Complainant

Respondent

Anonymised Parties

Operations Director

Nursing Home

Representatives

Tricia Sheehy Skeffington BL

Instructed by Elaine Connolly Solicitor

Connolly Maguire Solicitors

Mark Curran BL (Day 1)                 Mark Connaughton SC (Day 2 – 5) Instructed by Sinead O’ Loghlin and Tom Carney

O'Loghlin Hughes 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-00015898-001

20/11/2017

The Complainant is an operations director. The Respondent operates a nursing home. The Respondent was incorporated to operate a nursing home in January 2016. The founding owners of the Respondent sold it in the summer of 2016. The Complainant became part owner (25% shareholder) of the Holding Company which purchased the Respondent. The purchase was completed with the assistance of various financial structures including a personal guarantee on the part of the Complainant to Bank of Ireland for €150,000.00.

The Complainant commenced working for the Respondent on the 1st of July 2016. Her employment ended on the 25th of October 2017 on her resignation.   Her gross pay was €100,000.00 per annum together with other expenses.

The Complainant’s claim is that of constructive dismissal. Her preferred redress was compensation.  She was available for work from the 14th December 2017.   She secured employment on the 25th January 2018 earning a salary of €70,000.00 per annum.

The Respondent made an application that the proceedings of the first day should be adjourned due to parallel proceedings issued by the Complainant before the High Court. The Respondent also submitted that I did not have jurisdiction to hear the matter on the basis that the Complainant was not an employee. The Respondent explained that the Department of Social Protection had issued a decision that the Complainant was not an employee and that a normal employer/employee relationship did not exist between the parties. The Respondent proffered that the tests and determination process to be applied by the WRC and the Department of Social Protection when assessing the employment status of the Complainant are the same for each body. It submitted that the claim was res judicata and that any investigation by me would be a waste of valuable WRC resources.

The Complainant resisted the Respondent’s application on all bases. The Complainant relied on caselaw and submitted that the High Court claim was quite different as the damages sought were breach of contract and damages relating to a Shareholders Agreement.   The Complainant pointed out that the correspondence from the Respondent referred to the Complainant being an employee and they were estopped from now arguing that she was not an employee.

The Respondents replied that the term “employee” used in the correspondence was in the vernacular and I had to weigh this up under all the other indicators that they identified as confirming that the Complainant was not an employee.

I advised the parties that I would consider the application and proceed to hear the substantive case however reserving my decision regarding the preliminary issues.  

The Complainant is one of two members of the Respondent’s board of directors. She described the other member of the board as her “best friend”. Her friend’s husband organised the financial structure for the purchase of the Respondent. He took on the role of financial manager.

The Complainant was a qualified nurse and had extensive experience in nursing home management.

She described it as a dream of hers to own a nursing home.

Her contract of employment designated her with primary responsibility for the operations of the nursing home.  

The Complainant’s evidence was that it was not envisaged that the financial manager was to be in regular attendance at the nursing home and he was not to have any clinical management functions.

The Complainant’s case is that the financial manager overstepped his role in the Respondent and positioned himself in a management position over her. He undermined her role and her dignity in the workplace through inappropriate and bullying behaviour. He undermined her authority as operations director.

The Complainant gave eleven examples of this ranging from his attendance at the nursing home one day per week, attempting to overrule the Complainant’s instructions and impose his management decisions on the running of the nursing home, shouting and showing a barely controlled rage, grilling her both privately and in front of her subordinates.

The Complainant’s case was that she made complaints in respect of bullying and harassment and in respect of ambiguous management structures which issues impacted on her ability to perform her role and impacted on her health.

She was certified unfit to work by her GP on the 23rd June 2017. She attended at the nursing home on the 24th June 2017 and did some “housekeeping” on her desk because she would be off work for a couple of weeks. She said that any files she deleted were of a personal nature and that hard copies of all documents were available and stored in a filing system.  

