Complainant

Respondent

Parties

Kevin Blake

Freighteam Transport Ltd

Representatives

JRK Business Support & Employee Advocacy Services

IBEC

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-00043939-001

06/05/2021

The respondent is a freight forwarding business with operations in Dublin Port and in Bradford in the UK.  The complainant commenced work as a sales person in December 2001.  In 2005, he was appointed as a company director.  Until 2011, he reported to the operations director, who had oversight of both the Dublin and Bradford operations.  When the operations director left in 2011, the complainant became responsible for the Dublin business, reporting to the MD.  Around 12 people reported to the complainant and his annual salary was €54,000.

On February 11th 2021, the complainant gave one month’s notice of his intention to resign, and he left his job on March 12th.  He claims that he was compelled to leave because the behaviour of his employer undermined his role as a senior manager and made it impossible for him to function.  He claims therefore, that the termination of his employment was a constructive dismissal.

Deterioration in the Relationship Between the Complainant and the Managing Director

From 2001 until 2019, the complainant’s relationship with his employer was positive, and there was a degree of trust built up between him and the MD.  In his submission in advance of the hearing, Mr Keenan said that the complainant had an effective relationship with the MD and, while they had robust exchanges, they were able to manage and develop the business effectively.  In the latter part of 2019 however, Mr Keenan said that as the MD began to get involved in issues being managed by the complainant, the relationship between the two men became strained.  Mr Keenan submitted some examples:

For some time, the complainant had expressed concern about the respondent’s failure to invest in the broadband service between the Dublin and Bradford offices.  Nothing was done about this and in the middle of December 2020, the broadband service failed and wasn’t restored until January 16th 2021.  Combined with the introduction of new Brexit protocols, the broadband difficulties had a considerable impact on cashflow at year-end.

At the latter end of 2019, the MD insisted that a payment was due from a customer, and the complainant advised that the debt had been paid.  He was subsequently proved to be correct when the payment was discovered in the company’s UK account.

In March 2020, the complainant was instructed to inform the MD’s daughter if he wanted to take holidays, which he never had to do before then.

In May 2020, when the company was attempting to keep employees safe at work, the MD’s son over-ruled the complainant by restricting access to toilet facilities for warehouse staff.  He was also instructed to inform the MD’s two daughters if he was working from home.  Previously, he worked from home at his own discretion.

In August 2020, the complainant was over-ruled by the MD’s son when he refused to accept a pallet of goods with pigeon droppings on the wrapping.  The complainant said that the MD was unhappy at his decision not to handle the dirty pallets.  He accused the complainant of making up the problem.  The issue was raised again in November 2020 when the MD challenged the complainant’s decision to refuse to handle these pallets.  In September, the MD remarked that the complainant was obstructive, when he passed a customer’s request for a pest control procedure to the MD’s son.

In the same month, the complainant’s efforts to retain an important customer were undermined by the respondent’s efforts to increase prices paid by that customer.

In November, the MD sent an email to warehouse employees over-riding the complainant’s directions, instructing them to deal with trailers only from a company owned and managed by him and his family.  The complainant said that the warehouse staff were instructed by the MD to deal with him or his son or daughter.

That same month, the MD became involved in the complainant’s efforts to negotiate a customs clearance service with a particular agency.  At a meeting attended by the MD and his daughter, the MD told the agency representative that he didn’t know his business and couldn’t properly come up with a price.  He subsequently excluded the complainant from the negotiations with the customs clearance agency, causing tensions with the service-provider.  On December 31st 2020, the customs clearance agency terminated its service to the respondent’s business, leaving them heading into 2021 and the changes imposed by Brexit, without a customs clearance service.  This was on top of the failed broadband connection with the Bradford business.

At the beginning of January 2021, as trailers queued up on the quayside, the complainant’s efforts to prioritise customs clearance was countermanded by the MD, who insisted that priority was given to trailers from the Bradford business, over the Dublin trailers.  The MD engaged the customs clearance agency without consulting with the complainant, and insisted that the Bradford trailers were prioritised.

