Complainant

Respondent

Anonymised Parties

An Employee

A Freight Company

Representatives

Represented by Patrick O’ Brien BL, instructed by Tallans Solicitors

Represented by O'Shea Legal

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-00020629-001

18/07/2018

The complainant commenced employment with the respondent on 15 February 2016 as a business development manager. The respondent is a company which carries on the business of, inter alia, transport, freight forwarding, project specialisation and air freight. The complainant is alleging that he was unfairly dismissed on 12 March 2018 while the respondent has submitted that the dismissal was by reason of redundancy.

The complainant received an offer of employment from the respondent and was subsequently employed on foot of a contract of employment dated 15 February 2016. The complainant was employed in the role of Business Development Manager and his role was a full-time position. He worked Monday to Friday undertaking 37.5 hours per week. He earned a gross annual salary of €50,000. Pursuant to the terms of his contract, the complainant was also entitled to commission at a rate of 15% on gross margin of any new business secured. The complainant was also entitled to be paid vouched mileage. The complainant’s duties included but were not limited to, developing new solutions and services, introducing direct sales and assisting with the development of the respondent’s office in Holland. The complainant states that on 9 August 2016, he introduced Mr. R to the Director of the respondent company (Mr.D). The parties had a meeting on that date, following which, it was agreed that the respondent would establish a separate company under the group banner which would operate in the UK. The purpose of that company was to enable the respondent to establish a service in that jurisdiction. The complainant submits that it was agreed between the parties that the shareholding in that company was to be allocated at 75 percent to Mr. D, 18 percent to Mr. R and 7 percent to the complainant. It was further agreed that if the complainant left his employment with the respondent that he would relinquish any shareholding with no charge. The complainant states that it was expressly agreed that as the respondent was the complainant’s employer, that the complainant would not spend any time contributing to the development of this business in the UK. The development of that company was the sole responsibility of Mr. R who was also its Managing Director.

The complainant contends that in October 2016, he was requested to provide a budget forecast for targets which were client specific. The complainant states that he was concerned at this approach and advised the respondent that he preferred to do a revenue based approach. Notwithstanding this, the respondent insisted on a “named” budget which is client specific. This became an issue of significant contention between the parties. The complainant states that on 2 May 2017, he suffered a heart attack at home. The complainant was hospitalised. He was absent from work as a result from 3 May to 9 June 2017. While the complainant was in hospital, he received a text from Mr. D wishing him well but also requesting a report from the complainant’s most recent visit to Holland when the complainant had an opportunity. In accordance with the terms of the contract of employment, the complainant was paid while he was on certified sick leave. While the complainant was absent on sick leave, he continued to participate with work e-mails and the preparation of quotations. On 13 June 2017, the complainant submitted his report to Mr. D regarding his visit to Holland. The complainant received an e-mail from Mr. D on the same day which was copied to other employees which was negative and critical of the complainant.

The complainant states that on 14 July 2017, he received an e-mail from Mr. D advising of the need for him to attend the office once a week. It is submitted that this is a performance related e-mail. It signs off with “Peter, I am aware from the outset that you like to work loose, but this loose is not workable for quality freight.”   The complainant states that importantly in the context of this claim, there is no mention of redundancy in this e-mail. There was a meeting on 22 September between Mr. CD (son of Mr. D), Mr. D and the complainant. This meeting related to the complainant’s performance. The complainant submits that there was no mention of redundancy. The note of what occurred at this meeting commences with the line “Peter, we have 2 months to sort matters out or we have a major problem.” It then contains a list of tasks that the respondent required the complainant to complete. By letter dated 22 November 2017, the complainant was requested to attend the company’s Occupational Physician for a medical to ensure that conditions at work were not unduly challenging to his health. The complainant highlights the questions posed by the respondent for the OT to answer. It stated … “Trading conditions in his division are currently very challenging and Mr. S may be required to participate in a rigorous decision-making process in the coming weeks in an effort to make changes necessary to rectify the performance shortfall.”  

