Complainant

Respondent

Parties

Ian  Nagle

Premier Auto Parts Ltd.

Representatives

Terence O'Sullivan Terence J O'Sullivan Solicitors

David Gaffney Gaffney Solicitors

Act

Complaint/Dispute Reference No.

Date of Receipt

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

CA-00038793-001

17/07/2020

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

CA-00038793-002

17/07/2020

Complaint seeking adjudication by the Workplace Relations Commission under section 27 of the Organisation of Working Time Act, 1997

CA-00038793-003 WITHDRAWN

17/07/2020

Complaint seeking adjudication by the Workplace Relations Commission under section 27 of the Organisation of Working Time Act, 1997

CA-00038793-004 WITHDRAWN

17/07/2020

The Complainant submits that he was unfairly selected for redundancy and that the Respondent acted unreasonably in the manner in which the redundancy was conducted. The Complainant also submits that he did not receive his written  Terms and Conditions of Employment during the currency of his employment.  The Respondent denies that the Complainant was unfairly selected for redundancy. It further submits that the redundancy was a valid redundancy and that the process was transparent and  allowed appropriate consultation in all respects during the process. The Respondent denies that it acted unreasonably in the manner in which the redundancy was carried out.  The Respondent concedes that it is in breach of the Terms and Employment (Information) Act 1994.

The Complainant commenced employment as a 17-year-old in the Respondent’s Auto Parts company on 30 May 1995.  The Company was in its infancy at the time. He held a number of positions at the Company including that of a Sales Representative and occupied the position of Sales Manager when his contract was terminated on 15 July 2020. His weekly salary for a 42.5-hour week was gross €1130.92; net €866.40. The Complainant received a statutory redundancy sum of €30,348.00 

The Sales and Operation Director (the Director) at the time of the Complainant’s dismissal gave evidence on behalf of the Respondent. The witness explained that he no longer worked for the Respondent. The summary of the Director’s testimony is as follows:

The Respondent company operated as Motor Factors within the motor trade. They dealt with trade customers only and had joined a buying group in later years to ensure lower costs for the products they were selling.  The Respondent had to save costs because sales had fallen at the particular branch where the Complainant worked.  It was loss making for at least 5 years. Three Sales Representatives were made redundant in 2019 as part of a downsizing process to reduce costs.

The Director testified that he sent the Complainant a letter on 12 May 2020 advising that his position was at risk of redundancy where there was a decline of €671,414 in sales. The letter invited suggestions from the Complainant with regard to alternatives to redundancy, with a deadline of 15 May 2020 for a response. Evidence of a follow up communication between the parties was presented where the Director understood that the Complainant’s position was that that he was not willing to accept a role with a lower salary or status.

On 22 May 2020 the Director testified that he sent a letter titled ‘Notification of Redundancy’ to the Complainant. He stated that he had made the decision to make the Complainant redundant. Amongst other things it reads: “It is with great regret that I find myself having to write this letter but it is no longer commercially viable for the company to continue to operate the business with the number of staff employed and we are now faced with the necessity of having to make redundancies.”

The letter went on to state that the Complainant’s contract would terminate on 15 July 2020 and that a statutory entitlement sum of €30,348.00 would be paid.

The Director admitted that there was no ‘Last In, First Out’ system being operated by the Respondent. He accepted in cross examination that a General Manager had been taken on in recent years who would be classed as a senior manager with responsibility for a number of branches but who also had multi-site experience before her recruitment.     

The Director accepted that his decision to make the Complainant redundant was based on the fact that he was chosen because of his high salary. The Director also testified that the position of Sales Manager in the location had been suppressed and not filled since the termination of the Complainant’s employment. 

The Complainant gave evidence that he had given exemplary service to the Respondent company for since he was aged 17. He had a very good sales record with the Respondent. He said he received a €10,000 bonus in 2005 and he understood that he was made a Director for a period.  He was shocked to receive the notice of redundancy.

In explaining the difference between a Sales Representative and a Sales Manager he said that that the Sales Representative operated on the road and called to the various businesses, whereas his job was at a desk controlling the sales teams and contacting customers. He accepted that there had been a significant downturn in the business over the last few years and that this had been exacerbated by the Covid 19 pandemic.

He accepted in cross-examination that he did not put any proposals forward as to how he could be retained other than to tell the Director that he would not accept a demotion nor a reduction in pay.

CA-00038793-001 – Unfair Dismissal

The Applicable law:

Section 6(1) of the Unfair Dismissals Act 1977 provides that: -

Subject to the provisions of this section, the dismissal of an employee shall be deemed, for the purposes of this Act; to be an unfair dismissal unless, having regard to all the circumstances, there were substantial grounds justifying the dismissal.

Section 6(4)(c) of the 1977 Act provides that: -

Without prejudice to the generality of subsection (1) of this section, the dismissal of an employee shall be deemed, for the purposes of this Act, not to be an unfair dismissal, if it results wholly or mainly from ... the redundancy of the employee...