Her case was that the Respondent and/or its agents’ response to her complaints was entirely unreasonable and it exacerbated rather than resolved the issues between them.   Their response was in breach of their duty to her health and the Respondent’s duty not to act in a manner that destroyed the requisite trust and confidence in the employee/employer relationship.

She submitted that the Respondent’s reaction not only failed to address the issues raised, but served to undermine the Complainant’s role and bully the Complainant through:

Ø  A series of aggressive letters which undermined the Complainant’s authority to manage the Respondent’s nursing home

Ø  The instigation of investigations established with the primary purpose of finding fault with the Complainant’s performance

Ø  A trawl through the Complainant’s private files and legally privileged documents stored on her work computer despite express requests to desist.

Ø  The Respondent’s refusal despite repeated request to adhere to due process in the investigation of her complaint, the assessment of her employment performance and in all investigations in relation to the Complainant’s work and management of the nursing home.

The Respondent’s response resulted in the Complainant’s constructive dismissal.

Under cross examination by the Respondent’s Senior Counsel, the Complainant answered many of the questions put to her that she couldn’t remember. She submitted that she was on medication at the time and was very unwell. She did not consider it surprising that she couldn’t remember.

The finance manager gave evidence on behalf of the Respondent. He described himself as being the conduit between the Respondent, its Banks and the Investor Groups.

The Respondent denied that the Complainant was entitled to claim she was constructively dismissed. It requested that I look at the conduct of both parties. Its case was that the Complainant was not entitled to resign, or it wasn’t reasonable that she resigned in the circumstances of the case.  

Towards the end of 2016 the finance manager became even more involved with the financial accounts of the business. Despite having another full-time job, he attended at the nursing home every Friday.   He explained that there were “issues” on the accounts side of the business.   His evidence was that he had a positive working relationship with the Complainant and he didn’t feel that he was interfering with the day to day running of the business.

On taking up her role, the Complainant relocated from her home and rented a property close by the nursing home. She did this until the end of November 2016. The witness explained that she wasn’t happy with this arrangement as it was a long distance from where she normally lived, and she missed her granddaughter. In February 2017 the Complainant advised the finance manager that she wasn’t happy.   At this stage she had been commuting two hours each way every day to and from work as she had given up her local accommodation. The witness was very concerned about this as the Respondent had given undertakings to banks and investors that the Complainant would be full time involved in the business. The Complainant accepted his concerns and said she would look for local accommodation again.

The Respondent was required to keep a close reign and a careful control over its finances. The investment structure meant that the Respondent had agreed to financial limitations on what it could and could not do. These resulted in controls on the operation of the business. The facility letter from their commercial lender limited capital investments at €25,000.00.

The witness gave evidence that the Subscription and Shareholders Agreement of the Respondents holding company contained a covenant on the part of the Respondent that litigation would not be instigated without prior approval of the funders. The finance manager had serious concerns about a proposal that the Complainant had for a High Court Ward of Court application regarding a resident of the nursing home and the costs that would be involved in the application. On the 9th April 2017 he made these concerns known to the Complainant and the solicitor advising the Respondent on the application.

On the 14th of April 2017 the Complainant advised him that she wanted to leave.   She told him that she felt they weren’t getting on. She wasn’t happy, and she was missing her granddaughter. The witness explained to the Complainant how her leaving would impact on her shareholding and offered to come up with “a proposal” for her.   His evidence was that he was panicked.   He told the Complainant he would come up with something that would work for both of them.

On the 22nd April 2017 he proposed that the Complainant work three days a week with her salary reduced pro rata. He calculated the package equated to about €90,000.00 per annum. He was very worried that the Complainant would leave and he wanted to make it attractive for her to stay. The Complainant said she would consider it.

Post resignation he discovered that the Complainant was applying for other roles at this time (28 April 2017).

The finance manager continued to investigate acquiring other nursing homes. He wanted to build up a Group of nursing homes at which time the Complainant would take up a Group role.

At the end of May 2017, the Complainant advised him that she had changed her mind she wanted to stay full time. The witness was relieved but was confused about what the Complainant said were “issues with regard to defining roles”.

