FULL RECOMMENDATION
SECTION 8A, UNFAIR DISMISSAL ACTS, 1977 TO 2015 PARTIES : ACTION HEALTH ENTERPRISES LTD (REPRESENTED BY WILLIAM FRY) - AND - MICHAEL D'ARCY (REPRESENTED BY REDDY CHARLTON SOLS) DIVISION : Chairman: Ms Jenkinson Employer Member: Ms Connolly Worker Member: Ms Treacy |
1. Appeal Of Adjudication Officer Decision ADJ-000014891, CA-00019411-001
BACKGROUND:
2. The Respondent appealed the Decision of the Adjudication Officerto the Labour Court on 26 June 2019 in accordance with Section 8(A) of the Unfair Dismissals Act 1977 to 2015. A Labour Court hearing took place on 26 February 2020. The following is the Determination of the Court:
DETERMINATION:
This is an appeal by Action Health Enterprises Limited Partnership against the decision of an Adjudication Officer ADJ-000014891, CA-00019411-001 under the Unfair Dismissals Act 1977, as amended (“the 1977 Act”) in a claim of unfair dismissal by Mr Michael D’Arcy.
For ease of reference the parties are given the same designations as they had at first instance. Hence Mr Michael D’Arcy will be referred to as “the Complainant” and Action Health Enterprises Limited Partnership will be referred to as “the Respondent”.
The Adjudication Officer held for the Complainant on both the jurisdictional matter and on the substantive claim and ordered the Respondent to pay compensation of €45,000.
The Respondent appealed the Adjudication Officer’s Decision on the basis that the Adjudication Officer :-
- “incorrectly decided that the Complainant had the requisite service required under section 2(1) of the UD Act in order to bring a claim of unfair dismissal. The Adjudication Officer had no jurisdiction to proceed to consider any substantive issue in the respect of the termination of the Complainant s employment nor to determine that such termination was unfair in circumstances where the Complainant is a person to whom, the UD Act “shall not apply by reason of the fact that he does not have 12 months’ service.”
The Complainant lodged his claim with the WRC on 24th May 2018, the hearing before the Adjudication Officer took place on 5th November 2018 and 14th January 2019, and his Decision was issued on 16th May 2019. The Respondent referred its appeal to the Labour Court on 26thJune 2019.
Background
The Complainant commenced working as a Business Development Manager with the Respondent in 2014. Initially, the Complainant was on a contract for service rather than a contract of service. That arrangement remained in place until a contract of employment was issued to the Complainant on 31st January 2017, at which point his role and duties remained unaltered after his status changed from contractor to employee.
On 30th November 2017, the Complainant was dismissed from his employment on a no-fault basis and presented with a letter informing him that he will receive a payment in lieu of his contractual notice period of three months and his employment will terminate effective immediately. It stated that he will receive payments within 14 days. He received pay in lieu of notice on 17th December 2017. This payment was prompted by a letter from his solicitors’ firm requesting payment.
The Complainant’s contract of employment provides at Clause 10 :-
- Termination with Notice:
“... employment may be terminated at any time by either you or the Partnership giving the other party at least three months ‘prior written notice, or statutory notice, if greater.”- “Where notice of termination of our employment is given, whether by you or the Partnership, the Partnership will have the right to:
Pay you in lieu of notice the amount of your entitlement to basic salary in respect of all or part of such notice period;”
- “Where notice of termination of our employment is given, whether by you or the Partnership, the Partnership will have the right to:
Position of the Parties
As the Respondent’s appeal is limited to the issue of jurisdiction, the parties agreed that the Court will confine its investigation of the case to that issue only and will not deal with the substantive arguments in the case.
Summary of the Respondent’s Case on the Jurisdictional Issue
Mr Marcus Dowling, B.L. instructed by William Fry Solicitors on behalf of the Respondent submitted that the Complainant did not have the necessary period of service required in order to bring a claim of unfair dismissal. He said that by letter dated 30th November 2017, the Respondent terminated the Complainant’s employment on the giving of notice and exercised its right to pay him in lieu of notice.
