Complainant

Respondent

Anonymised Parties

Accountant

Accountancy Firm

Representatives

  Self

Self

Act

Complaint Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under Section 8 of the Unfair Dismissals Act, 1977 – 2015

CA-00040693-001

30/10/2020

The Complainant worked as an Audit Senior with the Respondent, an accountancy firm, from 27th February 2017 until 17th July 2020 on an annual salary of €45,000 gross. The Complainant submits that he was unfairly dismissed.  The Respondent refutes this and contends that the Complainant was fairly dismissed because his role became redundant as a result of the COVID-19 pandemic.  

The Respondent submits as follows:

The Respondent submits that 2020 was an extremely difficult year.  The full impact of COVID-19 hit in April 2020.  In the 3 months April – June 2020, turnover fell 48% on the same period in 2019. By end of June 2020, cash flow had taken a substantial hit, as not only had turnover halved, but a lot of customers were not in a position to pay for services rendered.

The Respondent submits that at the beginning of 2020, it employed a total of 7 staff – 2 audit seniors (including the Complainant); 1 accountant; 1 bookkeeper; 2 trainee accountants and 1 receptionist.

On the 13th March 2020, the bookkeeper resigned.  On the 5th June 2020, one of the trainee accountants resigned.  At that point in time, the firm had 4 qualified accountants (including the owner) and one trainee. Most of the work was bookkeeping and outsource accounts.  As turnover was showing no sign of recovering, the Respondent had to make changes or face potential insolvency.  A decision was made to make the second trainee accountant redundant. 

The Respondent submits that it had no bookkeeper, so it had no choice but to recruit for this position.  The Respondent recruited an experienced bookkeeper in June 2020.

In July 2020, with the business still struggling, the Respondent took the decision to make the receptionist redundant. Turnover in the three months July – September 2020, was still 30% down on 2019.

By July 2020, the Respondent employed just 4 staff – 2 audit seniors; 1 accountant and 1 bookkeeper.

The two Audit Seniors were the Complainant who had been in employment with the Respondent for 40 months and a colleague who had been in the Respondent’s employment for 36 months.  The Respondent submits that both senior accountants were good employees, but due to the need to restructure the business in response to the economic downturn, the Respondent had no choice but to let one of them go.  The Respondent submits that both employees were working with it for a similar length of time and both were entitled to similar amounts of redundancy, so the decision was not influenced by cost.

The Respondent submits that it made the very difficult decision to make the Complainant redundant based on experience, as the other Audit Senior had many more years of audit experience than the Complainant and as an audit firm, the Respondent needed their experience.  The Respondent further submits that in the 18 months prior to June 2020, the other Audit Senior had done 75% of all audit work.  The Respondent submits that the Complainant’s work mostly consisted of audit exempt work.  The Respondent submits that whilst it was a difficult decision to make on personal grounds, business needs made it a relatively straightforward decision.

In response to the Complainant’s assertion that there was no need for redundancy, the Respondent submits that its business took a massive financial hit from which it has not recovered. The Respondent contends that if it had continued with no restructuring of its business, it would almost certainly have faced insolvency.  The Respondent submits that it reduced its head count by more than 50%.

In response to the Complainant’s complaint of unfair selection for redundancy, the Respondent submits that it had two Audit Seniors, but only have enough work for one.  The Respondent submits that the selection process ultimately came down to experience.  The Respondent submits that the Complainant's role was made redundant and that this remains the case.

At the adjudication hearing, the Respondent said that the company’s current staff complement was one senior account and two bookkeepers although it does have a vacancy for an accountant and a bookkeeper/trainee.

At the adjudication hearing, the Respondent confirmed that it did not have any paperwork in relation to the redundancy selection process which was applied to the Complainant.  The Respondent also confirmed that there was no discussion with the Complainant about an alternative position as it felt that any alternative position would entail a reduction in the Complainant’s salary and the Respondent did not want to insult the Complainant by reducing his salary.

The Respondent also confirmed that the Complainant was not afforded the right to appeal the decision to make him redundant. 

The Complainant submits as follows:

The Complainant contends that there was no need for him to be made redundant.  The Complainant further contends that the selection process was unfair.

The Complainant submits that he started working for the Respondent as an Audit Senior in February 2017.   At that time, the Respondent was experiencing a high turnover of employees.  The four employees who were working for the Respondent when the Complainant joined all left within six months of his commencement.  Therefore, at the time of his redundancy, the Complainant was the longest serving employee.

The Complainant submits that he was informed about his redundancy on 22nd June 2020  and was given four weeks’ notice to end on 17th July 2020.  

