Complainant

Respondent

Anonymised Parties

A Financial Controller

A Forestry Company

Representatives

none 

Martin Cosgrove A.B O'Reilly Dolan & Co

Act

Complaint/Dispute Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under Schedule 2 of the Protected Disclosures Act, 2014

CA-00034660-001

14/02/2020

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

CA-00034660-002

14/02/2020

Complaint seeking adjudication by the Workplace Relations Commission under Section 12 of the Minimum Notice & Terms of Employment Act, 1973

CA-00034660-003

14/02/2020

The Complainant commenced employment with the Respondent on 6th February 2019. He alleged that he made a number of protected disclosures over the course of his employment and that he was penalised for same. He claimed that he had no choice but to leave his employment on 1st September 2019 as a result of the Respondent’s failure to act on his concerns.

The Complainant stated that he started employment with the Respondent on 6th February 2019 and was trained by the outgoing Financial Controller. He highlighted firstly that the outgoing Financial Controller had received a redundancy payment in December 2018 but did not leave until 28th February 2019. He also alleged that during the first week of his employment, he was shown a “forgery table” which was used to recreate the signatures of Directors. He was led to believe that this was used to expedite forestry and mortgage applications but told the outgoing Financial Controller that he would not be using that and never did.

He claimed that from the end of February until he left the company, he had daily conversations with the CEO about what he perceived as areas of company policy which were in some instances illegal.

He said that on 21st June 2019 he was nominated to be Commercial Director of the Respondent by the shareholders but informed the Board that he would not be willing to accept a directorship unless the company was run ethically.

Following a period of sick leave, he returned to the office on 19/8/19 and informed the CEO that he could no longer process any expense payments as they were fraudulent. He claimed that the CEO responded by stating that the Company would not be able afford the pay rises which people would ask for if they could not claim expenses. The CEO also informed the Complainant that this would cause an issue for him. 

The Complainant also stated that on 27th August 2019, he questioned one of the directors Mr X about his purchase of a personal vehicle and that he confirmed to him that it was washed through the business for tax purposes. Having subsequently informed the CEO of this conversation later on the same day, he was made aware that the CEO already knew about this issue. 

Further to this conversation, on 30th August 2019, he claimed that the CEO informed him that Mr X was “gunning” for him. The CEO added that in order to appease Mr X, he had agreed to give the Complainant a set of milestones to hit in order to keep his job. The Complainant informed the CEO that he was disappointed with what he was saying as there had been no issue with his performance previously. The CEO then proceeded to ask him to process another fraudulent expense claim on behalf of another employee

As a result of his view that he was being put on a Performance Plan in order to manage him out of the company because of his questions around illegal payments, the Complainant attended the company’s offices in in Virginia to type out his resignation letter. He claimed in his letter that if he was to continue in the role in any capacity, he would have to continue to break the law on the Respondent’s behalf. Specifically, in his letter of resignation the complainant alleged that the Respondent:

·        Encouraged staff members to claim fraudulent expenses instead of awarding pay rises.  

·        Put employees’ personal purchases through the company’s accounts to reclaim VAT. 

·        Allowed employees to falsely claim Business Mileage whilst driving a company car. 

·        Paid a tax-free redundancy payment to a departing employee to cover his last two months’ salary whilst he remained employed and trained a successor to the “redundant” role. 

·        Paid tax-free expenses to non-employees

·        Falsified signatures on official documents

·        Falsified signatures on Bank Loan applications (Directors signatures) 

He also alleged that the Respondent had been operating a Forestry Insurance revenue stream without having been approved to do so by the Central Bank. This included charging customers for a forestry insurance premium while never having the Insurance underwritten for the Customer.

The Respondent denied that the Complainant had highlighted many of the allegations made at the hearing prior to submitting his letter of resignation. While these allegations were largely refuted, it was however accepted that the Complainant had highlighted that one of the directors had purchased his personal vehicle through the company and that he sent an email to the CEO on 15th August regarding the payment of expenses.

It was denied however that the Complainant had been informed of the intention to set milestones for him because he had raised these issues and was asserted that this was done because of some performance issues that arose. Specifically, one of the Respondent’s directors had not been provided with reports he had requested from the Complainant for a meeting with a very important client and the absence of these reports had caused serious difficulty for him. It was also noted that the Complainant had not provided the required information on previous occasions.

It was also highlighted that these milestones were not agreed prior to the Complainant’s resignation.

CA-00034660-001:

The Law

My jurisdiction under the Act as regards the matters arising in this case relates, in accordance with Schedule 2 of the Act, to the protection afforded by Section 12(1) of the Act to those who make a protected disclosure.

Specifically, Section 12(1) of the Act provides as follows

• 12. (1) An employer shall not penalise or threaten penalisation against an employee, or cause or permit any other person to penalise or threaten penalisation against an employee, for having made a protected disclosure.

It follows therefore that I must firstly establish that a protected disclosure has been made by the Complainant before I can examine whether a penalisation within the meaning of the Act has occurred.