Section 6(7) provides that: -

 Without prejudice to the generality of subsection (1) of this section, in determining if a dismissal is an unfair dismissal, regard may be had, the adjudication officer or the Labour Court, as the case may be, considers it appropriate to do so —

(a) to the reasonableness or otherwise of the conduct (whether by act or omission) of the employer in relation to the dismissal, and

(b) to the extent (if any) of the compliance or failure to comply by the employer, in relation to the employee, with the procedure referred to in section 14(1) of this Act or with the provisions of any code of practice referred to in paragraph (d) (inserted by the Unfair Dismissals (Amendment) Act, 1993) of section 7(2) of this Act.

Section 7(2) of the Redundancy Payments Act 1967, as amended, provides in Section 7(2)(c):

The fact that his employer has decided to carry on the business with fewer or no employees, whether by requiring the work for which the employee had been employed (or had being doing before his dismissal) to be done by other employees or otherwise.

Charleton J. in the High Court case of   JVC Europe v Jerome Ponisi  [2012] 23 E.L.R. 70 stated:

           “That it may be prudent, and a mark of a genuine redundancy, that an employer prior to making an employee redundant examine alternatives to letting that employee go and conduct a fair selection procedure. As a matter of contract where selection processes for redundancy or a consultation process to discover alternatives to redundancy are contained in a collective agreement or an individual employment contract, these should be followed. That a fair procedure may be used to disguise deceptive conduct and followed in form only in order to mask an ulterior motive.”

The first issue that has to be asked is whether there was a valid redundancy situation in the Respondent company. The burden of proof rests with the Respondent to establish that the dismissal was wholly redundancy connected and the Respondent must then justify the process whereby the Complainant was selected for redundancy, was fair and transparent in all respects. . Plausible uncontested evidence was submitted by the Director that sales had significantly dropped, and I am satisfied that the Respondent was faced with having to reduce costs and the decision to make the Complainant redundant was taken for economic reasons. I am therefore satisfied that a genuine redundancy situation existed at the time. However, In circumstances where redundancy is unavoidable, the Respondent is obliged to establish reasonable and objective criteria for selection and must apply those criteria fairly, as outlined by Charelton J. in Ponisni.  I note that in the Respondent’s letter of 22 May 2020  to the Complainant it refers to redundancies in the plural where it states: “It is with great regret that I find myself  having to write this letter but it is no longer commercially viable for the company to continue to operate the business with the number of staff employed and we are now faced with the necessity of having to make redundancies.”  Any reasonable reading of this letter suggests that a selection process was in train, considering that a number of positions were in the frame for suppression.

The Labour Court in Students Union Commercial Services Ltd v Traynor UDD 26/2017 referred to  Mulcahy  v  Kelly [1993] E.L.R. 35, on the point that the  duty of a Respondent in a valid redundancy situation  may involve locating alternative work within the organisation even it this involves dismissing another employee with shorter service. The Director in this instant case stated that he did not consider it plausible to consider the redundancy of other employees in the location, or other senior management, and, significantly, stated that the Complainant’s position was made redundant on the sole criteria of his high earnings. This suggests that no fair selection process took place and that the purported consultation with the Complainant masked an already pre-determined decision.

The Respondent argued that the Complainant did not use the appeal mechanism that was available to him as communicated in his notification of redundancy letter of 22 May 2020, which stated in the last sentence that the Complainant could lodge an appeal within 7 days. The Complainant’s solicitor sent a letter on 3 June 2020 which signalled the Complainant’s rejection of the Respondent’s position. The Respondent did not submit any detail of custom and practice of redundancy/termination procedures at the Company. The Director in evidence, who wrote the letter and made the redundancy decision, was not able to provide any familiarity with pre-existing appeal procedures at the company. The only reference to appeal was an arbitrary suggestion in the aforementioned letter that there was a deadline of seven days. This was neither a contractual nor lawful obligation under legislation. Based on these circumstances, I find that the lack of recourse to an appeal was not fatal to the Complainant’s case.

I note that the Complainant had twenty-five years’ service with the Respondent company, having joined it as a young man. All the evidence suggested he was  reliable and committed to his work as well as   being an effective salesperson. He was, in effect, a victim of his own success because the overarching reason for his redundancy, according to the Director’s evidence, was his high salary.  The Respondent had a number of business units and had various members of staff employed in different locations. The Respondent presented no evidence to demonstrate that it carried out a thorough exercise to consider alternative options. The result of such an exercise may not have identified any alternative positions suitable to the Complainant, however, it seems clear that it did not engage in such an exercise. On that basis the I find that the approach adopted by the Respondent was arbitrary and therefore by reference to Section 6(7)(a) of the Act, the dismissal of the Complainant was unfair.