The Complainant submits that on the  morning of Monday 22nd June 2020 the Respondent asked him to come into his office and said he had bad news for the Complainant.  The Complainant asserts that the Respondent informed him that he had to let him go because the Respondent was losing business and could not continue to pay the Complainant’s salary.  The Complainant contends that at the time he was made redundant, the Respondent was availing of the wage subsidy scheme.

The Complainant submits that he  was not told about the redundancy process and he received no explanation as to why he was selected for redundancy.  The Complainant contends that three employees had left the firm in the previous three months and that the Respondent also mentioned about letting another semi-senior accountant go.  The Complainant asserts that left the Respondent with three employees – the owner and two other accountants, one qualified and one part-qualified.

The Complainant contends that during the week prior to his redundancy announcement, the Respondent had said that the impact of COVID-19 had not been significant that it was still getting €30k in fixed monthly revenues apart from any annual work it does for clients which accounts for more than half of the firm’s annual income.  The Complainant contends that the Respondent also mentioned the names of a few clients who had recently signed up with the firm.

The Complainant submits that he believed that there was no need for redundancy when three employees had left the firm and another one had been let go.  The Complainant suggests that if there had been a need for redundancy, he was not informed about the selection process.  The Complainant contends that the redundancy was not carried out on a last-in, first-out basis as he was the longest serving employee of the firm.  The Complaint asserts that no selection matrix was prepared by the Respondent. 

The Complainant asserts that he was told by a colleague that the Respondent was conducting interviews around the time that he was made redundant. The Complainant further asserts that when he went to the office to return his computer that there was a new employee already sitting at his desk.  The Complainant contends that this clearly indicates that there was no requirement for him to be made redundant.

At the adjudication hearing, the Complainant said that he was really shocked when he was made redundant and was very upset.  The Complainant said that he had undertaken all roles in the Respondent company and could have filled an alternative position if one had been offered to him.  The Complainant contended that if he had been asked to take a pay cut, he would have considered it.

The Complainant confirmed that he secured comparative alternative employment within days of the termination of his employment with the Respondent and that he did not suffer any financial loss.

Preliminary Matter - Jurisdiction of the WRC

The complaint was submitted via the WRC online portal on 30th October 202.  In the complaint referral form, the Complainant sought redress under Regulation 6 of the European Communities (Protection of Employment) Regulations 2000. 

In the narrative of on the complaint form, the complaint was framed as a complaint under the Unfair Dismissals Act and the hearing was conducted on that basis.  The matter for me to decide is if I have the jurisdiction to hear this complaint under the Unfair Dismissals Act, 1977.    

In this regard, I note the finding of the High Court in County Louth VEC v Equality Tribunal [2009] IEHC 370 that

‘I accept the submission on behalf of the respondent that the Form EE1 was only intended to set out, in broad outline, the nature of the complaint. If it is permissible in court proceedings to amend pleadings, where the justice of the case requires it, then a fortiori, it should be permissible to amend a claim as set out in a form such as the EE1, so long as the general nature of the complaint (in this case, discrimination on the grounds of sexual orientation) remains the same.’ 

I also note the dicta of MacMenimin J. in the Supreme Court in Louth/Meath ETB v Equality Tribunal[2016] IESC 40:

‘It goes without saying, first, that the duty of the Equality Officer is both statutory, and, ultimately, delimited by constitutional considerations. As part of fair procedures, it is necessary that all parties be aware, in a timely way, of the case which they must meet. Consequently, it would be wrong, were a situation to evolve in this investigation, where one or other of the parties was under a misapprehension of precisely the range of legitimate inquiry. Second, it is hardly necessary to reiterate that it is not possible for any tribunal, upon which a particular jurisdiction has been conferred by statute, to extend or confine the boundaries of that jurisdiction by an erroneous determination of fact (see State (Attorney General) v. Durkan [1964] I.R. 279, approved in Killeen v. DPP [1998] ILRM 1). There may also be circumstances in which a tribunal, although holding jurisdiction to enter upon an investigation or inquiry, may render its decision a nullity by, for example, a denial of fair procedures.’

I further note the dicta of Charleton J. in Galway-Mayo Institute of Technology v Employment Appeals Tribunal [2007] IEHC 210:

“It follows from the foregoing that a judicial or quasi-judicial tribunal is not entitled to invoke a statutory remedy which no one has sought and in respect of which no one is on notice. For the purpose of fulfilling the requirements of natural justice, however, I would have thought that if any such tribunal does have jurisdiction to give a remedy under a particular Act, then if this remedy is sought in an originating document, for instance by ticking a box giving a choice of remedies, or if it is orally sought to in the course of the hearing, such a tribunal is entitled to make a choice in favour of it. If that happens, parties have to be taken as being aware that in the event that a decision goes a particular way the tribunal may look to a remedy claimed. In that regard, I would regard a written claim or an oral assertion seeking a particular remedy as being sufficient for the due administration of constitutional justice provided the tribunal has jurisdiction in respect of it. If remedies are complex, and a tribunal has rules as to notice in the form of simple originating documents, then it should abide by its own procedures or consider the grant of an adjournment to a genuinely surprised party.”