A series of email correspondence between the MD and the complainant was produced in evidence.  In the correspondence, the MD told the complainant that he had reports “from various members of staff that you are refusing to co-operate with them.”  In an email on January 25th, he accused him of being obstructive.  Later that day he wrote, “Be straight with me as I have always been straight with you and tell me what is wrong with you.”  When he was asked for details about the alleged complaints from staff, the MD failed to back up his claims.  On February 9th, in an email described by Mr Keenan as displaying hostility and criticism, the MD said, “You have not responded to my last few emails.  Is this by accident or design?”  Considering his experience over the preceding 12 months, the complainant felt that his authority as a manager had been destroyed to such an extent that he couldn’t function in his job.  On February 11th 2021, he sent an email to the MD, giving him one month’s notice of his intention to resign.

Concluding his written submission, Mr Keenan said that the final year of the complainant’s almost 20 years of employment with the company was “virtually unbearable.”  His authority to make business decisions was removed, meeting the burden of the contract test, which determines if an employee has shown that there has been a significant breach of their contract of employment to the extent that they had to terminate their own employment.  Mr Keenan said that the trust and confidence required to maintain the employment relationship was at an end.  With regard to the test of reasonableness, Mr Keenan submitted that the complainant “endured considerable unwarranted criticism and serious unfounded allegations in addition to having his function as managing director undermined.”

By giving his employer a month’s notice of his intention to resign, Mr Keenan said that the complainant presented the MD with an opportunity to address matters by way of reconciliation, or by discussing an agreed mechanism for him to leave the business.  One hour before his employment was due to end, the MD made an offer of severance terms.  When the complainant asked for an improvement on those terms, the offer was withdrawn.  Later, “because of the impasse,” the complainant decided to accept the MD’s 11th hour offer; however, the MD changed his mind and the offer was withdrawn.

It is the complainant’s case that he had no option but to address his concerns directly with his employer, which he did “in a reasonable and rational manner as best he could, over time, up to the termination of his employment and beyond it, regrettably without a reasonable response.”

Evidence of the Complainant

In response to questions from Mr Keenan, the complainant corroborated the details of his written submission.  Because of the issues at work and the stress he was experiencing, he went to his doctor in November 2020 and was advised to take time off work.  He said that he didn’t take time off because he was too busy with Brexit looming and the on-going effects of the Covid pandemic on the business.

In December 2020, he said that he was excluded from the negotiations with the customs clearance agency, even though he was responsible for the running of the Dublin business.  The failure of the broadband service on December 13th meant that the company had to limit the staff who had access to the company’s email system and it was impossible to work from home.  He said that the system crashed in 2014 and he had consistently asked for an upgrade and investment to meet the needs of the business.  However, the MD decided that the upgrade wasn’t necessary.

By January 2021, the complainant said that the business was embroiled in Brexit issues, they were suffering cash flow problems because of the lack of broadband and lorries were queuing in the docks.  If there had been a customs clearance process in place, trailers could have been moved to a bonded warehouse, but the agency had pulled out on December 31st.  If this service had been available, the complainant said that there would have been delays, but less pressure.

At the end of 2019, the complainant said that one of the MD’s daughters came back from retirement to manage the back office.  He said that he felt that this was a way to take him “out of the picture” as the MD “made family important.”  Since his departure the MD’s daughter is now the office manager.

The complainant said that he felt undermined when the MD instructed the warehouse employees to take direction from him or his son or daughter.  He was questioned about his holidays and instructed to get approval from the MD’s daughter, so that his holidays wouldn’t overlap with hers.  He said that up to then, he approved holidays for employees.

The complainant said that he sometimes worked from home because he got more work done, and that he often worked from home at weekends and during his holidays.  He said that he was instructed to inform two of the MD’s daughters if he was working from home, as well as the person who works in accounts and another man in the garage.  He said he was never informed when any of these employees worked from home.

On two occasions in January 2021, the complainant said that the MD told him that staff were complaining about him.  When he asked who was complaining and what the complaints were about, the MD didn’t respond.  The MD complained that he was slow at answering his emails and that he was obstructive and liable to damage the business.