Around this time, the Complainant and the witness were scheduled to view a nursing home with the intention of purchasing same. The Complainant refused to go to the viewing. She refused to meet him. He emailed her suggesting that she could bring somebody independent, impartial, somebody she could trust to a meeting to discuss what issues they had.   He didn’t get a response from the Complainant.

The Respondent argued that the Complainant sought to benefit from amendments she made to the sickness policy. She changed the policy to entitle herself to eight month’s paid sick leave. The Respondent submitted this was an extraordinary insertion into the sick leave policy and disputed there was any basis for same. There was previously no sick pay scheme.

It pointed out that the Complainant removed company documents that related to Nursing Home Residents and HIQUA. Seventeen internal policy documents including a safety statement were removed. They were advised by their IT consultants that 85% of the system was wiped. The Respondent submitted that the removal of these critical policies and procedures showed that the Complainant was engaged in a deliberate attempt to savage the Respondent and make it as difficult as possible for the company after she left.  

The Respondent submitted the Complainant had a duty and obligation to cooperate, to comply with normal procedures and to participate in any complaints made by her.   The Respondent submitted that the Complainant didn’t use the grievance procedures and went ahead and resigned.   That was her decision. She was not constructively dismissed. It submitted she was not forced to resign.   There were other options open to her.

It is not possible for me to address all the evidence both oral and written that was presented to me in this written decision. I don’t believe that in the interests of justice or fairness that I am required to do so.

Having considered the evidence of both sides, I accept that I have jurisdiction to investigate this case.

The Complainant was paid sick pay, holidays and was taxed in the PAYE system. All this was an indicator of being an employee. The Complainant was a minority shareholder, never a controlling shareholder. She was held accountable for her place of work, where she could live, subjected to an annual review, allowed holidays, voucher expenses, she was accountable to financial control and her employment was subject to termination.

I find that the decision of the Department of Social Protection is not binding on me as it relates to the Complainant’s social insurance status.

I also find that I am not prevented from investigating this case because of the Complainant’s High Court proceedings either. The Plenary Summons issued on the 31 July 2018. I read the Indorsement of Claim and it does not claim unfair or wrongful dismissal. In following Ciarán Culkin -v- Sligo County Council [2017 IECA 104] the claim before me is a claim made under a statutory scheme.   The Complainant could not have brought her claim of constructive unfair dismissal in her High Court Plenary Summons. I am not required to wait for the High Court proceedings to have concluded before I continue with this investigation.

The general facts of this case are not unique to the parties. The Complainant herself researched and noted that disagreements in new companies was a frequent occurrence especially in the first 18 months of business. In this case, two friends entered into a venture purchasing the Respondent for a substantial cost and commenced working together for the first time.   The Complainant’s friend was not involved in the day to day running of the Respondent’s business.  

I cannot ignore the reality of the situation the parties found themselves in as regards the company structures and financial obligations. The Complainant was both an employee and a minority shareholder/ one of two members of the board of directors of the Respondent. The working environment was highly regulated, and this added another aspect to the employment relationship.

The oral evidence was presented over the four and a half day. The legal arguments for both sides were well made. I found both witnesses to be truthful in their direct evidence. The fact of dismissal was in dispute. The Complainant resigned from her employment on the 25th October 2017. The burden of proof is on her.

The Complainants case was that she resigned “to survive”. She was being attached by the Respondent and punished for raising a grievance.   She couldn’t hack what was being thrown at her any more. She couldn’t stay in a room with her co-director and the financial manager, let alone remain in business with them. The Complainant relied on her contractual position that she had as operations director. She found the involvement of the finance manager stressful and difficult. She felt her contract was eroded by his behaviour.

The Respondent’s case was that she elected to resign as she recognised she would be in difficulty in explaining her actions in an independent investigation. The finance manager’s evidence was that he deferred to the Complainant as she had the twenty years’ experience. His focus was on finance and accounting. He submitted that the Complainant herself said that “figures were not her thing”.