Redress:

Section 7 of the Act, in its relevant parts, provides:

7. Redress for unfair dismissal:

(1) Where an employee is dismissed and the dismissal is an unfair dismissal, the employee shall be entitled to redress consisting of whichever of the following the adjudication officer or the Labour Court, as the case may be, considers appropriate having regard to all the circumstances:

…. (c) (i) if the employee incurred any financial loss attributable to the dismissal, payment to him by the employer of such compensation in respect of the loss (not exceeding in amount 104 weeks remuneration in respect of the employment from which he was dismissed calculated in accordance with regulations under section 17 of this Act) as is just and equitable having regard to all the circumstances, or

(ii) if the employee incurred no such financial loss, payment to the employee by the employer of such compensation (if any, but not exceeding in amount 4 weeks remuneration in respect of the employment from which he was dismissed calculated as aforesaid as is just and equitable having regard to all the circumstances,

and the reference in the foregoing paragraphs to an employer shall be construed, in a case where the ownership of the business of the employer changes after the dismissal, as references to the person who, by virtue of the change, becomes entitled to such ownership.

…. (3) In this section—

“financial loss”, in relation to the dismissal of an employee, includes any actual loss and any actual loss and any estimated prospective loss of income attributable to the dismissal and the value of any loss or diminution, attributable to the dismissal, of the rights of the employee under the Redundancy Payments Acts 1967 to [2014], or in relation to superannuation;

“remuneration” includes allowances pay and benefits in lieu of or in addition to pay.

The Complainant gave evidence that he had secured similar employment at a higher rate of pay within days of being dismissed. A copy of pension details of a PRSA scheme was submitted by the Complainant’s solicitor after the hearing. The Respondent’s solicitor pointed out that it was a PRSA scheme where the Respondent did not make contributions, therefore, there was no attributable loss as result of the dismissal. I note also that the Complainant had received €30,348 as a statutory redundancy sum, which I have considered when assessing compensation.  I find therefore that the Complainant successfully mitigated his loss and find that he had no actual financial loss as a result of the dismissal.  However, under section 7(1)(c)(ii) I order that the Respondent pay the Complainant the compensatory sum of €3,464, the equivalent of four weeks net salary, which I find is just and equitable having regard to all the circumstances.      

CA-00038793 -002 - Complaint under Section 7 of the Terms of Employment (Information) Act 1994

The Employer conceded this claim at the commencement of proceedings. The only matter to be addressed is the amount of compensation to be awarded. 

The Terms of Employment (Information) Act, 1994 requires that an employer must provide his/her employee with a written statement of the particulars of the employee’s terms and conditions of employment.

Furthermore, redress in the Act is described as follows at Section 7(2):

 A decision of an adjudication officer under section 41of the Workplace Relations Act 2015 in relation to a complaint of a contravention ofsections 3, 4, 5, 6or 6C  shall do one or more of the following, namely—

(a) declare that the complaint was or, as the case may be, was not well founded,

 (d)in relation to a complaint of a contravention under change section 3, 4, 5, or 6, and without prejudice to any order made under paragraph (e)  order the employer to pay to the employee compensation of such amount (if any) as the adjudication officer considers just and equitable having regard to all of the circumstances, but not exceeding 4 weeks ’remuneration in respect of the employee’s employment calculated in accordance with regulations under section 17 of the Unfair Dismissals Act 1977.

 (e) in relation to a complaint of a contravention under section 6C, and without prejudice to any order made under paragraph (d), order the employer to pay to the employee compensation of such amount (if any) as the adjudication officer considers just and equitable having regard to all of the circumstances, but not exceeding 4 weeks ’remuneration in respect of the employee’s employment calculated in accordance with regulations under section 17of the Unfair Dismissals Act 1977.

The Complainant submits that he never received a statement of his Terms and Conditions from the Respondent during the period he was employed. It should be emphasised that compensation, if any, must be within the bounds of what is fair and equitable having regard to all the circumstances. No evidence was given by the Respondent of having given the Complainant any written terms or conditions of employment, nor contract over the 25 years tenure of the Complainant’s employment. I order the Respondent to pay the Complainant a compensatory sum of €1732, the equivalent of two weeks net salary, for a breach of the legislation.

CA-00038793-001 - Section 8 of the Unfair Dismissals Acts, 1977 – 2015 requires that I make a decision in relation to the unfair dismissal claim consisting of a grant of redress in accordance with section 7 of the 1977 Act.

I find that the Complainant was unfairly dismissed for the reasons outlined above and I order the Respondent to pay the Complainant a compensatory sum of €3,464.

Section 41 of the Workplace Relations Act 2015 requires that I make a decision in relation to the complaint in accordance with the relevant redress provisions under Schedule 6 of that Act.

CA-00038793-002 – Complaint seeking adjudication under section 7 of the Terms of Employment (Information) Act 1994:

I find that the complaint was well founded, and I order the Respondent to pay the Complainant a compensatory sum of €1,732.   

Unfair Dismissals Act 1977, Unfair selection for redundancy, Reasonableness of the Employer, Terms of Employment (Information) Act 1994,