The respondent dealt with a Turkish agent and, in January 2021, the MD decided that he didn’t want to deal with this business.  The complainant said that he disagreed because the business was valuable and he didn’t cancel the contract.  Over-riding the complainant’s decision, the MD contacted the Turkish agent and cancelled the business.

On February 9th 2021, the complainant said that, having been side-lined and accused of being obstructive and playing games, he wrote to the MD to clarify his position.  He referred to previous suggestions that he would invest in the business himself, as a “buy-in, management buy-out – draw a line and buy the good will.”  As this had been met with a poor response, he asked the MD to “clarify my position and if it is still the same as it was throughout the years.”

Two days later, following a conversation with the MD, the complainant sent him an email informing him of his intention to resign.  When he got no response, on February 19th, the complainant wrote again “to make it as clear as I can why I decided to submit my resignation after 19 years.”  He said,

“It is simply this, I could not and cannot continue to sustain the unreasonable demands that you have made on me over the years, and which in recent times have become both more intense and unreasonable.

You have failed to support me and the business in terms of investment, resources and positive encouragement and day to day management support.

For me, the tipping point has been reached by your open undermining of me and my decision making, both internally and externally.

I very much regret that it has taken this latest propensity together with my wife’s wellbeing, to bring me to the realisation that you have simply made it impossible for me to continue working with you.  I did bring your attention to this, but not for the first time my alert has found deaf ears and a careless attitude.

What I ask now, is that you at least attempt to create a transition for me and the business so that my compelled leave is mitigated.

Yours sincerely…”

Regarding a “transition,” the complainant said that after he sent his email of February 19th 2021, he asked the MD to pay him 1.5 times his annual salary, which was half what he would have earned in the three years left before his normal retirement date.  He was seeking a severance payment of €81,000.   He said that, in the hour before he was due to leave the company on March 12th 2021, the MD made him a written offer of €25,000.  The complainant said that rejected this offer and “we had a reasonable chat and I left.” 

Concluding his direct evidence, the complainant said that he did everything he could for the company.  After he resigned, he heard that they were moving on without him.  He feels that this had to have been thought out beforehand and he thinks that the MD’s plan was to get his family more involved.  He said that he built the business up, and when he left, he didn’t use any of his contacts when he set up a customs clearance agency.  He said that he never did the company any harm and that he couldn’t damage the business.

Cross-examining of the Complainant

Responding to Mr Haverty’s questions, the complainant said when he joined the company, the MD and another director were shareholders.  In 2011, when that director left, he took over.  He said that he put the business ahead of himself.  He said that he didn’t submit a medical cert in November 2020, but that the MD knew he was under pressure.  He said that they had talked over the preceding months about needing to take over the Bradford service, but that nothing happened to resolve the issues. 

Mr Haverty asked the complainant about the pallets with pigeon droppings.  He said that these had to be un-wrapped and re-wrapped by the warehouse staff.  He said that it was a problem caused in Bradford, and a problem that the staff there didn’t deal with.

Referring to the MD’s daughter who took on the role of office manager, the complainant said that “she was supposed to support me” but she ended up working in credit control.  She was an extra wage with no support.

Asked if he used the grievance procedure to address his concerns, the complainant said that there was no grievance procedure.  He said that the only person he could complain to was the MD.

Mr Haverty asked the complainant why he gave the MD one month’s notice.  He said that “if someone handed me their notice, I would ask them ‘why?’”  Mr Haverty pointed out that the reasons that the complainant resigned were stated in his email of February 11th 2021.

The complainant said that he set up a business and he started trading on April 14th 2021.  He said that he had previously indicated to the MD that he was interested in doing this.  His company doesn’t compete with the respondent, as the MD is engaged in a freight-forwarding business and his is a customs clearance agency.

Conclusion

Summarising the complainant’s position, Mr Keenan said that the complainant was reduced to operating as an office manager, instead of a company director with responsibility for the Dublin operation.