Applying these dicta, I note that the WRC complaint form is not a statutory form. It is intended to set out the outline of a complaint or complaints, so that, and in line with fair procedures, the Respondent knows the issues it faces. In this case, the unfair selection for redundancy and the lack of information about the selection process was clearly raised in the complaint form. The complaint form was copied to the Respondent.  In its pre-hearing submission, and at the adjudication hearing, it was clear that the Respondent was fully prepared to deal with a complaint regarding the selection for redundancy and the integrity of the selection process.

I find, therefore, that I have jurisdiction to investigate this complaint under the Unfair Dismissals Act, 1977. The decision, therefore, reflects that this is a complaint seeking redress pursuant to the Unfair Dismissals Act, 1977.

Substantive matter

The substantive matter for me to decide is if the Complainant was unfairly dismissed under the Unfair Dismissals Acts for reasons of redundancy.  I will first set out the relevant legislative provisions which apply in this case.

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 a relevant definition of valid redundancy 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.”

The burden of proof rests with the Respondent to establish that the dismissal of the Complainant arose wholly as a result of redundancy.  Accordingly, the first matter which I must investigate is if there was a valid redundancy situation in the Respondent company. If I find that this was the case, then the second question to be investigated is if the Respondent can show that the process whereby the Complainant was selected for redundancy was fair and transparent in all respects.

Plausible evidence was submitted by the Respondent that its business was adversely affected by COVID-19.  I am satisfied that the Respondent found itself in a position where it had to reduce costs and that 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.

It is an accepted feature of dismissal due to redundancy that fairness and reasonableness includes meaningful consultation.  In this regard, the EAT in Boucher -v- Irish Productivity Centre [1994] ELR 205 found as follows:

“The onus of proof is on the employer to establish that he acted fairly in the selection of an employee for redundancy.

Where selection for redundancy involves consideration of employee’s contribution and versatility to the respondent those in the group likely to be dismissed should be made aware that such assessment was being made and they should be given an opportunity to give their views which should be considered. To be considered fair the assessment should have the characteristics of an enquiry.”

This position was reinforced by a subsequent decision of the EAT in Mulligan v J2 Global (Ireland) Limited UD 993/2009 where the EAT found that:

“In cases of redundancy, best practice is to carry out a genuine consultation process prior to reaching a decision as to redundancy.  While in some cases there may be no viable alternative to the making of one or more jobs redundant, whatever consultation process is carried out, the employer who fails to carry out a consultation process risks being found in breach of the Unfair Dismissals Act as such a lack of procedure may lead to the conclusion that an unfair selection for redundancy had taken place.”

I note that in evidence, the Respondent accepted that it did not enter into a consultation process with the Complainant in relation to his redundancy nor did it provide a right of appeal.  I also note that in evidence, the Complainant expressed himself to be shocked when he was informed of his redundancy and contended that no reason was forthcoming why he was selected.  Accordingly, based on the totality of evidence adduced, I find that the Complainant was not put on notice that redundancy was being contemplated; no consultation was facilitated; no consideration was given to the possibility of retaining the Complainant in an alternative position; and, no appeal was offered.

In Bunyan –v- United Dominion Trust (Ireland) Limited 1982 ILRM404 the EAT endorsed and applied the view quoted from NC Watling Co. Limited –v- Richardson 1978 IRLR225 where it was stated:

“The fairness or unfairness of dismissal is to be judged by the objective standard of the way in which a reasonable employer in those circumstances in that line of business would have behaved. The Tribunal therefore, does not decide the question of whether, on the evidence before it, the employee should be dismissed. The decision to be dismissed has been taken, and our function is to test such decision against what we consider the reasonable employer would have done and/or concluded.”

Having considered the evidence and the submissions in this case, I find that the Respondent did not manage the termination of the Complainant’s employment in a proper manner.  The Respondent departed from the standard of reasonableness that a reasonable employer would have shown in dealing with an employee in similar circumstances.  Accordingly, I find that 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 comparative employment at a similar rate of pay within days of being dismissed.  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.  Accordingly, pursuant to section 7(1)(c)(ii) of the Unfair Dismissals Act, I direct that the Respondent pay the Complainant the sum of €3,462 which is equivalent to 4 weeks remuneration.

Having considered the submissions of both parties and all of the evidence adduced at the adjudication hearing, I find that the complaint of unfair dismissal is well founded and I direct the Respondent to pay the Complainant redress of €3,462 which I find is just and equitable having regard to all the circumstances.

Unfair dismissal – redundancy