I accept that the Complainant did in the main have a free rein in running the nursing home. The finance manager’s evidence pointed to his involvement on the financial side of the business only. His evidence was credible. He worked full time in a different business, he attended at the nursing home only one day per week from the end of 2016. He accepted that the Complainant was a crucial person on the working of the nursing home.

I accept that the Complainant was not happy with the finance manager’s involvement. She described the atmosphere as toxic and it came across in the evidence that she sought to avoid any contact with him. She was not in the Nursing home on the day that he was there. This was confirmed by the Respondent’s evidence.

The Complainant confirmed that “the finances were tight”. Disputes between operations departments and finance departments are not unique to this case. In trading companies, sales directors are frequently not happy with credit limits set on them by credit control. As the business was not owned by her alone, I find it reasonable that the Respondent set financial limits on the operation of the nursing home.

I note the Complainant’s evidence that on the 14th April 2017 she advised the finance director that she wanted to leave. She felt they not getting on. She later described this as a knee jerk reaction to the dispute hey had regarding the Ward of Court application on the 9th April 2017. I found the Respondents reaction to this notification instructive. The finance director sent her an email on the 22nd April 2017 suggesting a resolution to her wish to leave. This involved a change to her role. The Complainant sent a replying email on the 17th May 2017 and I read this as a positive response from the Complainant and a wish to start afresh. However somehow by the 29th May 2017 the situation had seriously deteriorated. By then the Complainant had drafted a very detailed 4-page letter outlining her grievances.

At the hearing, I wasn’t presented with any evidence of interactions between the parties from the 17th May 2017 to the 29th May 2017 apart from a meeting at the first communion of the daughter of co-director and finance manager that could explain this change in the Complainant’s stance.

The variance between email of the 17th May 2017 and the letter of the 30th May 2017 is notable. I find that the letter of the 30th May 2017 (sent to the holding company rather than the Respondent presumably in error) set the tone for the reply in correspondence from the Respondent. The letter was technically detailed. It relied on the Regulation 23 of the Health Act 2007 (Care and Welfare of Residents in Designated Centres for Older People) Regulations and referred to Respondent’s duties under the contract of employment and the parties obligations under the Shareholders Agreement. In summary, the letter requested that a mediator or facilitator be engaged to move the issues outlined forward. The Complainant made two suggestions as to who should be approached for the role.

The reply from the Respondent continued in the same technical detail. It reminded me of an arms race. Its reply was more detailed and forceful than the Complainants of the 29th May 2017. This was the way that the inter-parties correspondence continued. Post resignation, the Complainant described the correspondence as “the needlessly aggressive approach to dealing with her complaints”.   At the hearing, Counsel for the Complainant described it as “abrasive, aggressive and difficult” and “a litany of punishing correspondence”. Counsel for the Respondent described it as “voluminous”.

It was clear that the parties were engaging in a process that was becoming more and more acrimonious.   The financial stakes were very high.   The parties were involved in a complicated organisation structure and the work environment was highly regulated.   Their now past personal friendship added to the acrimony. Despite their written words to the contrary, the discord worsened with the exchange of correspondence.  

The penultimate personal letter from the Complainant of the 26th June 2017 was a detailed complaint of bullying against the finance manager. From then on until her resignation letter (being her final personal letter) of the 25th October 2017 all correspondence was through her solicitor. Her solicitors’ letter of the 14th July 2017 ran to 13 pages. As before, I don’t intend to go through this correspondence in detail. The parties are aware of its contents. The letter again suggested mediation to resolve the issues. It stated that the Complainant was anxious to avoid litigation due to the detrimental impact this would have on the Respondent. The solicitor requested several undertakings and set a deadline of the 26th July 2017 for their provision, failing same injunction proceedings were threatened.

The Co-director replied on the 25th July 2017 and some of the contents of the letter were frankly baffling to me e.g. the threat to report the Complainant’s solicitor to the Disciplinary Committee of the Law Society. Mediation was accepted in the letter as the Respondents preference for resolution of the dispute.