The Act defines a protected disclosure at Section 5 as follows:

Protected disclosures

5. (1) For the purposes of this Act “protected disclosure” means, subject to subsection (6) and sections 17 and 18, a disclosure of relevant information (whether before or after the date of the passing of this Act) made by a worker in the manner specified in section 6 , 7 , 8 , 9 or 10 .

(2) For the purposes of this Act information is “relevant information” if—

(a) in the reasonable belief of the worker, it tends to show one or more relevant wrongdoings, and

(b) it came to the attention of the worker in connection with the worker’s employment.

(3) The following matters are relevant wrongdoings for the purposes of this Act—

(a) that an offence has been, is being or is likely to be committed,

(b) that a person has failed, is failing or is likely to fail to comply with any legal obligation, other than one arising under the worker’s contract of employment or other contract whereby the worker undertakes to do or perform personally any work or services,

(c) that a miscarriage of justice has occurred, is occurring or is likely to occur,

(d) that the health or safety of any individual has been, is being or is likely to be endangered,

(e) that the environment has been, is being or is likely to be damaged,

(f) that an unlawful or otherwise improper use of funds or resources of a public body, or of other public money, has occurred, is occurring or is likely to occur,

(g) that an act or omission by or on behalf of a public body is oppressive, discriminatory or grossly negligent or constitutes gross mismanagement, or

(h) that information tending to show any matter falling within any of the preceding paragraphs has been, is being or is likely to be concealed or destroyed.

(4) For the purposes of subsection (3) it is immaterial whether a relevant wrongdoing occurred, occurs or would occur in the State or elsewhere and whether the law applying to it is that of the State or that of any other country or territory.

(5) A matter is not a relevant wrongdoing if it is a matter which it is the function of the worker or the worker’s employer to detect, investigate or prosecute and does not consist of or involve an act or omission on the part of the employer.

(6) A disclosure of information in respect of which a claim to legal professional privilege could be maintained in legal proceedings is not a protected disclosure if it is made by a person to whom the information was disclosed in the course of obtaining legal advice.

(7) The motivation for making a disclosure is irrelevant to whether or not it is a protected disclosure.

(8) In proceedings involving an issue as to whether a disclosure is a protected disclosure it shall be presumed, until the contrary is proved, that it is.

Findings

The Complainant highlighted a number of alleged illegal activities which he claimed to witness in the organisation over the course of his employment.

Specifically, he claimed in his letter of resignation dated Sunday 1st September 2019 that:

-          Illegal tax-free payments were being made to employees.

-          Employees were putting personal purchases through the company in order to reclaim VAT

-          Signatures were being falsified on official documents

-          The respondent was illegally operating an insurance scheme without approval from the Central Bank.

The CEO denied in evidence that the complainant had ever highlighted to him that illegal tax-free payments were being made to employees. While he did acknowledge receipt of a mail on 15th August 2019 from the complainant which stated: “Can you send me a list of all expenses agreements which had been put in place historically. I am not comfortable paying them and need to work out the impact on payroll of rectifying them” at no stage was it:

·       Either explicitly called out why the complainant was not comfortable paying the expenses

·       or followed up in a subsequent email after the CEO responded to him with the amount in question.

Accordingly, I am not satisfied that this meets the definition of a protected disclosure as set out in Section 5 above and do not believe there is sufficient evidence to suggest that a protected disclosure was made in respect of alleged illegal tax-free payments allegedly being made to employees.

I also note the Respondent’s assertion that he only became aware of many of the other allegations highlighted by the Complainant, such as signatures being falsified, operating an illegal insurance scheme and paying a fraudulent redundancy payment, when he read the letter of resignation from the Complainant. Even if any of these disclosures were considered protected under the legislation, they were not notified to the Respondent until the Complainant submitted his letter of resignation after which he could not have been penalised given that he departed from the company with immediate effect.

I do however note that the Complainant verbally informed the CEO on 27th August 2019 that one of the Respondent’s directors informed him when queried earlier on the same day that he put the purchase a personal vehicle through the company to avoid tax. While the CEO acknowledged in his evidence that the Complainant did indeed make him aware of this illegal practice, he said that this already been brought to his attention by the auditors and that he was in the process of rectifying same.

Notwithstanding the CEO’s alleged prior awareness of this particular matter, I am satisfied that the Complainant made a protected disclosure within the meaning of Section 5(3)(a) of the Act when he informed the CEO of this instance of apparent tax avoidance and must now consider whether or not he was penalised for having made such a protected disclosure.

Specifically, the Complainant alleges that having queried the director, Mr X, on 27th August 2019 about the purchase by the company of a personal vehicle for him and having subsequently made the CEO aware of same, he was informed three days later on 30th August during an informal meeting that he would be set “milestones” to keep his job despite him not have been made aware of any performance issues prior to this. 