The complainant states that by letter dated 30 November, he was invited to a meeting to discuss the prospects for his post. He was invited to bring a trade union representative or a colleague. The meeting was set for 4 December 2017. The letter informed the complainant that the company was “reviewing the role of development manager because of the lack of results.” It signs off by stating “having heard your proposals and explanations we will then review our discussion with a view to bringing clarity to our intentions regarding your role in the company.” At the meeting of 4 December, Mr. CD, Mr. D, Mr. R and the complainant were present. Mr. R attended with the complainant as his colleague. Without any prior notification to the complainant, the first issue that arose at the meeting were the results of the medical examination with the OT. The complainant states that he did not have prior sight of the medical report. Secondly, the complainant was presented with a copy of a private e-mail which he had received from a client in Holland and was requested to comment upon its content. Together with those issues, the complainant’s performance was discussed, and it was stated by Mr. D that notwithstanding the contribution the complainant had made to the business in Holland, the gross contribution of the complainant was insufficient and that the respondent needed to consider the role of the complainant and that Mr. D would let the complainant know in 24 hours. The complainant submits that at that point, he voiced his extreme concern that the respondent “wanted him out” and asked if he was being suspended. The complainant was advised that he was not. There was then mention of gardening leave by Mr. D, albeit in error and he corrected himself and informed the complainant that he was on paid leave until the respondent got back to him the following day. The complainant states that at this meeting, there was no mention of redundancy. It is the complainant’s position that this was a performance review which because of the e-mail correspondence developed into an investigation where he was informed that his role was being considered and he would be told within 24 hours of the outcome. The complainant submits that this meeting breached the requirements of fair procedures for an investigation and clearly was not to discuss redundancies in the company.

The complainant was certified as unfit for work. On 14 December 2017, the complainant received a letter from the respondent which indicated that the issues of performance and possibly inappropriate representations to a client would require further discussion. The letter informed the complainant that he had used his contractual entitlement to sick pay and that he would be paid until 15 December 2017. On 18 January 2018, the complainant received a letter entitled “Proposed Redundancy”. The complainant highlights that it was solely him that was being considered for redundancy and the true reason for this was alleged want of performance. The complainant outlines that absent from this letter are the common explanations such as the events leading the company to the position where it had to consider redundancies, such as that the company had looked at all available steps to avoid redundancies to include redeployment or short-term working, there was no selection process, criteria or matrix set out or explained. There were no global figures presented to explain the necessity for redundancy but instead it was the cost of the complainant to the respondent company which was explained. The complainant was invited to submit proposals to the company.

A meeting was held between the parties on 9 February 2018. At the meeting, the complainant again stated that he was unfairly selected for redundancy. The complainant proposed that he should have been considered for other roles and considered for other positions within the company. This letter was sent after the complainant had been notified of his redundancy on 26 February and almost one month after the meeting on 9 February. This offer was declined by the complainant who maintained at this point, he had lost trust and confidence in the respondent. The complainant states that the respondent made three offers to the complainant by way of ex-gratia payment which were completely unacceptable to the complainant. A further meeting was held on 19 February 2018. At this meeting, a further “voluntary redundancy” offer was made to the complainant who was informed that he had until 2 pm on that date as to whether he would accept it but he declined this offer. The complainant states that by letter dated 26 February 2018, he was informed of his redundancy which would take place on 12 March 2018. The complainant states that by letter dated 8 March 2018, the respondent purported after the fact to invite the complainant to be assessed for eligibility for these roles and score him against other employees. The complainant states that he was offered a right of appeal which he did not exercise as he felt it would be futile as it would have been heard and determined by those who had taken the decision to terminate his employment.

The complainant submits that in order for a valid redundancy situation to exist, it must be unconnected to the particular employee who is to be made redundant and that a genuine redundancy situation arises in circumstances where the work diminishes or changes. The situation must relate to the state of the business rather than the particular employee. The complainant submits that when one looks at the minutes of the meetings, what is addressed is the performance of the complainant as opposed to a business which is diminishing or making a legitimate change. The complainant submits that the respondent has an individual contract with the complainant and when it comes to terms, conditions, grievances and disciplinary matters, termination of employment and redundancy, particular regard must be had to the individuality of the employees and their rights, entitlements, obligations and duties. It is submitted that this derives the employee’s right to fair procedures which the complainant argues were not afforded to him in the instant case. In this regard, the complainant cites the case law in Pacelli v Irish Distillers Ltd. [2004] ELR 25. In relation to guidelines on the selection of employees for redundancy, the complainant cites the case of Williams v Compare Maxam Ltd [1982] IRLR 83. The complainant also highlights the caselaw in Barton v Newsfast Freight Ltd UD 331/1993 and Sheehan and O’Brien V Vintners Federation of Ireland Ltd UD 169 / 2005 and O’Kelly v Exsil Ltd. UD 1086 / 2007 in support of his case.