Regarding the failure to process his concerns through the grievance procedure, Mr Keenan said that if a procedure is available, it should be used.  There was no grievance procedure that the complainant was aware of.  He reported to the MD and he addressed his concerns directly with the MD.  During the period of his four weeks’ notice, he gave the MD an opportunity to effect a proper hand-over of responsibilities and to bring about a different outcome.  His efforts to have a smooth transition were not responded to.

Mr Keenan said that the most important factor in the complainant’s resignation was the breakdown in the relationship between him and the MD.  While the MD said that he would take the financial hit for his decision-making, the complainant couldn’t properly function when he didn’t know how much authority he had.  Mr Keenan said that the relationship broke down to such an extent that the complainant’s authority was gone, effectively repudiating his contract of employment.  On the issue of the reasonableness of the complainant’s decision to resign, Mr Keenan asked if it was reasonable to accuse the complainant of playing games, or to intervene in negotiations, or to ask him to report to his subordinates about his whereabouts.

The respondent’s submission addressed each of the issues highlighted by the complainant which he claims led to his decision to resign.

A copy of the complainant’s contract of employment was submitted in the respondent’s book of documents.  Under the heading, “Grievance and Disciplinary Procedure,” there is a clause relating specifically to grievances as follows:

“If you have any grievance which you consider to be genuine in respect of any aspect of your employment, you have a right to a hearing by your immediate superior or other management as circumstances warrant.  If you are unhappy with the outcome, you may appeal to more senior management.”

Mr Haverty referred to the complainant’s claims about an event in 2019 when he was placed under pressure to seek a payment from two customers.  He said that this was a matter for the credit control department and the respondent has no recollection and no evidence about the issue.

In 2019, the MD’s daughter returned to work for the company, having retired in 2016.  She came back because the complainant was struggling to fill a role and she was persuaded to work with him until the role could be filled.  The respondent’s submission states that the complainant and Ms O’Reilly “had a great working relationship.”

Regarding the exclusion of the warehouse staff from certain bathroom facilities, Mr Haverty said that the objective was to separate employees as much as possible and that there were “several toilets on site for staff to use during this difficult period.”

Mr Haverty said that some employees were permitted to work from home during the Covid pandemic and that all of these staff members were asked to inform others when they were at home and not working in the office.

Regarding the pigeon droppings, Mr Haverty said that the respondent has measures in place to deal with this, but that sometimes, the measures don’t work.  Instead of opting for what he referred to as “the sensible option” of cleaning the pallets, the complainant sent them back.

In August 2020, the respondent lost a customer when they tried to re-negotiate prices.  It is the respondent’s position that this “unfortunately happens in business sometimes and is nothing unusual.”

Referring to the respondent’s efforts to retain a customs clearance provider, Mr Haverty said that the complainant and the MD agreed on the company they wanted to provide this service.  However, the provider informed the respondent that they hadn’t got the resources to cover groupage loads on wheels without paperwork  being submitted within specific timelines.  The MD’s efforts to resolve this problem were successful when, at the last minute, he persuaded the company to do groupage clearances.

The back-up of trailers along the quayside was the result of Brexit regulatory requirements and were not related to anything the complainant did or didn’t do.

The company has a computer file server that requires a broadband link between Dublin and Bradford.  On December 15th 2020, the broadband link broke down; however, a secondary link was available and the company put other steps in place to fix the problem.  Mr Haverty said that the complainant was fully aware of the remedial steps that were taken, including the deletion of old files and the installation of a new and more powerful server in Bradford and finally, the installation of a leased line.  Mr Haverty said that this new, leased line has resolved the broadband problem.

In his resignation email of February 11th 2021, the complainant said that he “could not longer work under the extreme pressure and long hours as had been the case for many years now.  It is now important that I put some time into taking care of my family.”  The complainant had never previously raised any concern about working long hours.  He never invoked the grievance procedure about any matter, although the process is referred to in his contract of employment.  He failed to provide the respondent with a fair and reasonable opportunity to respond to and deal with his complaints.