The crux of the case is therefore whether the Complainant can show the way he was treated by the respondent was “but for” making the protected disclosure. I note the Labour Court held in the matter of Aidan & Henrietta McGrath Partnership & Anna Monaghan (PDD162);

“… the detriment giving rise to the complaint must have been incurred because of, or in retaliation for, the Complainant having committed a protected act. This suggests that where there is more than one causal factor in the chain of events leading to the detriment complained of the commission of a protected act must be an operative cause in the sense that “but for” the Complainant having committed the protected act he or she would not have suffered the detriment. This involves a consideration of the motive or reasons which influenced the decision maker in imposing the impugned detriment.”  

I note that the Respondent’s CEO refuted the suggestion that the Complainant was penalised for having raised the issue about Mr X’s personal vehicle being inappropriately paid for by the company given that it had been previously flagged by the auditors. Indeed, the CEO claimed that the reason he wished to set milestones for the complainant was because of unhappiness with his performance. Specifically, he stated that Mr X had not been provided with reports he had requested from the Complainant for a meeting with a very important client and that the absence of these reports had caused serious difficulty for him. He also noted that the Complainant had not provided the required information on previous occasions.

Crucially, when questioned, the Complainant agreed that he had not provided the necessary information to Mr X for the meeting in question. Moreover, it is noteworthy that while both the CEO and the complainant were due to have a further meeting to agree the specific milestones, the complainant resigned from his employment on Sunday 1st September when he attended the office to type out his resignation letter which he subsequently left on the CEO’s desk. It is also noteworthy that the complainant made no reference whatsoever to any alleged penalisation in the letter of resignation, which was written only 2 days after such penalisation was meant to have occurred.

As previously stated, it is for the complainant to show that the acts of penalisation were but for a protected disclosure. For the reasons outlined above, I prefer the evidence of the Respondent and believe that the proposal of 30th August to set milestones related solely to his performance and was not related to the protected disclosure that he made to the CEO on 27th August 2019.

CA-00034660-002:

The Law

While Section 2 (1) (a) of the Unfair Dismissals Act 1977 states that the Act shall not apply in relation to:

Section 11 (c ) of the Protected Disclosures Acts 2014 states that the Unfair Dismissals Act 1977 is amended in section 6 by inserting the following subsection after subsection (2C):

I also note that Section 1 (b) of the 1977 Act states

“the termination by the employee of his contract of employment with his employer, whether prior notice of the termination was or was not given to the employer, in circumstances in which, because of the conduct of the employer, the employee was or would have been entitled, or it was or would have been reasonable for the employee, to terminate the contract of employment without giving prior notice of the termination to the employer.”

and the onus therefore lies with the complainant to demonstrate that his resignation was justified.

Findings:

In justifying his decision to terminate his employment, the complainant must demonstrate that the circumstances of his dismissal met the tests as set out by Lord Denning, MR in Western Excavating (ECC) v Sharp (1978) IRL 332, and described thus:

“conduct which is a significant breach going to the root of the contract of employment, or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract then the employee is entitled to treat himself discharged from any further performance”.

and the reasonableness test which was expressed as

“an employer who conducts himself or his affairs so unreasonably that the employee cannot be fairly be expected to put up with it any longer, the employee is justified in leaving”

Obligation to invoke grievance procedures.

The requirement to do so in cases of constructive dismissal has been identified in McCormack V Dunnes Stores, UD,1421/2008, and in Terminal Four Solutions v Rahman, UD 898/2011 and has been followed  in many other decisions. In the complainant’s letter of resignation of 1st September 2019, he lists a number of reasons for his resignation, which have been highlighted above and claimed that the respondent was operating fraudulently and outside of the law.

The Supreme Court in Berber -v- Dunnes Stores [2009] E.L.R. 61 in considering the ‘reasonableness test’ stated

“The conduct of the employer complained of must be unreasonable and without proper cause and its effect on the employee must be judged objectively, reasonably and sensibly in order to determine if it is such that the employee cannot be expected to put up with it.”

Applying Berber, while it may have been a difficult situation for the Complainant, this is not the bar which he has to surmount to demonstrate that the employer’s conduct was so unreasonable as to leave him with no choice other than resignation.

As I have outlined above, while the Complainant certainly highlighted some concerns surrounding alleged illegal or fraudulent behaviour in the company, I believe that much more could have been done by him to raise these concerns and give the respondent an opportunity to address and investigate these prior to him taking the decision to resign from the company. Specifically, I note that there was only one email sent by him about alleged illegal expenses prior to his departure from the company and, as I have highlighted above, consider that this email was sufficiently lacking in clarity. Moreover, I cannot understand why, if he was so concerned about the illegal practices, which he claimed were so pervasive and led to him leaving the company, these were not highlighted in writing prior to him writing his letter of resignation.

Given these insufficient efforts on behalf of the complainant and having regard to the authorities cited therefore, I believe that he has failed to meet the necessary tests and find therefore that he was not constructively dismissed.

CA-00034660-001:

The complaint of penalisation pursuant to the Protected Disclosures Act is not well founded for the reasons set out above.

CA-00034660-002:

I find that the complainant was not unfairly dismissed for the reasons set out above.

CA-00034660-003:

As I have found that the complainant was not unfairly dismissed, this Act was not contravened.

Constructive dismissal; protected disclosure