The respondent states that the complainant commenced with the company on 15 February 2016. Discussions with the complainant regarding the viability of his post due to inadequate results began on 4 July 2017 following previously unaddressed concerns raised at personal meetings and in writing by e-mail dated 6 April 2017. The respondent states that further e-mails ensued on 14 July and 9 August 2017 which elaborated on these issues. The respondent submits that meetings and discussions on the subject occurred on 10 and 28 July and 22 September. The respondent contends that after eight months of consultation he was served notice of redundancy by letter on 26 February 2018 and his employment ended after due notice period on 12 March 2018.

The respondent maintains that the role of Business Development Manager was an experimental post originally created specifically with the complainant in mind after commercial discussions with him about new clients and new types of freight business he claimed he could bring to the company based on his personal contacts and experience in the freight business. The respondent asserts that the post was not advertised and other candidates were not considered for the position. The respondent submits that almost all other functions in the company are administrative posts, none of which are identical to, similar to or interchangeable with the post created for the complainant. It states that the creative development role is fundamentally different in form and nature from administrative tasks of a routine and formulaic nature which all other posts in the company (apart from the MD) involve. The respondent submits that due to the unique nature of the complainant’s role, he worked independently and mostly out of the office away from other staff.

The respondent maintains that the reason for redundancy of the post was that the complainant’s own projected gross margin contribution of €142,605 on the company’s Dublin operations turned out to be an actual gross margin contribution of €14,398 which was €128,000 short of his promised contribution and €166,427 short of the figure which the company informed him would be necessary to justify his post. The respondent states that the complainant was given the opportunity to present a plan to rectify the shortfall over the eight-month consultation period but no feasible plan was presented. The respondent submits that by letter dated 18 January, a full explanation as to why the post was financially unsustainable was given to the complainant. It states that the complainant was asked to provide suggestions about alternatives to redundancy at the meeting of 4 December and 12 January and by letter of 18 January and 15 February. However, no proposals for retaining his post were forthcoming.

The respondent submits that at a meeting of 9 February, the complainant asked to be considered for the posts of existing employees. The company provided a list of all the posts within the company and gave an explanation why they were unrelated to the redundancy, were not similar or equivalent to his role and were unsuitable for the complainant in each individual case.

The respondent states that it made three different offers of an enhanced ex gratia payment which the complainant refused. The respondent states that it issued notice of redundancy by letter dated 26 February and indicated that the complainant could appeal that decision if he wished. The respondent asserts that it wrote to the complainant on 8 March asking for clarifications about his assertions and objections before setting a date for the appeal hearing. The respondent submits that as the complainant was challenging the company as to why other staff were not being made redundant and that he was of the view he could take on some of their roles; the company undertook to re-open the discussion about other posts and test him for his capacity to do the roles in question in comparison with the staff he sought to make redundant. The respondent submits that even if the complainant believed that he was capable of doing administrative posts, it does not follow that he was the best candidate for those posts. The respondent asserts that whilst the complainant was challenging the right of others to remain in employment, it submitted that there is a requirement for the company to be equally fair to any other staff whose employment is under threat to apply objective and transparent tests to any decision-making process. The respondent asserts that it is entitled to select the most appropriate person for the post. The respondent states that the complainant appeared to assert that he should automatically take priority over the jobs of others whose posts were not similar or related to his or affected by the rationale for redundancy of his post. The respondent submits that the complainant was invited to begin the process of discussion by attending a test on Friday 9 March. The respondent asserts that by e-mail of 8 March, the complainant refused the offer to attend the test and stated that he did not wish to appeal the decision.

The respondent contends that it provided a detailed, obvious and substantive economic reason for redundancy of the complainant’s post which was objectively justified by financial evidence which it claims the complainant has not rebutted. The respondent submits that the complainant was provided with detailed information and reasoning which he had a full opportunity to challenge, discuss and consult about over an eight-month period. It states that the complainant did not engage constructively in the consultation and refused reasonable requests for objective testing designed to ensure objective fairness for all the staff concerned and he refused to take part in an appeal discussion. The respondent therefore contends that the reason to dismiss and select for redundancy was commercially rational and arrived at after an appropriate fair and comprehensive process of consultation.