Mr Dowling said that the Complainant was legally advised from the outset. At no time did he dispute that his employment had been invalidly terminated. In each correspondence between the Complainant’s legal representatives and the Respondent’s, there is reference to the fact that he was being paid in lieu of notice. In a letter dated 20th December 2017, the Complainant’s solicitor stated that: “[the Complainant ] is no longer an employee of [the Respondent].” Accordingly, Mr Dowling surmised, that while the Complainant alleged that the dismissal was unfair, he did not allege that it was ineffective.
Mr Dowling submitted that on a proper analysis, this case falls within the first leg of the definition of “date of dismissal” under the 1977 Act, i.e. the date of dismissal is:
Section 1
- (a) where prior notice of the termination of the contract of employment is given and it complies with the provisions of that contract and of the Minimum Notice and Terms of Employment Act, 1973, the date on which that notice expires.
In the alternative, Mr Dowling argued that even if the matter is treated as a “no notice” case, the same result is achieved. In a “no notice” case, date of dismissal is defined as follows:
Section 1
- (b) where either prior notice of such termination is not given or the notice given does not comply with the provisions of the contract of employment or the Minimum Notice and Terms of Employment Act 1973 (“the 1973 Act”) the date on which such a notice would have expired, if it had been given on the date of such termination and had been expressed to expire on the later of the following dates—
- (i) the earliest date that would be in compliance with the provisions of the contract of employment
(ii) the earliest date that would be in compliance with the provisions of the Minimum Notice and Terms of Employment Act, 1973,
- (i) the earliest date that would be in compliance with the provisions of the contract of employment
Mr Dowling disputed the Complainant’s argument where he maintains that an employer is prohibited from avoiding the reckonable service accrued by an employee for the purposes of establishing the length of service required pursuant to the legislation by paying in lieu of notice. He maintained that both the 1973 Act and the 1977 Act provide the complete opposite. Insofar as the 1973 Act is concerned, it specifically provides that nothing in the Act prevents an employee from agreeing to accept payment in lieu of notice. The 1977 Act is equally clear, the definition of “date of dismissal” specifically refers in both legs of the definition to compliance with the contract. Therefore, termination of the Complainant’s contract on 30th November 2017 by payment in lieu of notice was in compliance with the contract.
Mr Dowling referred to the Employment Appeals Tribunal case relied upon by the Complainant,Kinziger v Marketo Emea Limited [2016] 6 JIEC 2801, which Mr Dowling said does not properly engage with the relevant statutory provisions. InKinziger,the employee was dismissed for gross misconduct. The employer nevertheless purported to pay the employee in lieu of notice. He argued, whether or not that form of equivocal termination is effective is clearly questionable, but that point does not appear to have been taken in theKinzigercase. The ratio of the decision is contained in the following passage:
- “The Tribunal considered the respondent’s submission that the part of this section which states: where the company exercises its right to pay you in lieu of notice, your employment will terminate with immediate effect and you will not be entitled to any further payments or benefits from the company”
- does not operate to circumvent the strict notice requirements set out in the Act.
An employer and employee cannot “agree” to disregard a statutory construction in other words to disregard the provisions of the date of dismissal as defined in the 1977 Act.
The Tribunal noted para. 21.73 in “Dismissal Law in Ireland” by Mary Redmond- “Under s. 1 of the Unfair Dismissals Act 1977, the date of dismissal is defined as the date on which a notice of termination expires or would have expired where the notice is, or would have been, in accordance with the contract of employment or with the Minimum Notice and Terms of Employment Act, 1973, whichever is the greater.””
- does not operate to circumvent the strict notice requirements set out in the Act.
Mr Dowling argued that this paragraph does no more than paraphrase the definition of ‘date of dismissal” and the Tribunal incorrectly highlighted it as it may not have referred to the balance of the commentary in Redmond at paragraph 21.77 which directly contradicted the decision it was about to make.