Legal Submission

Mr Haverty referred to section 1 of the Unfair Dismissals Act and the definition of dismissal in relation to an employee.  I will consider this definition under the heading, “Findings and Conclusions” later.

In light of the definition, and the principles established by the former Employment Appeals Tribunal (EAT) and the Courts, there is a burden of proof on the employee to demonstrate that:-

a)           He was entitled to terminate his employment because of a breach of contract on the part of his employer, or

b)           That  his employer acted so unreasonably so that it was impossible for the employee to continue in employment and it was reasonable for him to resign.

With regard to the contractual test, Mr Haverty said that the employer operated within the terms of the complainant’s contract of employment and no violation occurred.  He referred to the precedent at the EAT of Conway v Ulster Bank[1] in support of the respondent’s position in this regard.  He said that the respondent’s actions were in no manner “a repudiation of the contract of employment” and did not demonstrate “that the Respondent no longer intended to be bound by the contract.”  He said that there was no change to the complainant’s contract to make it “so radically different from what it was before.”  Mr Haverty submitted that the respondent fulfilled its contractual obligations, implied and otherwise and he argued that, on the basis of the contractual test, the complainant has not established that his termination was a constructive dismissal.

With regard to reasonableness, Mr Haverty argued that two “interwoven” factors require to be considered:

1.           Did the employer act so unreasonably as to make the employment relationship intolerable?

2.           Did the employee act reasonably by resigning, particularly in respect of the requirement to use the internal grievance procedures?

To demonstrate how these concepts are approached, Mr Haverty referred to the EAT case of McCormack v Dunnes Stores[2], where the Tribunal chairman stated:

“The notion places a high burden of proof on an employee to demonstrate that he or she acted reasonably and had exhausted all internal procedures formal or otherwise in an attempt to resolve her grievance with his or her employers.  The employee would need to demonstrate that the employer’s conduct was so unreasonable as to make continuation of employment with the particular employer intolerable.”

Mr O’Reilly is the owner and managing director of the company and has a level of responsibility for decision-making which may decide the direction the business will take.  It is his prerogative to make decisions in the best interest of the company and this cannot be considered to be unreasonable and did not render his relationship with the complainant intolerable. 

Mr Haverty submitted that if, during the course of his employment, the complainant had raised the allegations he makes to support his claim, they would have been addressed and resolved in line with the grievance procedure.  It is the respondent’s position that the complainant could have notified the MD of his concerns and that he could have used the grievance procedure to do this.  Instead he acted in a hasty and unreasonable manner by resigning before notifying the respondent of his concerns.  It is the respondent’s position therefore, that the complainant did not act reasonably by resigning, as he had not “substantially utilised the grievance procedure to attempt to remedy his complaints.” (Conway v Ulster Bank).

Mr Haverty argued that there is an obligation to exhaust internal grievance procedures even where there exists a purported breach of an employment contract.  In a third case referred to, Travers v MBNA Ireland Limited[3], the employee’s job was changed in a manner “not in keeping with his contract of employment.”  Mr Travers initiated the grievance procedure, but did not bring that process to a conclusion and resigned without lodging a final appeal.  It is the respondent’s case that, like the claimant in Travers, the complainant did not utilise all the internal remedies available to him and that this is detrimental to his argument that his resignation amounts to a constructive dismissal.

Just as it is unacceptable for an employer to dismiss an employee without recourse to fair and comprehensive procedures, it is not sufficient for an employee to claim to have been constructively dismissed without using and exhausting the grievance procedures.  It is the respondent’s position that the complainant has failed to establish the burden of proof that shows that his actions were reasonable.  As in Travers v MBNA, the complainant’s failure to use and exhaust the grievance procedure is detrimental to his claim.

Conclusion

It is the respondent’s position that the complainant’s contract was not repudiated in any way and the that employment relationship was conducted within the parameters of his contract.  The respondent’s interactions with the complainant were reasonable at all times, but conversely, the complainant’s failure to use the grievance procedure was unreasonable on his part.  In light of this conclusion, it is the respondent’s position that the complainant was not dismissed, constructively or otherwise.

