Complainant

Respondent

Anonymised Parties

Merchandiser

Marketing Company

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-00023756-001

04/12/2018

The Complainant is a merchandiser and the Respondent is a marketing company.

The Complainant commenced working for a predecessor of the Respondent on the 1st of September 1983.

Since 2008 the complainant worked in or around 30 hours per week. She had worked more hours but had reduced them at her own request. She never received a contract of employment.

Her case was that she received notice that her hours were being reduced permanently in June and July 2018. She resigned from her employment in July 2018. She did not receive a redundancy payment.

The Complainant argued that she was dismissed as envisaged under Section 9(1)(c) of the Redundancy Payments Acts due to the Respondent’s conduct.

The Respondents disputed this and argued they were not given an opportunity to replace the hours that were “lost” and essentially submitted that the Complainant was not dismissed. In addition, the Respondent argued that the Complainants work hours were not reduced to less one half of her normal weekly hours and that did not qualify for her for a redundancy payment.

The Complainant disputed that this was a lay-off situation as set out in Section 11(2) of the Redundancy Payments Acts.  

The Complainant gave evidence that her main duties involved merchandising products in various shops for customers of the Respondent.

The two relevant customers were a dairy company and confectionary/snack company.   For these customers, the Complainant was responsible for merchandising two products for each customer.

The Complainant’s weekly hours were loosely divided up between

-          The Dairy company: 17 hours spent on product A and 8 hours spent on product B

-          For the Confectionary company: 5 hours spent on product C and 1.5 hours on product D

The Complainant received a letter dated 4th May 2018 from her Accounts manager. It notified her that from the 8th of June 2018 she would no longer be merchandising Produce C which was 5 hours of her weekly work. The explanation given was that the store in which she was working was moving to a centralised purchasing and merchandising model and no longer engaged the Respondent for this product. The Respondent would no longer have that work available for the Complainant to carry out.

The Complainant received a further letter dated 7th June 2018 from a different Accounts manager with the Respondent. It informed the Complainant that from the 22nd of July 2018 because of the centralised system being introduced by the stores, the Respondent would be no longer providing food merchandising and ordering for Product B. This meant that the Complainant lost a further 8 hours of her working week.

The effect of these two letters was that from the 22nd of July 2018 the Respondent would no longer have work for the Complainant for Products B and C.   This resulted in a reduction in 13 hours (8+5 hours) or 41% of the work that she was engaged for the Respondent.   Her pay was to be reduced by €150.00 per week.

The Complainant submitted that there was no prospect that these hours would be recovered through other work provided by the Respondent. The Respondent’s letter of the 7th June 2018 stated

“[Respondent] will endeavour to offer suitable alternative or short-term work where such work may exist, however this is not always possible.”

The Complainant approached her supervisor enquiring about redundancy but was advised that no one in her area was being offered redundancy.

The Complainant resigned from her employment on the 8th of July 2018.

She submitted that she was entitled to her redundancy by reason of the employer’s conduct. She relied on Section 9 (1)(c) of the Redundancy Payments Acts 1967- Dismissal by employer. She referred to the EAT decision in McCann –v- Vantage Wholesale Limited (RP 253/2001).

The Complainant submitted that the change to her terms and conditions was a repudiation of her contract of employment by the Respondent. The Respondent had made it clear that it was not going to be contractually bound by the existing contract of employment.

She also relied on the UK EAT decision in Packman –v- Fauchon [2012] ICR 1362 where a reduction in working hours was accepted to amount to a redundancy scenario.

The Complainant submitted that the reduction in her working hours was dramatic and had a hugely negative effect on her earnings. The Respondent was aware that the introduction of the centralised distribution / marketing system was planned for at least 3 years. The Complainant submitted that it was a continual topic of conversation between her and her line manager. She had raised the question during these conversations as to her entitlement to a redundancy payment. She had assumed she was entitled to it.

The Respondent disputed that the reduction in working hours had such a dramatic and negative impact on the Complainant. Its case was that the Complainant had in the past 2 – 3 years reduced her own availability with the Respondent to take on additional work with a different company.

The Complainant was a valued member of the Respondents merchandising team and it didn’t want to lose her.

The Respondent had provided the notification of the reduction of hours to the Complainant effective on the 8th June 2018 and 21st June 2018.   The loss of the hours was outside of its control.

However, the Complainant resigned on the 2nd July 2018 before the Respondent had time to exhaust all external avenues of finding replacement hours for her. The Respondent submitted that it would now be able to offer her more hours.

The Respondent had set a criteria that any employee whose hours of work had reduced by more than 50% would be entitled to a redundancy payment. The Respondent submitted that the Complainant did not fall within that criteria.

The Respondent pointed out that the Complainant had not spoken with her line manager before she resigned. It only received an email from the Complainant advising of her resignation.

To be entitled to a redundancy payment under Section 7 of the Redundancy Payments Act 1967 (hereinafter called “the Act”) there must be a dismissal.

The definition in the Act of “date of dismissal”, refers to both termination by the employer and the employee.

Section 9 of the Act is the relevant section on what is a dismissal.  