Redmond at paragraph 21.77:-
- “If a contract lays down a notice period, it will technically be a breach of contract to give pay in lieu of notice unless this right is reserved to the employer. If it is, and an employee accepts payment of wages in lieu of notice, the date of dismissal will be the date on which termination takes effect, as the contract will have been determined in accordance with its terms. If there is no right to give pay in lieu of notice in the contract the EAT will treat the case as a no notice one and will add on the contractual or statutory notice whichever is the greater”
He referred to Section 7(1) of the 1973 Act, which specifically provides that it does not prohibit the parties to a contract of employment from accepting payment in lieu of notice. He said that the operative provisions of Section 1 of the 1977 Act make repeated reference to the terms of the contract. Accordingly, Mr Dowling surmised that far from stating that the terms of the contract are irrelevant, both the 1973 Act and the 1977 Act refer to the terms of the contract and provide respectively that the parties can agree to accept payment in lieu of notice and that date of dismissal can be a date that is in accordance with the terms of the contract. He said that the confused nature of the decision inKinzigeris emphasised by the following statement made by the Tribunal later in its determination:-
- “The Tribunal determines that clause 18.3 does not operate to limit the claimant’s entitlement to contractual notice to which the claimant was entitled to under the Act”
Mr Dowling said that for this statement to make any sense in light of the Tribunal’s earlier finding that the terms of the written contract were irrelevant, the “contractual notice” referred to must be the minimum notice guaranteed under the 1973 Act. In Mr. Kinziger’s case that was one week, which would have been sufficient to give him one year’s service. Accordingly, ifKinzigermeans anything, it can only be that in a “no notice” case payment in lieu of notice cannot trump the minimum periods of notice provided for under the 1973 Act.
In support of his position in the instant case, Mr Dowling referred toA Sales Director v A Food CompanyADJ-00002 798 where the Adjudication Officer concluded as follows:-
- “As to the question of notice and the effective date of termination the following appears in the complainant’s contract of employment at Clause 18, in relation to Notice of Termination;
- “Except in circumstances justifying summary termination or termination consequent on the application of formal disciplinary procedure, the employee will be entitled to receive three months’ written notice of the termination of his employment. Such termination of employment will be deemed to be a “no fault” termination. The Company reserves the right to pay the Employee’s remuneration in lieu of notice or continue payment during the notice period, while relieving the Employee of any or all of his duties and responsibilities during the notice period.”
- “As to the question of notice and the effective date of termination the following appears in the complainant’s contract of employment at Clause 18, in relation to Notice of Termination;
The third edition of “Dismissal Law in Ireland”repeats the passage relied upon by the Adjudication Officer at paragraph 22.63. The author of the edition, Desmond Ryan, refers to the fact that the Adjudication Officer adopted the passage from the second edition in the decision referred to above.
Mr Dowling also stated that, for completeness, it should also be noted that the provisions of Section 7(2) of the 1973 Act do not extend the “date of dismissal” under the Redundancy Payments Act, 1967 (“the 1967 Act”) insofar as the time limit for bringing claims is concerned. Rather, the provisions of Section 7(2) of the 1973 Act simply serve to extend length of service for the purpose of calculating the amount of the payment.
Clause (b) of the definition of “date of dismissal” in the 1967 Act provides:
“date of dismissal’ in relation to an employee, means—
- (b) where his contract of employment is terminated without notice, whether by the employer or by the employee, the date on which the termination takes effect.
Mr Dowling said that while the foregoing is not directly relevant to the core issue in this appeal, it does reinforce the proposition that payment in lieu of notice is entirely compatible with the provisions of the 1973 Act and that the only circumstances in which the legislature saw fit to provide that notice should be automatically added onto service was for the purpose of calculating the amount of a redundancy payment.
In conclusion, Mr Dowling surmised that the result contended for by the Complainant was incompatible with the provisions of the 1973 Act and 1977 Act irrespective of whether payment in lieu of notice is treated as a “with notice” or “no notice” dismissal. If it is treated as a “with notice” dismissal, then the notice expired on the date that it was given by reason of the Respondent exercising its right to pay in lieu of notice.
If it is treated as a “no notice” dismissal, then the later of the two dates is either 30th November 2017 on the basis that payment in lieu of notice was in accordance with both the contract and the 1973 Act, or 7th December 2017 if somehow the provisions of Section 7 of the 1973 Act do not apply.
Summary of the Complainant’s Case on the Jurisdictional Issue
Mr Michael Hegarty, Reddy Charlton Solicitors on behalf of the Complainant submitted that the contractual notice provision supersedes the Complainant’s entitlement under the 1973 Act, therefore, the Complainant was entitled to three months’ notice of termination. Furthermore, he said that there was ambiguity in the contract in relation to the date of termination. In Clause 17 the termination date is defined as‘the date on which notice of termination expires, or in the case of a payment being made in lieu of notice, the date on which termination takes effect’. However, he said that this definition is expressly stated to apply solely to this Clause, as evident in the preceding words, “For the purposes of this Clause 17”.