Evidence of the Managing Director

In his direct evidence, the MD said that the complainant’s evidence was “all waffle.”  He said that he has to make decisions in the interest of the company.  He also referred the Turkish business, and he said that he wasn’t paid by that business.

Constructive Dismissal

As set out by both sides at the hearing, the definition of dismissal at Section 1 of the Unfair Dismissals Act 1977 (“the Act”), includes the concept of constructive dismissal:

“dismissal, in relation to an employee means -

“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 without giving prior notice of the termination to the employer[.]”

The burden of proof rests with the complainant to set out the facts that show that, because of the actions of his employer, he had no alternative but to resign.  Section 1 of the Act envisages two circumstances in which a resignation may be considered to be a constructive dismissal.  The first of these, referred to as “the contract test,” occurs when the employer’s conduct amounts to a repudiatory breach of the employee’s contract.  In such a circumstance, the employee would be entitled to resign his position.  In Western Excavating (ECC) Limited v Sharp[4], it was established that the test requires the employee to show that the employer is “guilty of 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…”  If this can be established, “…then the employee is entitled to treat himself as discharged from any further performance.”

The second test, known as the “reasonableness test,” may be relied upon in combination with or as an alternative to the contract test.  This requires the employee to show that their employer acted so unreasonably that they could not be expected to tolerate it and they had to resign.  Reasonableness goes both ways and we know also that the employee is required to act reasonably, by using their employer’s grievance procedure to try to resolve the issues that are threatening to lead to resignation.

Examination of the Evidence

At the hearing, the evidence of the MD was brief and dismissive.  I found the complainant to be a credible witness, setting out his experience in factual terms without any sense of rancour or ill will towards his former employer.

It is apparent that the complainant and the MD had a reasonably constructive relationship for many years.  This is demonstrated by the fact that, in 2005, after only four years in the company, the complainant was appointed as a director.  In 2011, he took over responsibility for operations in Dublin.  Next to the MD, he was the most senior manager in the business, with around a dozen direct reports. 

It is apparent also that 2020 was a challenging year for the respondent’s business, as it was for most employers.  Alongside having to manage Covid-19 in the workplace, for freight companies, the introduction of new customs clearance protocols for goods to and from Britain created additional bureaucratic and financial challenges.  The failure of the broadband service between the company’s Dublin and UK operations created a further headache, something that, from the complainant’s perspective, could have been avoided if they had invested earlier in a technical solution.

The complainant’s evidence points to a deterioration in the relationship between him and the MD following inconclusive discussions about the complainant’s interest in taking a part-ownership in the business or in a management buy-out.  From the complainant’s evidence, I reached the conclusion that the MD could rely on his adult children to run the business and he had no interest in a buy-out.

The correspondence submitted by the complainant demonstrates that the difficulties presented by the Brexit changes, the failure of the broadband connection, trailers queuing up on the quays, and the absence of a customs clearance service, added to an already busy workload for the complainant in January 2021.

From the emails on Monday, January 25th 2021, we learned that the MD and the complainant had a recent face to face meeting and that the MD thought that they had “cleared the air” and were “going forward and not looking back.”  The complainant’s position was that he had not had time to consider a response to what was said at that meeting, although he planned to do so.

In an email with “Co-operation” in the subject-header, the MD wrote,

“I have reports from various members of staff that you are refusing to co-operate with them.

This is being obstructive.

Members of staff reported that you have told them that you are only responsible for invoicing.

You are the managing director of the company and you have responsibility for all aspects of the company.

I would remind you once again that as a director of the company you have a fiduciary duty for all aspects of the company and not just invoicing.

In these trying times with Covid and Brexit we need everyone pulling in the same direction and everyone giving their full co-operation if we are to save the company.

I would ask you will all sincerity to stop being obstructive and co-operate fully with everyone.

My email last night mentioned 100 jobs unrated.  This was an error on my part.  There was in fact 1,000 jobs unrated.

Please confirm that you will co-operate with all staff and start running the business as a Managing Director should.

