UDD1840

This matter came before the Court by way of an appeal brought by Mr Niall Homan (‘the Complainant’) against the decision of an Adjudication Officer (ADJ-00007256/CA-00011244-001, dated 16 November 2017) under the Unfair Dismissals Act 1977 (‘the Act’). The Complainant’s Notice of Appeal was received by the Court on 22 December 2017. The Court sat on 28 March 2018 and again on 3 July 2018 to consider the within appeal and a number of related appeals. The Complainant gave evidence on his own behalf; Mr James McManus gave evidence on behalf of Unique Diary Productions Limited (‘the Respondent’).

The Complainant was employed by the Respondent to lead the development of a school diary ‘App’. His annual salary was €35,000.00 gross. His job involved a considerable amount of travel to second-level schools around the country. He was also required - during the final three years of his employment - to travel on a regular basis, usually for about a week at a time, to Mumbai, to where the development of the App had been outsourced. The Complainant submits that a combination of factors put him in the position where he was left with no option but to leave his job with the Respondent. Those factors included the excessive hours he was continuously required to work, the erratic manner in which his monthly salary was paid, the fact that he was constantly having to make loans to the Respondent and ultimately - what he characterises as - the Respondent’s demand that he make a substantial financial investment in the business in order to ensure his continuity of employment. The Complainant initially informed the Court - in his written submission - that he regarded himself as having left his employment on 1 January 2017. However, in the course of giving direct evidence, he indicated that he had, in fact, arrived at the decision to leave his job over the course of the weekend of 26 to 27 November 2016. On 27 November 2016, he went to his office at the Respondent’s premises and removed several pieces of computer equipment, including back-up disks. In or around that time, he also effectively shut down a cloud-based calendar system on which the entire team in the office was reliant.

The Respondent submits that the Complainant raised no grievance about his terms and conditions of employment, his working hours, payment arrangements or any other matter prior to his departure. The Respondent accepts that there had been protracted discussions between Mr McManus and the Complainant about the latter acquiring equity ownership in the App that the Respondent was developing in return for a financial investment in the business. The Respondent’s understanding was that a final proposal in this regard had been put to the Complainant in mid-November 2016 and the Complainant initially accepted the outline terms of this proposal but subsequently informed Mr McManus that he was unable to secure the funds to proceed with the investment.

The Respondent submits that the Complainant’s unilateral decision to close down the cloud-based calendar after his departure caused it considerable difficulty with many of its customers as that calendar was the sole repository of all appointments scheduled for the period beyond the end of November 2016. For its part, the Respondent states that through its Managing Director, it made numerous attempts to contact the Complainant by email once it became apparent that he had emptied his office on Sunday 27 November 2016. However, the Complainant did not reply and gave no indication to it of his intentions. The Respondent continued to pay the Complainant up until 31 December 2016. Finally, it was submitted on behalf of the Respondent that the Complainant never notified it in writing or otherwise that he had resigned his employment.

Summary of Complainant’s Evidence

In his direct evidence, the Complainant told the Court that the reason for his resignation was that he was required to work excessive hours and he received very little in return for his efforts on the Respondent’s behalf. He also said that his salary was paid in a haphazard manner – as and when the company was in funds – and that he was regularly asked to loan money to the company. He also informed the Court that he believed he was owed a considerable amount of money in respect of business expenses he had incurred and for which he had not been reimbursed by the Respondent. Although his salary was only €35,000.00 per annum, he says he was required by the Respondent to invest €100,000.00 in the business in order to retain his job. When that request was made of him, he believes the company was already indebted to him for some €25,000.00. Despite all of the foregoing, the Complainant informed the Court that he loved his job and did not want to leave it but eventually found himself with no other option. He says that he had raised all his grievances in relation to his working conditions with Mr McManus, the Managing Director to whom he reported directly, and that it took Mr McManus some eight months to revert with a wholly unsatisfactory proposal i.e. that the Complainant invest €100,000.00 in the business in return for a 20% equity share in the App. The Complainant said that Mr McManus failed to put that limited proposal in writing to him.

