invitation letter was issued on the 25th August (the Friday before the hearing) and the employee was then suspended and given a copy of all evidence from the investigation.

The Disciplinary Meeting was held on the 1st of September 2017. The Complainant chose to attend alone without representation.  

The Complainant did not deny being involved in the incorporation of the new Limited Company. The Complainant did not deny that he had not informed the Respondent of this and not sought the prior written consent of the Company as required by his Contract of Employment.

The Complainant did not deny that he had engaged in business with two French based customers of the Respondent company and did not deny that he had done so without the knowledge or consent of the Respondent.

The Complainant did not deny that he used company facilities in researching the establishment of the new Limited Company although he did seek to explain that any employee in the Company could have been involved in that research given all employees have access to the internet through company servers.   Furthermore the Complainant indicated he was entitled to free internet access under his Contract of Employment.

The Complainant did not deny that the material provided to him by the Respondent showed usage of Company systems relating directly to the establishment and conduct of business of the new Limited Company.

The Complainant sought to say that the new Limited Company was complimentary to the Respondent company business both in terms of product and sub-contract services to third parties such as diving operations.

The Complainant chose not to make any representations on the issues of fidelity, loyalty and good faith or the breach of his Contract of Employment and in particular Clauses 7.1 and 8.1.

The Complainant was advised in writing by letter dated 1st of September 2017 that he was dismissed. The Respondent did not accept the explanations provided particularly where the Complainant had not sought the consent of the Respondent to establish a new business and had not sought any input from the Respondent on the proposed activities of the new Limited Company until confronted by the Respondent.

The Complainant was dismissed with immediate effect on the grounds of gross misconduct, the breach by the Complainant of his Contract, including fidelity, loyalty and good faith.

The Disciplinary Hearing was conducted wholly in accordance with SI146/2000.   At the time the Complainant was invited to a Disciplinary Hearing, he was provided with full information including:-

1.       A letter setting out the nature of the allegations.

2.       A copy of SI146/2000.

3.       A copy of the material to be considered by the Respondent.

4.       Advised that he could have representation.

5.       Advised that he would have the opportunity to address the allegations and separately make such representations as he saw fit.

The Complainant chose not to be represented. At the Disciplinary Hearing he did not deny establishing the new Limited Company and did not deny the allegations set out in the letter inviting him to a Disciplinary Hearing.

The Respondent Company is a small company with a flat management structure. The Managing Director (MD) is the only senior manager in the company to whom all functions report. Each of the functions are equal in status and amount to the Complainant’s peer group.

SI146/2000 is designed to accommodate all sizes of employers and not just employers with several different senior management levels that might facilitate a distinction in roles. It is for this reason that SI146/2000 places such emphasis on the conduct of the Disciplinary Hearing itself and not any earlier fact finding stage.   The test to be applied is when the Complainant was given due notice of the nature of the allegations was SI146/2000 complied with and the answer to that test in this case is a resounding yes.

The Respondent as a reasonable employer, is entitled to expect that its employees will abide by significant terms in their Contracts of Employment and in particular Clauses 7 and 8. Clause 11 of the Contract when read alone and when considered against other Clauses provides that the Respondent could dismiss without notice in the event of any breach or non-observance by the Employee of any of the stipulations contained in this Agreement, which is materially detrimental to the interest of the Company.

The actions of Complainant were secretive and were done without either the prior written consent of the Respondent or at any time advising the Respondent that he was engaging in the establishment of a new business during Company time, using Company facilities and seeking to leverage off long standing business relations with customers of the Respondent in France. The situation was compounded in the Disciplinary Hearing by the Complainant seeking to justify his secretive actions on the grounds of all the work he did for the Respondent including sub-contract work to third parties and seeking to explain his actions as being potentially beneficial to the Respondent in the future. If that was the genuinely held belief of the Complainant then he would have engaged with the Respondent in a collaborative manner prior to engaging in the creation of an alternate business while being paid by the Respondent and including while at work.

The actions of the Complainant were materially detrimental to the interests of the Respondent company and in addition were in direct contravention of the Complainants Contract of Employment.

Separate to the express terms of the Contract of Employment, it is well recognised law that a duty of fidelity, obligations of loyalty and good faith exist in all employment contracts. These duties have been held to include obligations on an employee not to compete with his employer while employed by him. Historically the Employment Appeals Tribunal has upheld decisions on this ground for breach of good faith and loyalty.

In this case there were express provisions in the Contract of Employment prohibiting the engagement of the Complainant in any business whether inside or outside normal working hours without the prior written consent of the Respondent.   This provision places an onus on the employee to seek consent and not act in a secretive way. Even if it is determined that the Complainant did not act in a secretive way the onus to seek prior written consent is not diluted but remains. No prior consent was sought from the Respondent.

The establishment of a separate business with a third party and the subsequent use of by the Complainant of the Respondents customer list and its transport operations involved disclosing details of the Respondents business to a third party being the disclosure of information relating to the Company not in accordance with the proper course of employment contrary to Section 8 of the Complainants Contract of Employment.

In every Contract there are express and implied terms of employment. The breath of the express terms of employment were in themselves sufficient to justify the decision to dismiss the Claimant.   When combined with the implied terms of fidelity, loyalty and good faith the decision to dismiss was reasonable.  

The obligations of fidelity, loyalty and good faith are part of all Contracts of Employment, the only question being the extent to which same apply while an employee remains an employee as opposed to the separate argument as to their existence post-termination. In the context of this case those obligations of fidelity, loyalty and good faith remain at their highest while the Claimant remained an employee of the Respondent and those implied obligations fortify the express terms of the Contract including Clauses 7, 8 and 11.