Yours sincerely, etc”

This email points to certain fundamental problems between the MD and the complainant.  For two people who had worked together for nearly 20 years, it was strange that the MD sent the complainant an email to express his concern about his conduct as a managing director.  Surely the matter was serious enough to warrant a phone call or a meeting?  The MD’s tone in the email is paternalistic on the one hand, and slightly threatening on the other.  By telling the complainant that he has reports from employees about his behaviour, he withholds information so that the complainant can’t address his concerns.  By pointing out what he already knows, (“you are the managing director”) and that everyone needs to pull together, the MD suggests that the complainant doesn’t know what’s going on and what is required to keep the business up and running.

The MD didn’t respond to the complainant’s request for details about who said that he was not co-operating with them.  In a follow-up email, he suggests that there is something amiss, as he says, “I am of the view that the company was always good to you in every way.”  He treats the complainant like a recalcitrant child when he asks, “Just let me know why you are acting in this negative manner towards the company and me.”

In this correspondence, the MD referred to the complainant as the managing director, but some of the incidents that occurred over the previous 12 months show that he was consistently over-ruled and that his opinion was of no consequence.  For example, the complainant’s instruction to return the soiled pallets to the Bradford depot, his efforts to secure a customs clearance service, his concern about maintaining the Turkish business and his negotiations to hold on to a customer who was at risk of moving elsewhere over pricing.  In all of these examples, and in others, the complainant’s views were disregarded.  This is the context in which he decided to resign.

Was it Reasonable for the Complainant to Resign?

Mr Haverty referred to three significant precedents regarding constructive dismissal; the Conway v Ulster Bank case, the McCormack v Dunne’s Stores case and the Travers v MBNA case, all cited at page 9 above.  He and Mr Keenan referred to the requirement for a complainant to show that the conduct of the employer must fail at least one of the two tests, the contract test and the reasonableness test.

I will consider the breach of contract argument in the first instance.  The employment contract is grounded on a premise that trust and confidence exists on both sides; the parties agree that they will preserve and maintain the interests of the other.  From the evidence of the complainant, it appears that the MD stopped having faith in him, did not trust him to direct his own staff and felt the need to intervene in negotiations with customers and service-providers.  While the MD reminded the complainant that he was the managing director, he effectively removed his capacity to conduct himself as the managing director.  This is the basis of Mr Keenan’s argument that the complainant’s contract was repudiated.  In the decision of the Supreme Court in Berber v Dunne’s Stores[5], considering the issue of repudiation, Mr Justice Finnegan held that,

 “In determining whether there has been a breach of the implied term of mutual trust and confidence in employment contracts:

1  The test is objective.

2  The test requires that the conduct of both the employer and the employee be considered.

3  The conduct of the parties as a whole and the cumulative effect must be looked at.

4  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.”

I have considered the conduct of the MD and the complainant in the months leading to the complainant’s resignation.  Applying an objective assessment, it is my view that, if the MD had not undermined his authority, and if he had treated him as a co-director in his business, with shared responsibility for business decisions and with respect for his knowledge, experience and commitment over nearly 20 years, the complainant would not have resigned. 

In Murray v Rockabill Shellfish Limited[6], the EAT addressed specifically the conduct of the employer:

“The Tribunal must consider whether because of the employer’s conduct, the claimant was entitled to terminate his contract or it was reasonable for him to do so.  An employee is entitled to terminate the contract only when the employer is guilty of conduct which amounts to a significant breach going to the root of the contract or shows that the employer no longer intends to be bound by one of more of the essential terms of the contract.  In the case of Brady v Newman UD330/1979, the Tribunal stated at pp 9-10:

“…an employer is entitled to expect his employee to behave in a manner which would preserve his employer’s reasonable trust and confidence in him and so also must the employer behave.”

I accept the evidence of the complainant when he referred to “the tipping point” of the MD’s treatment of him in the way he was openly undermined in his role and I find that this was a significant breach causing the complainant’s contract to be repudiated.  I find that the essential requirement for mutual trust and confidence no longer existed and that the complainant was justified in his decision to resign.

