Complainant

Respondent

Anonymised Parties

A Former Employee

A Toy Retailer

Representatives

Stephen Brady

Daniel Kelleher BL instructed by Felton McKnight Solicitors

Act

Complaint Reference No.

Date of Receipt

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

CA-00030695-001

02/09/2019

Complaint seeking adjudication by the Workplace Relations Commission under Section 11 of the Minimum Notice & Terms of Employment Act, 1973

CA-00030695-002

02/09/2019

The claimant started working for the respondent on 15 September 2014. She submits that she was unfairly dismissed on 21 February 2019, and she was not paid the correct notice period. The respondent says the dismissal arose from a genuine redundancy and she received the correct notice payment for someone with less than 5 years’ service.

CA-00030695-001

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 and 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.

As a Director, the complainant should have been aware of the respondent’s financial situation as there were a number of staff meetings and direct meetings with the Executive Chairman.

The complainant was made redundant on 21 February 2019 and paid 2 weeks’ notice.

CA-00030695-002

The respondent submits they paid the correct notice under the legislation for someone with the complainant’s service.

CA-00030695-001

The complainant submits that her role was not redundant, as evidenced from her name still being on the respondent’s website. At a meeting of the founders in July 2018 she was asked to trust the Executive Chairman. She did not go to the staff meeting on 8 November 2018 because of the stress caused by the situation within the respondent. She was unaware of the financial situation of the respondent.

The first time she was made fully aware of the situation was at a meeting on 21 February 2019 with the Executive Chairman when she was told she was being made redundant. She received a letter the same day confirming this.

CA-00030695-002

The complainant submits that she was in paid employment from 15 September 2014 but she started working for the respondent from 1 July 2013 in an unpaid capacity. She is therefore entitled to receive payment of four weeks’ notice under the legislation.

CA-0030695-001

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.

The complainant says that her name and image are still being used on the respondent website, saying she is actively working for the respondent. Thus, indicating her role was not genuinely redundant and someone else is doing her job. However, this contradicts her own evidence that she stood back from her role in the middle of 2018. From the evidence provided I conclude that while the complainant’s name and image remain on the website no one is carrying out the complainant’s role. I accept the respondent’s evidence that the company is effectively dormant and they have maintained the website in the hope that when the collaboration with the Canadian animation company fruition the company will become active again. However, I do think it is confusing to continue to use the name and image of the complainant when she will not be involved in the future, whatever happens. I therefore recommend that the website be amended.

In all the circumstances I conclude there was a genuine redundancy situation and the respondent has shown that the dismissal was not unfair.

CA-00030695-002

This is a complaint under section 11 of the Minimum Notice & Terms of Employment Act, 1973. Section 4 of the Act states: (1) An employer shall, in order to terminate the contract of employment of an employee who has been in his continuous service for a period of thirteen weeks or more, give to that employee a minimum period of notice calculated in accordance with the provisions of subsection (2) of this section.

(2) The minimum notice to be given by an employer to terminate the contract of employment of his employee shall be—

( a) if the employee has been in the continuous service of his employer for less than two years, one week,

( b) if the employee has been in the continuous service of his employer for two years or more, but less than five years, two weeks,

( c) if the employee has been in the continuous service of his employer for five years or more, but less than ten years, four weeks,

( d) if the employee has been in the continuous service of his employer for ten years or more, but less than fifteen years, six weeks,

( e) if the employee has been in the continuous service of his employer for fifteen years or more, eight weeks.

The complainant was paid two weeks in accordance with subsection (b). Her claim is that, taking into account a period before she was paid when she worked unpaid, she had over five years’ service and should have received four weeks in accordance with sub section (c). The Act defines an employee as:

“an individual who has entered into or works under a contract with an employer, whether the contract be for manual labour, clerical work or otherwise, whether it be expressed or implied, oral or in writing, and whether it be a contract of service or of apprenticeship or otherwise, and cognate expressions shall be construed accordingly”.

The complainant was a founder of the company and may well have worked for the respondent in an unpaid capacity. However, she has produced no evidence of a contract for the period, from 1 July 2013 – 15 September 2014. I am therefore unable to recognise this period for consideration as service within the meaning of the legislation and find the complainant was paid the correct notice period.

CA-00030695-001

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.

CA-00030695-002

For the reasons given above I find this complaint is not well founded.

Unfair dismissal financial situation