Mr Hegarty said that it is accepted that payment in lieu of notice operates to terminate the contractual relationship and there is no dispute that the contractual relationship came to an end on the payment in lieu of notice. He also said that it was accepted by the Complainant that there is a distinction between the date of termination from a contractual point of view and the date of dismissal for the purposes of the 1977 Act. However, he submitted that payment in lieu of notice does not override the statutory definition of “date of dismissal” for the purpose of the 1977 Act. Section 13 of the 1977 Act expressly provides:
- “A provision in an agreement (whether a contract of employment or not and whether made before or after the commencement of the Act) shall be void in so far as it purports to exclude or limit the application of or is inconsistent with, any provision of this Act”
Mr Hegarty said that the date of dismissal for the purpose of the 1977 Act includes the notice period, whether worked or not. This point is clarified by Desmond Ryan in Redmond on Dismissal Law:
- “the Unfair Dismissals Act, as amended, deems the date of dismissal to be the date on which notice, had it been given, would have expired. In practice, this can mean there is a crucial distinction between the employee‘s date of termination (when he or she ceased to be an employee pursuant to the contract of employment,) and his or her, date of dismissal (the date that is reckonable for the purposes of establishing the length of services qualification and the time limit rules under the Unfair Dismissal legislation)”.
Accordingly, he submitted that where there is a clause in an employee’s contract to trigger a contractual termination on a certain date by paying in lieu of notice, an employer is prohibited from avoiding the reckonable service accrued by an employee for the purposes of establishing the length of service required pursuant to the Acts.
Mr Hegarty referred to a case decided in July 2018,An Employee v A Technology CompanyADJ-00010670, where an Adjudication Officer clarified this point. The Adjudication Officer considered whether paying an employee in lieu of notice could impact on that employee’s entitlement to take a claim for unfair dismissal. In this case, the employee had commenced employment on a fixed term contract, the contract expired, rendering her employed on a contract of indefinite duration. Prior to completing 12 months service with the company, she received a letter informing her that her employment was terminated, and she was paid in lieu of notice.
The employee argued that she was entitled to the benefit of the applicable notice period in determining the date of her dismissal for the purposes of the Acts. The employer contended that as she was paid in lieu of notice, she was four days short of the 12 months service required to bring a claim and that the Adjudication Officer did not have jurisdiction to hear the claim. The Adjudication Officer acknowledged that the original contract expressly enabled the employer to pay in lieu of notice. However, she held that the date of dismissal for the purposes of the Unfair Dismissals legislation ‘must be
construed in accordance with that Act’. The Adjudication Officer found that the notice period was reckonable for the purposes of the service required under the Acts and the employee had the requisite service to pursue her claim, in which she succeeded.
Mr Hegarty said that the case ofKinzigerhas similar facts to this case in relation to the date of dismissal and the contractual notice period. At the date of termination, the Complainant had less than 52 weeks’ service. However, the contract of employment provided for 4 weeks’ notice, which when added to his service brought the Complainant over the 52-week threshold required by the Act. The Complainant’s contract of employment provided at clause 18.3:
- “Any notice to be given pursuant to this clause shall be in writing. The Company reserves the right to make payment of salary in lieu of such period of notice. Where the Company exercises its right to pay you in lieu of notice, your employment will terminate with immediate effect and you will not be entitled to any further payment or benefits from the Company [...]”
The Respondent had argued that as the Complainant was paid in lieu of notice, the contractual provisions above applied and his employment was terminated, for the purposes of the Acts, on the payment of such notice.
The EAT stated as follows:
- The Tribunal considered the Respondent’s submission that the part of this section which states: where the company exercise its right to pay you in lieu of notice, your employment will terminate with immediate effect and you will not be entitled to any further payments or benefits from the company does not operate to circumvent the strict notice requirements set out in the Act.
An employer and employee cannot “agree” to disregard a statutory construct - in other words to disregard the provisions of the date of dismissal as defined in the Act’.