While I have concluded that the contract test has been met, I wish to briefly address the second limb of the burden of proof which requires the complainant to show that the conduct of his employer was so unreasonable that it couldn’t be tolerated any longer and it was reasonable for him to resign.  Many of the issues that resulted in the repudiation of the complainant’s contract, also go to the heart of the issue of reasonableness.  It was not reasonable for the MD to instruct the complainant’s team in the warehouse to prioritise freight from an associated company, rather than the company where the complainant worked.  It was not reasonable for him to over-rule his decision to return the soiled pallets.  It was unreasonable to intervene in negotiations with a customs clearance provider and to tell the provider that he didn’t know how to do his job.  It was unreasonable and entirely unfair to suggest to the complainant that staff reported that he was un-cooperative.  Added to this was the long hours and the extreme pressure that the complainant said he had been working under for many years.

In defence of the MD, Mr Haverty said that he was responsible for the business and that it was his prerogative to make decisions in the best interest of the company.  This is tantamount to suggesting that the complainant was not acting in the best interest of the company, which the evidence has not shown.  It is my view that no one in the role of a managing director could be expected to continue to work in the circumstances described by the complainant and I find therefore, that his resignation meets the test of reasonableness.

We know from the decisions of the EAT in Conway v Ulster Bank and in Travers v MBNA, that an employee must act reasonably by using and exhausting the grievance procedure to attempt to resolve the issues prompting the desire to leave.  The process for resolving grievances between employees and managers is not adequate for resolving grievances between directors.  The only grievance procedure that the complainant could have resorted to is the one in the contract issued to him in 2001, for his role as a sales person.  This is comprised of five bullet points and was entirely inadequate to the challenge of resolving the fall-out of these two directors.  I am certain that, during their conversations and emails in the run-up to the complainant’s resignation, neither considered that there was any benefit in invoking the grievance procedure.    

The complainant resigned on February 11th 2021, giving one month’s notice of his intention to leave.  In his resignation email, he said simply, “I can no longer work under the extreme pressure and long hours as has been the case for many years now.”  Strangely, this prompted no response from the MD, to whom it was addressed.  With no response forthcoming, the complainant wrote again on February 19th, setting out in more detail the reasons for his resignation (see page 5 above).  I do not accept the respondent’s assertion that the complainant acted hastily or unreasonably and it is my view that the email of February 11th was adequate to open a “last resort” conversation with the MD about the problems he was experiencing.  It is regrettable that this opportunity was not taken up.

Often, in a complaint of constructive dismissal, the fact that an employee works out their notice is considered to be a fatal flaw in the argument that they couldn’t put up with their employer’s conduct any longer.  I was struck at the hearing by the complainant’s commitment to the respondent’s business and, worn out as he was, I appreciate that he could not have countenanced simply walking out.  I do not consider the complainant’s decision to work out his notice to compromise his case.  It is my view that he might not have resigned if his employer had used the notice period to address the problems between them and to put in place some procedures where they could have worked together collaboratively and with mutual respect. 

Conclusion

Why the breakdown in the relationship between the complainant and the MD occurred is outside the scope of my investigation here.  There is some indication that it may have been related to the failed management “buy-out” or “buy-in” discussions and the greater involvement of the MD’s family in the business.  Whatever the reason, it is clear to me that the situation was irretrievable, and it is regrettable that the negotiations to reach an agreement on severance terms amounted to nothing.

In addition to the relevant case law, I have considered the complainant’ evidence and the detailed submissions of both sides.  I have concluded that the complainant has discharged the burden of proof that shows that it was reasonable for him to resign from his employment and that the cause of his resignation was the manner in which he was treated by his employer.  I find therefore, that his was an unfair dismissal.

I have decided that this complaint is well-founded.  Considering the amount to be awarded in redress, I note that the complainant set up his own business and after six weeks, he was earning the same amount that he earned with the respondent.  I decide therefore, that the respondent is to pay the complainant €6,250, equivalent to six weeks’ gross pay.  As this award is in the form of loss of earnings, it is subject to the normal deductions of tax, PRSI and USC.

Constructive dismissal