The Complainant offered the following explanation for his decision to close down the calendar that had been in use in the office up until the end of November 2016. His evidence was that he had created the Calendar using his personal Apple account and had voluntarily given access to colleagues in the office over a period of time. He believed it was his personal calendar, nevertheless. He said he did not know what information remained accessible to his colleagues in the office when he ‘unsubscribed’ from it, sometime between 27 November 2016 and 2 December 2016.

The Complainant gave evidence that he secured alternative employment in or around 20 February 2017 and that his salary in his new job was €35,000.00 gross per annum, plus a potential annual bonus of €2,500.00.

Summary of Evidence given by Mr James McManus

Mr McManus gave evidence in relation to having worked with the Complainant for some twenty years in a number of different ventures. He told the Court that the Respondent company’s main business is the production of school diaries. He came to the view - sometime in 2008 or 2009 – that school diaries would go digital and, therefore, came up with the idea of developing a suitable App and bringing it to market. He told the Court that the Complainant had suggested that they source software developers in India.

The witness told the Court that the Complainant had never broached the issue of his acquiring equity in the App. By 2015, he said, the Respondent was spending a considerable amount of money developing the App (up to €150,000.00 per annum) and this was proving to be a significant draw on its resources. For that reason, Mr McManus applied for, and was successful in attracting, EEI investment of €100,000.00 in return for an equity share in the business. At that time, the Complainant had made a number of loans to the company which were due to be repaid to him. For that reason, Mr McManus suggested to the Complainant that he consider converting his loans into an investment in the App in return for equity. To the witness’s surprise, he says, the Complainant declined the offer. However, in April 2016 – over the course of a bank holiday weekend - the Complainant unexpectedly sent him an email asking Mr McManus to confirm that he (the Complainant) was entitled to 50% ownership of the App. The witness undertook to engage in discussions at an appropriate time with the Complainant about his acquiring equity but that this would involve a significant amount of preparatory work such as putting a value on the App and extracting it from the Respondent’s main business. Mr McManus wrote to the Complainant to that effect on 20 April 2016 confirming that he was committed to engaging with him in relation to attempting to arrive at an agreement regarding some equity division in the App but envisaged that that process would take some months and that there was, nevertheless, a realistic prospect that all matters could be resolved by 1 January 2017. Mr McManus told the Court that he and the Complainant had a number of conversations in the months after April 2016 about the issue of equity in the App, all of which were initiated by Mr McManus. Those conversations, he said, culminated in his making an offer to the Complainant of a 20% stake in the App in return for a payment of €100,000.00. He made this offer in mid-November 2016, a day prior to leaving for India. His evidence is that the Complainant was extremely happy with the offer and they shook on it.

Mr McManus expected the Complainant to have secured the funds by the time he returned from India a week later and that they would formally document their agreement at that stage. However, at a meeting on 21 November 2016, the Complainant told Mr McManus that he had been unable to raise the money. At that point in time, the Respondent’s business was in a precarious position financially as a large VAT payment fell due for payment on 23 November 2011 and Mr McManus anticipated receiving the funds from the Complainant to meet that bill. Both Mr McManus and the Complainant were absent from the office for various reasons for the following number of days. When Mr McManus returned the following Monday – 28 November 2016 – he discovered that the Complainant had been in the office between 7.30 and 9.30 pm the previous evening and had removed some IT hardware and back-up disks and had changed his passwords. He subsequently discovered that the Complainant had closed down what was effectively the electronic calendar for the entire business and included all future planned meetings as of November 2016. Thereafter he sent several emails to the Complainant but never received a reply. He did not hear from the Complainant until April 2017 when the latter asked him to meet for a personal, non-business chat. He agreed to this and was subsequently surprised to receive notification of the Complainant’s claims to the Workplace Relations Commission.