On the 21st July 2017 the Complainant emailed the Registration Team of HIQUA and advised them that her co-director who had made an application to be a person involved in the management of the nursing home (PPIM) had no part in the management of the company and had no qualifications or background that would in her opinion make her a suitable person to be a PPIM. I find this to be a provocative action on the part of the Complainant.

On the 27th July 2017 the Complainant suggested that mediation take place in early September 2017. A list of three mediators was suggested.

There was further detailed correspondence from the Respondent on the 31st July 2017.   Again, mediation was set out as the Respondent’s preference to resolve matters. Reference was made to the finance manager viewing the allegations against him as defamatory. This was relied upon by the Complainant as part of her case.

On the 24th August 2017 the Respondent wrote (among other matters) that it was engaging IT specialists to compile a review and retrieve deleted items from the IT system. It also advised that the Complainant would be paid for her three-month sick pay entitlement in accordance with her contract of employment.   The letter also outlined the requirement for the Complainant to complete a return to work interview and her annual review. The review panel was to be chaired by her co-director. The correspondence further set out that the Respondent was committed to pursuing and exploring to address the Complainants grievances including mediation where it is in the best interests of the company. Many paragraphs in this correspondence read contrary to what would be considered good employee engagement.

On the 29th August 2017 the Complainant replied to the Respondent’s solicitor with a detailed 13-page response to the earlier correspondence of the Respondent. The Complainant advised that she removed certain documents of a personal nature from her computer and removed templates which she had stored in a file called ‘Group Folder’ from her work computer.   The letter also referred to the Respondent to the Employee Handbook which referred to a sick pay period of 8 months.

This letter was replied to by the Respondent on the 4th September 2017. Again, it was a detailed letter that deal with all the issues raised in the earlier letters. Of note it disputed the Complainants assertion that she was entitled to receive full pay while absent for a period of 8 months. It also sought to rely on a clause of the Complainant’s contract to terminate her employment on giving not less than three months written notice. The letter outlined that the IT review revealed that significant documentation and correspondence were deleted. It stated that the level of files / documents on the Complainant’s folder on the site computer reduced from 19.4 MB (232 files and 42 folders) to 3.05 MB (33 files and 7 folders) within a 48-hour period immediately prior to 9pm on the 24th June 2017. This was the day after the Complainant was certified as ill and unavailable for work.

I note that the Complainant disputed this and sought a full report of the IT investigation (to include all documentation and written and verbal instructions furnished to the investigator). The Claimant relied upon the failure by the Respondent to provide this report to her and described it as an ambush at the hearing.

Correspondence continued between the parties throughout September 2017 and into October 2017. The allegation and counter allegations continued.   Both sides wrote that they wished to find a resolution. Neither side moved any closer to getting to that position.

The Complainant resigned from her employment on the 25th October 2017. The correspondence between the parties continued. The Complainant’s solicitor’s letter of the 27th October 2017 stated that the Complainant resigned from her employment on medical advice. The Complainant’s medical adviser had advised that the ongoing dispute was detrimental to her physical and mental health.

My role is to decide on whether the Complainant has reached the threshold to claim constructive dismissal.

Constructive dismissal is defined in s.1 of the Unfair Dismissals Acts 1977 as amended (the “UDA”) as:

“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”.

The statutory definition contains two tests either or both of which may be argued by an employee. These tests in practice are interchangeable. The focus is on the conduct of the employer.

• The “Contract” test. Here an employee claims an entitlement to resign on the basis that there has been a significant breach of contract by the employer which goes to the root of the contract or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract; or
• The “Reasonableness” test. Here an employee claims that it was “reasonable” for him or her to resign.

The Complainant brought her grievances to the Respondent on the 30 May 2017, 26th June 2017 and 14th July 2017. The Respondents reaction to same was at time baffling in terms of its employment relationship with the Complainant. Its focus was clearly more on its HIQUA and Company law obligations.   In July 2017 the Respondent appointed a healthcare management consultancy firm to investigate the issues raised in the 14th July 2017 letter of the Complainant. The Respondent also engaged a HR company in October 2017.