In holding that the Complainant had the requisite service to bring the claim under the Acts,the Tribunal held:-
- The Tribunal considered the Respondent’s submission that the part of this section which states: where the company exercise its right to pay you in lieu of notice, your employment will terminate with immediate effect and you will not be entitled to any further payments or benefits from the company does not operate to circumvent the strict notice requirements set out in the Act.
- “The Tribunal determines that clause 18.3 does not operate to limit the Claimant’s entitlement to contractual notice to which the claimant was entitled to under the Act. If the legislature had intended that the payment of the required notice in monetary terms could reduce the protection afforded by the Act, then it would have set this out accordingly in the Act”.
Mr Hegarty said that the Respondent appears to be conflating two distinct issues namely, the date of termination from a contractual perspective and the “date of dismissal” pursuant to the 1977 Acts. He said that there is no dispute that the parties to a contract of employment can contractually agree to include a clause permitting payment in lieu of notice. He said that the effect of that clause, if exercised by an employer, is to bring the contractually relationship to an end on the payment in lieu of notice. However, he said that such a clause does not have the effect of over-riding the statutory definition of “date of dismissal” in the 1977 Acts.
Mr Hegarty referred to the Employment Appeals Tribunal inO’Reilly vPullman Kellog LtdUD 340/1970 which stated that, where payment of wages is made in lieu of notice, it should be treated as a “no notice” case falling within para (b) i.e. the second limb of the definition of date of dismissal” under the Acts. In accordance with that provision the “date of dismissal” means the “date on which such notice would have expired, had it been given on the date of such termination and had been expressed to expire on the later of the following dates:-
- (i) the earliest date that it would be in compliance with the provisions of the contract of employment, or
(ii) the earliest date that would be in compliance with the provisions of the Minimum Notice and Terms of Employment Acts 1973 to 2005.
- (i) the earliest date that it would be in compliance with the provisions of the contract of employment, or
Mr Hegarty said that the later of the two potential notice periods is the contractual notice period of three months. The date of dismissal is therefore, the date of the expiry of the three months’ notice period, bringing the Complainant within the protection of the Acts.
In conclusion, Mr Hegarty submitted that the application of the payment in lieu of notice clause is relevant for the date of termination of a contract of employment, which is distinct and different to the “date of dismissal” as defined in the Acts. He said that the Complainant’s position is supported by case law and the renowned experts in the field of employment law who have written the seminal textbooks on “Dismissal Law in Ireland”, namely the late Dr Mary Redmond and Dr Desmond Ryan BL.
However, he referred to an article prepared for Legal Island which stated that the artificial or ‘deemed’ date of termination is a matter which generates significant dispute before the EAT.
The article stated:-
- “……Where the employer has reserved the right to make a payment in lieu of notice (“PILON”) in the employment contract, the position is not definitively settled. There is a view that in a dismissal where PILON is made to an employee and his/her contract had specifically provided for this (as opposed to a payment being ‘accepted’ by the employee in the absence of a contractual term providing for PILON), the date of dismissal is the date the payment is made, not the ‘deemed’ later date. However, the EAT is likely to take an employee’s would-be notice period into account in determining the date of dismissal for the purposes of computing the Qualifying Service Period, whether or not that employee’s employment contract specifically provided for PILON.”
The Law Applicable
Section 2(l) (a) of the 1977 Act provides:
“This Act shall not apply in relation to any of the following persons: (a) an employee (other than a person referred to in section 4 of this Act) who is dismissed, who at the date of his dismissal, had less than one year’s continuous service with the employer who dismissed him.”
The “date of dismissal’ is defined in Section 1 of the 1977 Act as meaning:-
- ‘(a) where prior notice of the termination of the contract of employment is given and it complies with the provisions of that contract and of the Minimum Notice and Terms of Employment Act, 1973, the date on which that notice expires.
(b) Where either prior notice of such termination is not given or the notice given does not comply with the provisions of the contract of employment or the Minimum Notice and Terms of Employment Act, 1973, the date on which such a notice would have expired, if it had been given on the date of such termination and had been expressed to expire on the later of the following dates—
(i) the earliest date that would be in compliance with the provisions of the contract of employment,
(ii) the earliest date that would be in compliance with the provisions of the Minimum Notice and Terms of Employment Act, 1973.
