Complainant

Respondent

Anonymised Parties

Contracts Director

Engineering Company

Representatives

Eoghan O’Sullivan B.L., instructed by Owen O'Mahony & Company Solicitors

 Self

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-00035472-001

27/03/2020

Complaint seeking adjudication by the Workplace Relations Commission under section 6 of the Payment of Wages Act, 1991

CA-00035472-002

27/03/2020

Complaint seeking adjudication by the Workplace Relations Commission under section 6 of the Payment of Wages Act, 1991

CA-00035472-003

27/03/2020

Complaint seeking adjudication by the Workplace Relations Commission under section 6 of the Payment of Wages Act, 1991

CA-00035472-004

27/03/2020

The complainant contends he was unfairly dismissed in the guise of redundancy and he was not paid correctly in terms of his final 6 weeks of service, notice period, leave and bonus. The respondent says there was a genuine redundancy and he was paid his correct entitlements apart from 11 days at the end of his service with them.

Summary of Respondent’s Case

The respondent contends the complainant was dismissed by reason of redundancy. By the summer of 2019 it was evident, despite previous restructurings, the business was still not performing adequately in the eyes of the Senior Executive Team or the Shareholders. The Senior Executive Team met on a number of occasions and on 15 October 2019 decided that the role of Contracts Director was no longer required. At this point the respondent had 2 Operations Directors (OD) and a Chief Operations Officer (COO). The 2 ODs split the majority of the work. One large customer was the responsibility of the complainant and it was decided the teams involved would report directly to the COO. This was decided to help meet the demands of the customer and the significant sums of money involved, and it was predicted that the projects with this customer would be severely loss making.

The complainant was advised of the redundancy situation by letter dated 24 October 2019 and told a final decision would not be made until he returned from parental leave and consultation had occurred. During the consultation period, which took place between 5 November and 12 December 2019, the complainant made it clear he would not be accepting any alternative role on varying terms to his current contract. He did not engage fully in looking at the number of roles which were explored.

Summary of Complainant’s Case

The complainant started working for the respondent as a site engineer in August 2007. He became a Director in 2014 and was responsible for setting up the Dublin office. He was particularly successful in working with the customer referred to by the respondent and secured a number of large and profitable projects from them.

In 2018 the respondent was sold to new investors and he stood down as Director to facilitate the sale. A written commitment to re-appoint him as a Director after the sale was refused by the new owners. In January 2019 the complainant gave notice he would be taking parental leave from 1 July to 5 November 2019 ‘to tend to my family and step away from the stress of the company’. He was selected for redundancy whilst on parental leave. On 20 September 2019, as part of a mortgage application, the complainant requested a letter from the respondent confirming he was due to return to work on the same terms and conditions at the end of the parental leave. The COO said he could not provide the letter due to upcoming changes in the company structure.

At a meeting on 5 November 2019 the respondent confirmed the redundancy was based on organisational restructuring and he would be replaced by 3 people in his role with the important customer.

The complainant says his selection for redundancy was unfair because it happened when he was on parental leave, no one else was considered for redundancy and the decision was not based on any clear criteria. Furthermore, no suitable alternative roles were available; they would have involved relocating and were at a lower level of responsibility and remuneration.

Findings and Conclusions

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”.

I have carefully considered the evidence of the respondent concerning the review undertaken by the Senior Executive Team which lead to the complainant being made redundant. I also note the poor financial situation of the respondent.

The former owner of the respondent gave evidence that shortly before the sale to the new owners went through he was asked to negotiate new remuneration packages with three Contracts Directors (including the complainant) who were contractually eligible to receive a profit related bonus. He negotiated new remuneration packages with the other two but no deal had been concluded with the complainant when the sale went through at the end of 2017. The former owner gave evidence that the amount paid to him was reduced because of what the new owners saw as the liability for the complainant’s remuneration package, particularly the profit related bonus.

In January 2019 the respondent changed their senior management structure. The Senior Executive became the Chief Operations Officer and the other two Contract Directors were appointed to the new Operations Director roles. The complainant says he was not encouraged to apply for these roles. The complainant carried on with his existing role and no explanation was given as to why his role was not included in this restructuring. Shortly afterwards he applied for parental leave from July to November 2019. It is clear to me that difficult relations with the COO was the main reason behind this application. No further efforts were made to conclude negotiations with the complainant over his remuneration package.