The healthcare management consultancy firm set out their terms of reference and in time revised them to address queries raised by the Complainant’s representatives. The Complainant had an issue with their appointment and queried their neutrality. The Complainant suggested three Junior Counsel as alternative investigators. The Complainant’s position was that the Respondent failed, neglected or refused to establish an independent investigation of her complaint and failed to remediate the flawed way the process had been set up as reporting to and to be acted upon by the co-director, the spouse of the person about whom the complaint was made.  

Having considered matters, I find that the Complainant should have engaged with the investigation process that was established by the Respondent. While it may not have been perfectly appointed and the wording of the terms of reference could have been expanded upon, the fact remains that an investigator was appointed, and the Complainant was not prepared to accept its jurisdiction to investigate her complaints.

The Complainant has referred to having no option but to resign. I do not accept that this was the case. The bar for a constructive dismissal claim is very high and the behaviour of the Respondent needs to be such that the Complainant is not expected to put up with it any longer.

I accept the Complainants evidence that she felt she couldn’t stay in business with the finance manager any longer. Their relationship had broken down. Her evidence of him shouting and showing a barely controlled rage, grilling her both privately and in front of her subordinates. I was struck by the email of the Complainant of the 17th May 2017 to the finance manager. I read this email as a positive one to all sides. The Complainant set out that she had “worked very hard this past year and I know that you have too, and I’m proud of all that has been achieved in …... so we would be foolish to just throw it away so soon.”

The Complainant relied upon the correspondence of the Respondent as a basis for her actions.   I must decide if the approach of the Respondent in their correspondence was unreasonable. As stated above, I believe that the detail and tone of the Complainants letter of the 30th May 2017 set the bar for the Respondent’s response. I also accept that some of the correspondence from the Respondent was wrong from an employment law perspective. However, the Complainant had the benefit of expert legal advice and the Respondent did eventually set out its willingness to investigate the Complainant’s grievances and engage in mediation. While most of the correspondence of the Respondent focused on the regulatory and company law interaction between the parties, it also outlined the Respondent’s position on the Complainant’s actions while she was in the workplace. The Respondent raised the amendment to the sick pay policy, deletion of files from the IT system, completion of a customer registration form for a local cash and carry which included a personal guarantee on the part of her co-director. Based on the evidence presented to me, I accept that the Respondent had reasonable grounds to raise these with the Complainant.

The last two pieces of correspondence from the Respondent before the Complainants resignation -on the 25th October 2017 - referred to resolution of the disputes and mediation.   These letters of the 6th October 2017 and the 16th October 2017 as well as the Complainant’s solicitors’ own letter of the 9th October 2017 set out the parties positive stances towards mediation. Both sides were in favour of mediating the dispute, however I accept that the parties were far from appointing a mediator.

I have no doubt that engaging in such detailed correspondence with her employer was extremely stressful for the Complainant. At the time of her resignation, the Complainant was not attending work. The correspondence between the parties continued after her resignation and I expect it will continue for many years to come. It was only the investigation process which she requested came to an end.

I accept the Respondents submission that had the Complainant remained in employment and participated in the investigation process, she would have to explain her actions in terms of the policy documents, IT deletions, customer registration form set out above. Similarly, the finance manager would have to explain the complaints made against him.

Therefore, in answer to the first of the two tests setting out the definition of Constructive dismissal in s.1 of the Unfair Dismissals Acts 1977, I find that the Complainant has not met the contract test.   I do not find that there has been a significant breach of contract by the Respondent which goes to the root of the contract or which shows that the Respondent no longer intends to be bound by one or more of the essential terms of the contract.

I also find that the Complainant did not meet the reasonableness test. I do not accept that she had no alternative but to resign. The parties were still engaging in October 2017. An investigator had been appointed to investigate the Complainant’s grievances. The Complainant unilaterally decided to end the employment relationship. She is entitled to so for her own reasons but on the evidence presented to me, she did not meet the test to claim constructive dismissal.

I find that this case is not well founded.

Constructive dismissal.