Complainant

Respondent

Anonymised Parties

A former employee

A Toy Retailer

Representatives

Stephen Brady

Daniel Kelleher BL instructed by Felton McKnight Solicitors

Act

Complaint/Dispute Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under section 7 of the Terms of Employment (Information) Act, 1994

CA-00029718-001

12/07/2019

Complaint seeking adjudication by the Workplace Relations Commission under Section 8 of the Unfair Dismissals Act, 1977

CA-00029718-002

12/07/2019

The claimant started working for the respondent on 5 January 2015 as the Accounts Manager. She submits that she was unfairly dismissed on 30 January 2019 and that she was not issued with a contract of employment. The respondent says the dismissal arose from a genuine redundancy and that she received a contract shortly after she started her employment.

CA-0029718-001

The respondent says the complainant was issued with a contract 0n 17 June 2015 but were unable to provide a signed copy.

CA-00029718-002

The respondent submits that the complainant was not unfairly dismissal, in that her dismissal arose from a genuine redundancy situation. This came about from the poor financial situation of the company. This resulted in all the company’s employees leaving their employment between January and April 2019; including the complainant and four others who made similar claims which were all heard at the same hearing.

The company received private financial investments in 2015, 2016 and 2018. Despite the investments, at the end of 2018 the company’s accounts showed a loss of €1.6 million. Furthermore, following a disappointing trading period at Christmas, the company had beached the covenants of its most recent investor, which was to make a profit on 2018 trading. Following all the staff leaving the respondent’s employment the company is effectively dormant. Since early 2017 the respondent has been in negotiation over a collaboration agreement with a Canadian animation company. This has taken longer to finalise than was expected. When this comes to fruition it is hoped that the company will be revived.

The complainant should have been aware of the respondent’s financial situation given her role as Senior Accounts Administrator and there were a number of staff meetings and direct meetings with the Executive Chairman.

The complainant was made redundant on 30 January 2019 and paid 2 weeks notice.

CA-0029718-001

The complainant submits she was never issued with a contract of employment setting out her terms of employment. This put her a disadvantage when her employment was brought to an end as she was unaware of her terms of employment.

CA-00029718-002

The complainant submits that at the end of the end of 2018 she thought the respondent was financially sound because of a large investment that has been made in the company in late October 2018. She also remembers a staff meeting when they were told wages were safe for 12 months. The first time she was made fully aware of the respondent’s financial situation was at a meeting on 30 January 2019 with the Executive Chairman when she was told she was being made redundant. She received a letter the following day confirming this. She says there was no consultation and no opportunities to be involved in the process and make suggestions.

CA-0029718-001

This is a complaint Terms of Employment (Information) Act in which the complainant alleges the respondent failed to supply her with a statement of her terms of employment. She says this put her at a disadvantage when her employment was brought to an end as she was unaware of her terms of employment. The respondent submitted a copy of a fixed-term contract issued to the complainant shortly after she started work. However, there is no evidence that she was issued with another contract when this one year contract expired.

In these circumstances I find that this complaint is well founded as the complainant was not issued with a contract and award redress of two week’s pay, i.e. €1,634.30.

CA-00029718-002

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 Executive Chairman, the acting CEO and the respondent’s Accountant, together with the submitted documents setting out the financial position of the respondent and the extract from the minutes of a Board Meeting on 17 January 2019. From this I conclude that the respondent was in a serious financial situation and substantial measures were needed to prevent the respondent from further increasing their debts.

The complainant’s evidence is that no consultation or selection process took place.

The respondent cited an Employment Appeals Tribunal Determination, UD737/2003, whish stated: “In particular the exception to the general rule that consultation should be carried out as outlined in the case of Polkey -v- AE Dayton Services Limited [1988] IRLR 115 seems reasonable to this Tribunal. That case found that if, in a given set of circumstances, consulting with the workforce is futile then it may be reasonable for the employer not to have so consulted.”

I accept that, given the dire financial situation of the respondent, it would have been futile to have initiated a consultation process. I therefore conclude that there was a genuine redundancy situation and the respondent has shown that the dismissal was not unfair.

CA-0029718-001

For the reasons given above, I find that this complaint is well founded and award redress of two week’s pay, i.e. €1,634.30.

CA-0029718-0021

For the reasons given above, pursuant to Section 8 of the Unfair Dismissals Act 1977, I find this complaint is not well-founded and conclude that the Complainant was fairly dismissed by the Respondent.

Unfair dismissal. Redundancy. No contract