At no time prior to being confronted by the Respondent, and during the entirety of the time the Complainant was an employee did the Complainant volunteer to the Respondent that he was engaged in establishing a business other than his employment. His explanations that the new Limited Company could be used to enhance “diving” sub-contract work of the Respondent, and/or expand the range of products for the Respondent do not bear scrutiny. Both of those explanations without doubt require the Complainant to have discussed same with the Respondent, and he chose not to do so.

In addition the Complainant had a senior position in the Respondent company and was directly responsible for sales and marketing and would have had very important and unparalleled contacts with the Respondents customers, its transport operations, costs, etc. It is entirely reasonable for the Respondent to dismiss the Complainant given his actions, his failure to inform the Respondent, his dealings with customers where he had such a critical “customer facing” role in the Respondent company and his sharing business and operations information with third party.

In determining whether the Respondents decision was not unfair, it is reasonable for an employer to have different responses, where each of those responses are reasonable. Because there are a number of different responses to the same problem it is not for the WRC to substitute its view for those of the Respondent employer.   In making that Submission the Respondent relies on the case of Bunyan –v- United Dominion Trust [1982] IRLM 400.

“The fairness or unfairness of dismissal is to be judged by the objective standard of the way in which a reasonable employer in those circumstances in that line of business would have behaved.

The tribunal therefore does not decide the question whether or not, on the evidence before it, the employee should be dismissed.   That decision has been taken, and our function is to test such decision against what we consider the reasonable employer would have done and/or concluded.”

In the instant case having regard to all the circumstances there are substantive grounds justifying the dismissal.

The dismissal of the Complainant should be deemed not to be an unfair dismissal as it resulted wholly or mainly due to the conduct of the Complainant.

Furthermore the position the Complainant held as sales and marketing manager of the Respondent company was a critical role in the context of 95% of the Respondents business being export of which most goes to France. The role involves significant responsibilities, discretion and loyalty and good faith. It was paramount to the Respondent that The Complainant could be trusted as he, both in his role and as a native speaker of French, represented the Respondent in dealing directly with customers. His actions will reflect positively or negatively upon the Respondent. The Respondent must have full trust and confidence in the Complainant to act with fidelity, loyalty and good faith without strict supervision. The actions of the Complainant irrevocably broke the trust and confidence of the Respondent in him.

Entirely without prejudice to the above Submission and should the Adjudicating Officer determine that the dismissal of the complainant was unfair then it is our submission that regard must be had to the extent of which any financial loss was attributable to any action, omission or conduct of the Complainant as required by Section 7(2)(b) of the Unfair Dismissals Acts 1977.

The Respondent at the time of preparing this Submission has not received any evidence of steps taken by the Complainant to mitigate his loss as required by Section 7(2)(c) of the Unfair Dismissals Acts 1977. Pending evidence to the contrary it is the Respondents position that the Complainant has failed utterly to mitigate his loss as required.

Strictly without prejudice to previous submissions should it be found that the Complainant was unfairly dismissed and is entitled to compensation regard requires to be had to the fact that the Complainants Contract of Employment was a Fixed Term Contract for 3 years from the 4th of August 2015 to the 3rd of August 2018. In those circumstances the correct basis on which any award for financial losses being made can only extend to the 3rd of August 2018 and thereafter the Complainants contributory fault and separately failure to mitigate loss requires to be taken into account.

In summary the Respondent stated that the Complainant held a crucial and sensitive role due to his knowledge of the seafood market. The MD saw information on the server and saw that there was a conflict in serving the same customers.

The Respondent claims that the Complainant contributed to his own dismissal.

2.       CA-00015729-002 – Hours of Work

The Respondent stated at the hearing that records were not kept for hours worked or time in lieu. The Respondent stated that on occasion the employee could take time off or take personal calls during work but there was no formal record. The Respondent claimed that the Complainant was required to be at work from 9am to 5.30pm at all times of the year. The Respondent acknowledged that the Complainant did raise the issue twice. The Respondent stated that phone records were analysed for a 24 hour period and only 4 hours were work related over the two year period. The Complainant stated that he never saw these phone records and that there was other work done besides the calls. The Respondent also stated that there is a statutory time limit regarding the maximum time the employee had to take a claim regarding his working hours.

1.       CA-00015729-001 – Unfair Dismissal

I need to consider firstly if the dismissal was fair in line with the legislation and secondly if the decision to dismiss was proportionate to the breach of Company policies.

I find that the dismissal was not carried out in line with the rules of natural justice as there was no separating of process between the investigation and the disciplinary sanction, nor was there an opportunity to appeal the dismissal.

2.       CA-00015729-002 – Hours of Work

Both parties gave evidence regarding a very laisse faire process in place and this seems to have been the case regarding hours of work also.

Based on all of the evidence presented both in written submission and orally at the hearing it seems the time in lieu was not recorded correctly but may have been taken on an ad hoc basis.

1.       CA-00015729-001 – Unfair Dismissal

Section 7 of the Unfair Dismissals Acts, 1977 – 2015 requires that I make a decision in relation to the unfair dismissal claim consisting of a grant of redress in accordance with section 7 of the 1977 Act if the dismissal was found to be unfair.

I am also bound consider how the Complainant contributed to and mitigated their loss since. This employee wholly contributed to his demise by opening a competing company and to do so during work time. The employee has not made efforts to get suitable work since his dismissal therefore I find that no award is due to this employee in terms of redress.

2.       CA-00015729-002 – Hours of Work

Section 27 of the Organisation of Working Time Act, 1997 requires that I make a decision in relation to the pay claim consisting of a grant of redress in accordance with section 27 of the 1997 Act.

There were no records kept which is an obligation under the Act therefore I award €1,000 compensation unpaid time in lieu.