The witness accepts that the Complainant was paid his salary in a haphazard manner and that the Complainant regularly advanced loans to the business. His evidence is that the Complainant fully understood the cyclical nature of the school diary business and was happy to proceed on that basis. He always received the balance of payments due to him when he requested them and his loans were always repaid as agreed. The witness also told the Court that the Complainant had never raised a grievance with him about the manner in which he received his salary payments or about the Respondent’s dependence on receiving loans from him, from time to time. Finally, the witness confirmed that the only contentious issue raised by the Complainant related to an equity share in the App which Mr McManus believed the Complainant – for no apparent reason – simply (and naively) assumed he was entitled to fifty per cent ownership of.

Discussion and Decision

The Act undoubtedly places a high bar on a Complainant who is seeking to establish that he or she was constructively unfairly dismissed within the meaning of the Act. Such a Complainant is required to demonstrate that it was reasonable in all the circumstances for him or her to terminate his or her employment as a consequence of either a breach by the employer of a fundamental term of the Complainant’s contract of employment or some other unreasonable behaviour on the part of the employer. Furthermore, the established jurisprudence in this area points strongly to the requirement that an employee must first have brought his/her grievance or concerns to the employer’s attention prior to resigning and claiming constructive unfair dismissal.

The Complainant in the within appeal was unable, in the Court’s view, to demonstrate that his decision to abandon his employment was motivated by a breach of his contract on the part of the Respondent. In his evidence to the Court, the Complainant sought to rely on the haphazard manner in which he had been paid his salary and the frequent loans he advanced to the Respondent as justifying, in large measure, his decision. However, it is clearly the case that the Complainant had a long working relationship with the Respondent’s Managing Director that stretched back over some twenty years, during most of which the same patterns of haphazard payments and advances from the Complainant to the business were regular features. That being the case, it is clear that the Complainant acquiesced in those arrangements. Moreover, the Court did not find the Complainant’s claim that he had raised a grievance with Mr McManus in relation to these issues in the immediate period prior to his departure credible.

The Court is of the view that the matter which led to the breakdown in the long and apparently otherwise amicable and mutually beneficial working relationship between the Complainant and Mr McManus was the issue of the Complainant’s wish to acquire an equity stake in the App business. This is perfectly understandable and was acknowledged as such by Mr McManus. However, following a protracted period of discussions between Mr McManus and the Complainant in relation to this issue between April and November 2016, Mr McManus made what he described as his best and final offer to the Complainant. The Complainant initially expressed his satisfaction with the offer and accepted it, assuring Mr McManus that he could and he would raise the necessary funds to meet the offer. In the space of a week, however, the Complainant changed his mind although he told Mr McManus that he was unable to raise the funds.

It is not for this Court to adjudicate on the commercial merits or otherwise of the offer made by Mr McManus to the Complainant of a 20% equity stake in the App in return for a payment from the latter of €100,000.00. The Court’s function is to determine – having already found that the Complainant has not made out a case that a breach of a fundamental term of his contract had occurred – whether or not the Respondent behaved in such a fundamentally unreasonable manner towards him that it was reasonable for the Complainant to abandon his employment. The Court was impressed by Mr McManus’s evidence generally and in particular by his undisputed account of the initiatives he took during the period April to November 2016 to get agreement with the Complainant in relation to the terms on which the latter might acquire an equity stake in the App business. In the Court’s view, Mr McManus cannot be said to have acted unreasonably towards the Complainant. Mr McManus adopted a business-like and professional approach in seeking a resolution to a purely commercial issue between him/the Respondent and the Complainant. In all the circumstances, it was reasonable for Mr McManus to believe that he reached an agreement on the matter with the Complainant in mid-November 2016. The manner in which the Complainant subsequently decided to abandon his employment without notifying anybody in the business of his decision and his true intentions was anything but reasonable.

Having regard to the foregoing findings and the evidence adduced in the course of the within appeal, the Court finds that the claim of constructive unfair dismissal within the meaning of the Act is not well-founded. The decision of the Adjudication Officer, therefore, is upheld.

The Court so determines.

Signed on behalf of the Labour Court



Alan Haugh
MK______________________
9 July 2018Deputy Chairman



NOTE

Enquiries concerning this Determination should be addressed to Mary Kehoe, Court Secretary.