The decision to make the complainant redundant was made whilst he was still on Parental Leave. No evidence was presented that the work he did with the main customer was reduced or changed to any significant extent. Some evidence was given that projects with this customer were running at a loss but this was not directly attributed to the complainant. The respondent decided to organise the work differently, with the Chief Operations Officer (COO), who had been the Senior Executive, taking the lead role. In looking at the different categories of redundancy the closest to the circumstances outlined by the respondent fall within section 7 (2) (e) of the Redundancy Payments Act, which states:

“ 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 -(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”

I do not accept that the reasons given for the restructuring validly explain why the complainant was made redundant. He was left out of the restructuring in January 2019 and left to get on with his work until he went on Parental Leave. Then, soon before he was due to return, the decision was made to make him redundant. However, I conclude the reasons given by the respondent are not “reasons not related to the employee concerned”. I accept the respondent was looking closely of the organisation and significant changes had been made. It is my conclusion the respondent considered the complainant was too expensive for the new structure they were putting in place and this had little to do with the work he was doing. Accordingly, I find redundancy, within the definition given in the Redundancy Payments Act, was not the primary reason for the complainant leaving the respondent’s employment and the dismissal was unfair.

CA-00035472-002

Summary of Complainant’s Case: The complainant submits two claims in relation to payments he did not receive:

1.       he was due to return from Parental Leave on 5 November 2019. Because of the discussions over his redundancy he did not return to work but he was not paid for the period 5 November 2019 until 12 December 2019. He calculates the amount owing as €28,295.

2.       He was not paid for 5.5 statutory holidays in 2019, 5 days for public holidays while on Parental Leave and 1.28 days for statutory holidays in 2020. He calculates the amount owing as €7,241.

Summary of Respondent’s Case: the respondent submits there is a lack of clarity on the complainant’s HR file as to the nature of his leave during this period; whether it was parental leave, gardening leave or annual leave. There is no one still working for the respondent who can verify this. In good faith they acknowledge a shortfall of 11 days (from 5 – 19 November 2019) at €488, a total of €5,368. The complainant was paid 10 days annual leave at €468 per day.

Findings and Conclusions: the complainant was not paid for the period 5 November to 12 December 2019. No evidence was produced to show he should not have been paid for this period. His remuneration amounts to a basic salary, plus pension and health insurance allowances totalling €126,852. I have not included any bonus payment in this as the bonus was calculated as a percentage of profit and paid in the following year. I calculate the amount due to the complainant as €13,661.

I conclude the complainant was entitled to a total of 10.5 days leave at €488 per day, totalling €5,124. He was paid €4,680. He is therefore entitled to €444.

CA-00035472-003

Summary of Complainant’s Case: the complainant submits he was he was entitled to receive six weeks pay at €5,061 per week in lieu of notice, totalling €30,366. He was paid €14,040. He claims a deficit of €16,326.

Summary of Respondent’s Case: the respondent submits the complainant was paid 6 week’s pay in lieu of notice at €2,340 per week, based on his final annual salary of €121,680.

Findings and Conclusions: I conclude the complainant was entitled to six weeks pay in lieu of notice at €2,439 per week; totalling €14,634. He was paid €14,040. He is therefore entitled to €594.

CA-00035472-004

Summary of Complainant’s Case: the complainant submits he was entitled to receive a bonus payment for 2019 in accordance with his contract and calculates this at €150,000.

Summary of Respondent’s Case: the respondent submits that due to the financial position of the respondent, showing a reported loss of after tax of €8.16m, the complainant has no entitlement to a bonus payment for 2019.

Findings and Conclusions: the complainant had a contractual entitlement to a bonus based on the respondent’s post-tax profit. I accept the evidence provided by the respondent they have a reported loss in 2019 and therefore I conclude the complainant has no entitlement to a bonus payment.

CA-00035472-001: for the reasons given above, pursuant to Section 8 of the Unfair Dismissals Act 1977, I find that the complaint is well founded. The complainant has not found alternative employment but has set up his own consultancy company. He has to date find a limited amount of work. Recognising the time it takes for a new company to establish itself, I award the complainant compensation of six month’s salary; €63,426.

CA-00035472-002: for the reasons given above I find the complaint is well founded and I award the complainant €14,105.

CA-00035472-003: for the reasons given above I find the complaint is well founded and I award the complainant €594.

CA-00035472-004: : for the reasons given above I find the complaint is not well founded.

Unfair dismissal – redundancy – not impersonal