9. Dismissal by employer

(1) For the purposes of this Part an employee shall, subject to this Part, be taken to be dismissed by his employer if but only if–

(a) the contract under which he is employed by the employer is terminated by the employer, whether by or without notice, or

[(b) where, under the contract under which the employee is employed by the employer the employee is employed for a fixed term or for a specified purpose (being a purpose of such a kind that the duration of that contract was limited but was, at the time of its making, incapable of precise ascertainment), that term expires or that purpose ceases without being renewed under the same or similar contract, or]

(c) the employee terminates the contract under which he is employed by the employer [ …] in circumstances (not falling within subsection (5)) such that he is entitled so to terminate it by reason of the employer's conduct. (Emphasis added)

The definition of “dismissal” in subs.(1)(c) is not as extensive as the equivalent definition of constructive dismissal in the Unfair Dismissals Act 1977. It only applies where the employee is “entitled” to terminate the contact.

In McCann v Vantage Wholesale Ltd RP 253/2001, the Employment Appeals Tribunal (chaired by Dermot MacCarthy SC) said that the word “conduct” in subs.(1)(c) did not “mean conduct which is necessarily blameworthy, but conduct that can be looked at factually”. In that case the Tribunal held that the claimant, “in terms of the law of contract”, was entitled to treat the company's action in changing the nature of his employment as a “repudiation” of his contract of employment.

In this case, I accept that there was an unequivocal communication to the Complainant that her hours were being reduced. In the letter of the 4th May 2018 there was no indication that the termination of the Complainant’s hours for Product C (5 hours) would be anything other than a permanent termination. There was no indication that the reduction in hours would be temporary and reinstated in the future.

In the letter of the 7th June 2018 there was no indication that the termination of the Complainant’s hours for Product D (8 hours) would again be temporary only. The Respondent did indicate it would “endeavour to offer suitable alternative or short-term work where such work may exist however this is not always possible”. The wording was so qualified as to reasonably read that the reduction would be permanent.

I note that the Respondent never did offer the Complainant alternative employment to reinstate her “lost” hours and advised that it was only at the time of the hearing of this case that it would have been able to do so.

Based on the above, I accept the submissions of the Complainant in that that Respondent was proposing new terms and conditions of employment viz a viz hours of work and correlating wages.   These terms were of such nature that the Respondent was clearly not agreeing to be bound by the existing contract terms.

In that case the Complainant was entitled to terminate the contract of employment by reason of the employer's conduct as contemplated in Section 9(1)(c) of the Act.

On finding that there was a dismissal, I now turn to the terms of Section 7 of the Redundancy Payments Acts.

7. General right to redundancy payment

(1) An employee, if he is dismissed by his employer by reason of redundancy or is laid off or kept on short-time for the minimum period, shall, subject to this Act, be entitled to the payment of moneys which shall be known (and are in this Act referred to) as redundancy payment provided—

(a) he has been employed for the requisite period, and

(b) he was an employed contributor in employment which was insurable for all benefits under the Social Welfare Acts […], immediately before the date of the termination of his employment or had ceased to be ordinarily employed in employment which was so insurable in the period of [four] years ending on that date.

(2) For the purposes of subsection (1), an employee who is dismissed shall be taken to be dismissed by reason of redundancy if [for one or more reasons not related to the employee concerned] the dismissal is attributable wholly or mainly to—

(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, or

[(b) the fact that the requirements of that business for employees to carry out work of a particular kind in the place where he was so employed have ceased or diminished or are expected to cease or diminish, or

(c) the fact that his employer has decided to carry on the business with fewer or no employees, whether by requiring the work for which the employee had been employed (or had been doing before his dismissal) to be done by other employees or otherwise, or

(d) the fact that his employer has decided that the work for which the employee had been employed (or had been doing before his dismissal) should henceforward be done in a different manner for which the employee is not sufficiently qualified or trained, or

(e) the fact that his employer has decided that the work for which the employee had been employed (or had been doing before his dismissal) should henceforward be done by a person who is also capable of doing other work for which the employee is not sufficiently qualified or trained.]

(emphasis added).

The Complainant relied on Section 7(2)(b) above and the diminution of work provision in support of her claim.

I note that the Respondent did accept that a redundancy payment was made to any employee of theirs who lost 50% or more of their hours.

I accept the Complainants submission that the reduction of the Complainants hours is covered by Section 7(2)(b) of the Redundancy Payments Act.

Therefore, having considered the submissions of the parties, I conclude that the Complainant’s employment was terminated by the Respondent following the loss of 41% of her working hours and the termination of the contract employment between the parties. I find that no reasonable offer of alternative employment was made to the Complainant to reinstate her reduced hours and the provisions of the Lay-off and short-time are not applicable to this case.

I find that the Respondent terminated the Complainant’s employment pursuant to Section 9(1)(c) of the Redundancy Payments Acts on the 8th July 2018 by reason of redundancy and that consequently the Complainant is entitled to receive a redundancy payment in accordance with the provisions of the Act.

I decide that, pursuant to the Redundancy Payment Acts, the Complainant’s case is well founded, and she is entitled to a statutory redundancy lump sum payment calculated as per the following criteria:

Date of commencement of employment: 1st September 1983

Date of notice of termination of employment: 8th July 2018

Date of end of employment: 14th July 2018

Weekly gross pay: €301.00 per week

This award is made subject to the Complainant having been in insurable employment under the Social Welfare Acts during the respective period of employment.

Redundancy. Constructive dismissal.  Section 9(1)(c) Redundancy Payment Acts.