The respondent submits that the accusation that the company selected the complainant for redundancy due to his health is denied. The respondent states that it commissioned a medical report from Medmark on 29 November 2017 which certified unreservedly that the complainant was fit to do all work duties without precautionary measures. The respondent contends that a previous heart condition was reportedly rectified entirely through surgery. Consequently, it states that the complainant was available for work and there were no fitness issues of concern to the company or any cost arising due to his health. The respondent asserts that as an indication that the company was supportive of rather than antagonistic towards the complainant during his health challenges, whilst the complainant was only entitled to seven days sick pay in the year, he was paid for thirty three days as a gesture of goodwill in spite of the fact that the company was unable to claim any Illness Benefit Payment due to the complainant’s particular circumstances. The respondent also submits that the complainant was also paid whilst taking time off during company time to attend a cardiac course for a few hours per week over a ten-week period.

The respondent asserts that the accusation that the company made a redundancy decision because of the age of the complainant is refuted. It states that the decision to recruit the complainant was made in the full knowledge of his age only months before the question of redundancy arose. The respondent submits that there is no material difference between his age at the start of employment and that at the end and therefore there is no reasonable basis for identifying age as a relevant consideration in the decision to make the complainant redundant.

The respondent asserts that according to the complainant, Mr. R has been doing his work since he left. The respondent maintains that Mr. R has many other roles and the residual functions remaining in the complainant’s former role were easily assimilated into Mr. R’s job description. It states that work formerly done by two people is now covered in one post, a re-organisation which the company is entitled to undertake. The respondent states that the accusation that the company employed anyone relevant to the redundancy decision after his departure is refuted. The respondent states that it only became aware of the consultant Mr. F three months after the redundancy decision. The respondent states that he has been retained as a self-employed consultant only on a temporary basis as he undertook to bring customers and types of business to the company from his previous clientele which the company has not had access to before. The respondent contends that the business was offered to the company on the condition that Mr. F receives payment for managing and bringing in the business. The respondent submits that this was not in the contemplation of the company during the redundancy discussion and involves new business which the complainant would not have been in a position to bring to the company in any event. The respondent submits that the assertion by the complainant that he has more experience than the consultant would have been irrelevant even if the temporary retention of Mr. F were deemed to be relevant to the redundancy because Mr. F was the exclusive source of the business.

In summary, the respondent submits the following

(a)    The dismissal was permissible as a redundancy under Section (6)(4)(c) of the Unfair Dismissal’s Act 1977

(b)    The redundancy was because work of a particular kind ceased or diminished, was carried out by fewer workers and done by others capable of doing other work for which the complainant was neither qualified or trained

(c)     The redundancy was wholly or mainly on the grounds of redundancy and the claim that age, health or animus were wholly or mainly the reasons are refuted

(d)    The complainant benefited from a full consultation procedure and was supplied with notifications, information, reasoned rebuttal and the right to representation in good time to influence all decisions including the decision to carry out a redundancy at all

(e)    The respondent did not consider that the complainant should be considered for other posts because his post was unique and standalone and all other posts in the company were not similar and the circumstances constituting the redundancy did not apply equally to them

(f)      Notwithstanding the view of the respondent regarding the appropriateness of considering other posts, it nevertheless engaged in a full consultation on the matter providing information on every post in the company and the rationale for not including those staff in the redundancy exercise. The respondent also proposed to test the abilities of the complainant against staff he identified as appropriate but the complainant ended the process unilaterally before the matter could be fully considered.          

The issue for decision by me is whether or not the complainant was unfairly dismissed by the respondent company.

Section 6 of the 1977 Act provides:

“6. – (1) Subject to the provisions of this section, the dismissal of an employee shall be deemed, for the purposes of this Act, to be an unfair dismissal unless, having regard to all the circumstances, there were substantial grounds justifying the dismissal.