- ‘(a) where prior notice of the termination of the contract of employment is given and it complies with the provisions of that contract and of the Minimum Notice and Terms of Employment Act, 1973, the date on which that notice expires.
Section 4
- (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) n/a
(c) n/a
(d) n/a
(e) n/a
- (a) if the employee has been in the continuous service of his employer for less than two years, one week,
Subsection (5) provides
- Any provision in a contract of employment, whether made before or after the commencement of this Act, which provides for a period of notice which is less than the period of notice specified in subsection (2) of this section, shall have effect as if that contract provided for a period of notice in accordance with this section.
- (1) Nothing in this Act shall operate to prevent an employee or an employer from waiving his right to notice on any occasion or from accepting payment in lieu of notice.
(2) In any case where an employee accepts payment in lieu of notice, the date of termination of that person’s employment shall, for the purposes of the Act of 1967, be deemed to be the date on which notice, if given, would have expired.
- (1) Nothing in this Act shall operate to prevent an employee or an employer from waiving his right to notice on any occasion or from accepting payment in lieu of notice.
Termination with Notice:
10.1 “Your employment may be terminated at any time by either you or the Partnership giving the other party at least three months’ prior written notice, or statutory notice, if greater.
10.2 Where notice of termination of your employment is given, whether by you or the Partnership, the Partnership will have the right to:
10.2.1 pay you in lieu of notice the amount of your employment to basic salary in respect of all or part of such notice period;”
The Termination Letter
The termination letter is dated the 30th November 2017. The relevant paragraphs are as follows:-
- “The purpose of this letter is to notify you of the termination of your employment on a no-cause, no-fault basis in accordance with Clause 10 of your contract of employment dated 31 January 2017 (the “Contract”).
"You will receive payment in lieu of your contractual notice period of three months and your employment will terminate effective immediately (i.e. with effect from to-day).”
- “The purpose of this letter is to notify you of the termination of your employment on a no-cause, no-fault basis in accordance with Clause 10 of your contract of employment dated 31 January 2017 (the “Contract”).
Findings and Conclusions of the Court
The issue to be determined by the Court concerns whether or not the Complainant has the necessary 12 months service to pursue a complaint under the 1977 Act. The question before the Court is whether his date of dismissal for the purpose of the 1977 Act is (a) 30th November 2017, the date he was informed that he was being dismissed with three months’ pay in lieu of notice, or (b) three months later, in which case he would have more than twelve months continuous service. The Respondent says that the date of dismissal for the purpose of the 1977 Act was the 30th November 2017, the date of the termination letter. The Complainant argues that his date of dismissal was the date of the expiry of his three-month contractual notice period from 30th November 2017.
At the hearing before the Court, both parties were asked to identify which sub-section of section 1 of the 1977 Act were they each relying on. Having considered the matter, both parties confirmed for the Court that they were relying on section 1 (a) as distinct from (b) of the 1977 Act, namely:-
- (a) where prior notice of the termination of the contract of employment is given and it complies with the provisions of that contract and of the Minimum Notice and Terms of Employment Act, 1973, the date on which that notice expires.
The Complainant commenced employment under a contract of service in early January 2017; his employment was summarily terminated on 30th November 2017, on a no-fault basis. As he had between 13 weeks and 2 years’ service, the minimum notice entitlement of the termination of employment would be one week’s notice, pursuant to the 1973 Act. However, the Complainant was given three months’ pay in lieu of notice in accordance with his contract of employment.
The question this case raises is somewhat complex and has not been ‘definitively settled’. The Court is of the view that it should be considered, firstly, in the context of the provisions under the 1973 Act and then in the context of the 1977 Act. Section 4 of the 1973 Act obliges an employer to give notice of dismissal. While that obligation is limited and qualified by subsequent provisions of the Act, the Court is of the view that it remains the primary obligation under the 1973 Act. It is noteworthy that the obligation is not to provide noticeorpayment in lieu. It follows that an employee has a concomitant right to receive notice and to work out that notice if he or she so chooses. However, it seems clear that if an employer makes a payment in lieu of notice the employee suffers no loss and cannot obtain redress under the 1973 Act. However, the point does have relevance in determining the “date of dismissal” for the purpose of the 1977 Act.