(4) Without prejudice to the generality of subsection (1) of this section, the dismissal of an employee shall be deemed, for the purposes of this Act, not to be an unfair dismissal, if it results wholly or mainly from one or more of the following:

... (c ) the redundancy of the employee

Redundancy for the purposes of the 1977 Act is defined with reference to section 7 of the Redundancy Payments Act, 1967;

“7(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”

In the case of JVC Europe Ltd v Panisi [2011] IEHC 279, Charleton J stated;

“In all cases of dismissal, whether by reason of redundancy or for substantial grounds justifying dismissal, the burden of proof rests on the employer to demonstrate that the termination of employment came within a lawful reason. In cases of misconduct, a fair procedure must be followed whereby an employee is given an entitlement to explain what otherwise might amount to a finding of real seriousness against his or her character. In an unfair dismissal claim, where the answer is asserted to be redundancy, the employer bears the burden of establishing redundancy and of showing which kind of redundancy is apposite. Without that requirement, vagueness would replace the precision necessary to ensure the upholding of employee rights. Redundancy is impersonal. Instead, it must result from, as section 7(2) of the Redundancy Payments Act 1967, as amended, provides, “reasons not related to the employee concerned”. Redundancy, cannot, therefore be used as a cloak for the weeding out of those employees who are regarded as less competent than others or who appear to have health or age-related issues. If that is the reason for letting an employee go, then it is not a redundancy, but a dismissal.”    

Judge Charlton recited two specific legal requirements in effecting a legitimate redundancy, both of which are directly relevant to the instant case; The first is Section 7(2) of the Redundancy Payments Act 1967, as amended by Section 4 of the 1971 Act, and by the Redundancy Payments Act 2003, wherein Section 5 (2) 1 requires that “(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 … “ five listed grounds.

Thus, highlighting the essential requirement of “impersonality” in effecting a fair dismissal on grounds of redundancy, noting later that in St. Leger v Frontline Distributors Ireland Ltd [1995] E.L.R 160 at 161 to 162, an EAT Chairman stated that “Impersonality runs throughout the five definitions in the Act.”

In this case, Judge Charelton remarked that “It may be prudent and a mark of a genuine redundancy that alternatives to letting an employee go should be examined” and that “a fair selection procedure may indicate an honest approach to redundancy by an employer”.

Having carefully considered all the evidence in the instant case, I find that there were issues around the selection of the complainant for redundancy. I note that no other staff members were considered for redundancy and it was personal to the complainant. While the respondent submits that the complainant’s role was “experimental in nature” “unique” and “on a trial basis”, I do not find this argument cogent or convincing. I am satisfied that a reasonable employer would not have behaved in the manner in which the respondent carried out the dismissal in this case.

While the respondent has pointed to performance shortfalls in relation to the complainant’s targets, I consider that if this was the case, the complainant should have been given adequate time to address these matters before the issue of redundancy was raised. Indeed the respondent did not examine ways in which it could assist the complainant in order to meet the challenging targets as they alluded to themselves in a letter to Medmark requesting an occupational health evaluation on the complainant following his heart attack. Having reviewed the totality of the correspondence, the first time redundancy was mentioned by the respondent to the complainant was in a letter dated 18 January 2018 prior to that the respondent in earlier correspondence referred to a “lack of results”. A genuine redundancy situation would involve a rigorous decision-making process and an evaluation of the complainant’s role which was not carried out in the instant case. While the respondent indicated that it had issues with the complainant in what they referred to as “a lack of results”, I also am of the view that the issue brought up in relation to the perception that the company had a suspicion that the complainant was moonlighting business (which the complainant refuted) may also have been a factor in the decision of the company to terminate the complainant’s employment.

I am also mindful that an employee of the respondent, Mr. R and a consultant Mr. F who was engaged 3 months after the complainant’s employment was terminated is undertaking the work similar to that previously carried out by the complainant. Further to Justice Charlton’s assessment in relation to impersonality being key in a redundancy situation, in my opinion this was not the case in the instant claim given the sequence of events.

Having adduced the totality of the evidence in the instant claim, I am satisfied that the dismissal of the complainant was disguised under the cloak of redundancy. I find that a genuine redundancy situation did not arise in the instant case and that the process adopted by the respondent was unfair, unreasonable and disproportionate. Therefore, I find his complaint to be well-founded under the Unfair Dismissals Act.

For the reasons set out above, I find that the complaint pursuant to the Unfair Dismissal’s Act is well-founded. I find that the dismissal by reason of redundancy was not a genuine one and has rendered the dismissal unfair. Having taken into account the losses sustained by the complainant, I deem it appropriate, taking all the circumstances of the case into account, to direct the respondent to pay the complainant €16,000 in compensation for breaches of the Act.

Unfair dismissal, selection for redundancy, lack of fair procedures