Subsection (5) of Section 4 of the 1973 Act provides, in effect, that if a contract of employment provides for a period of notice that is less than the period specified in subsection (2), it is to be read as if it provided for a period of notice in accordance with the section. Hence, if a contract of employment provided that no notice will be given but payment in lieu will be provided, that contract would have to be read as providing for the requisite period of notice.
Section 7(1) of the 1973 Act provides: -
- “Nothing in this Act shall operate to prevent an employee or an employer from waiving his right to notice on any occasion or from accepting payment in lieu of notice"
The effect of this subsection is that where an employee waives his or her entitlement to notice or accepts payment in lieu of notice their right to notice under section 4 is extinguished.
Section 7(1) provides that nothing in the 1973 Act operates to prevent an employee (or an employer) from waiving his or her right to notice, on any occasion, or fromaccepting payment in lieu of notice. The term in the Complainant’s contract of employment, upon which reliance is placed, provides, in effect, that the Respondent has the right to pay the Complainant in lieu of notice. That provision reserves to the Respondent the right to terminate the contract without notice and to make payment in lieu thereof. However, in order for the Complainant to“accept payment in lieu”, there must have been an offer and a free acceptance of that offer. It follows that where the Respondent relies on this provision by simply paying wages in lieu of notice there is no offer, in any meaningful sense, and there can be no acceptance. Consequently, it appears that this contractual provision is inconsistent with the 1973 Act and cannot be relied upon to assert that the Complainant agreed to accept payment in lieu of notice. It is questionable whether the contract itself could allow the Respondent, at its sole discretion, to determine that the Complainant had waived his right to notice within the meaning of the 1973 Act.
Nevertheless, the facts of this case show that at the time the Complainant’s employment was terminated he did not in fact receive payment in lieu of notice. Subsequently, his solicitor, acting on his behalf and instructions, sought payment in lieu of notice and did so in reliance on the relevant provision in the contract. This payment was subsequently made as a result. Therefore, two issues arise. Firstly, at the time of dismissal, the Complainant was dismissed without either the contractual or the statutory notice. If that is a correct construction of the facts, section 1(b) of the 1977 Act came into play. However, on the other hand, by relying on the terms of the contract to seek payment in lieu of notice, the Complainant, through his solicitor approbated the contract and cannot now seek to reprobate it.
InSuperwood Holdings plc v Sun Alliance & London Insurance plc[1995] 3 I.R. 303 Blayney J quoted with approval the following passage from the decision of Budd J. inCoen v Employer's Liability Assurance Corporation[1962] I.R. 314: -
- “….the repudiating party cannot be allowed to approbate and reprobate. He cannot thus be allowed to say: ‘I deny the existence of the contract which you say exists between us, but I also rely on a term of that contract ….”
Furthermore, the Court notes that both parties agreed in the course of the hearing that parties to a contract of employment are free to provide that payment can be made as an alternative to notice. However, in doing so the Complainant’s solicitor argued that payment in lieu of notice does not override the statutory definition of “date of dismissal” for the purpose of the 1977 Act.
A further point arises concerning the effect of subsection (5) of section 4 of the 1973 Act. If the contract, properly construed, does not provide for notice (as opposed to payment in lieu) it should be read as providing for the relevant statutory notice. However, that would not avail the Complainant as it would not bring him within the ambit of the 1977 Act.
In conclusion, in all the circumstances of this case, the Court is satisfied that the “date of dismissal” in the Complainant’s case is 30th November 2017, that being the date when his employment came to an end in accordance with his contract of employment. That being the case, the Complainant does not have one year’s continuous service with the Respondent. Therefore, the Court finds that the Complainant does not havelocus standito bring a claim under the 1977 Act and the Court has no jurisdiction to hear the Complainant’s complaint under the Act.
Determination
The Court overturns the Adjudication Officer’s Decision and the Respondent’s appeal succeeds.
The Court so Determines.
Signed on behalf of the Labour Court
Caroline Jenkinson
TH______________________
24 March 2020Deputy Chairman
NOTE
Enquiries concerning this Determination should be addressed to Therese Hickey, Court Secretary.