Complainant

Respondent

Parties

Pawel  Batko

Sugarloaf Ventures Limited

Representatives

Self-Represented

Ms. Aoife McDonnel, IBEC

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-00039996-001

22/09/2020

The Complainant commenced employment with the Respondent on 7th July 2014. The Complainant was a full-time, permanent member of staff, in receipt of an average weekly payment of €923.08. At all times, the Complainant’s role was described as that of “executive pastry chef”. The Complainant’s employment was terminated on 17th September 2020.

On 22nd September 2020, the Complainant referred the present complaint to the Commission. Herein, he alleged that he had been constructively dismissed by the Respondent. In particular, he alleged that the Respondent had sought to unilaterally imposed new contractual terms on him. By response, the Respondent denied that the Complainant was constructively dismissed and submitted that that alternative terms were suggested to the Complainant in an effort to get him back to work during the restrictions arising from the Covid-19 pandemic.

Hearings in relation to this matter were convened for 19th January & 28th March 2022. These hearings were conducted by way of remote hearing pursuant to the Civil Law and Criminal Law (Miscellaneous Provisions) Act 2020 and SI 359/20206, which designates the WRC as a body empowered to hold remote hearings. No technical issues were experienced by either side during the hearing. No issues as to my jurisdiction to hear the complaint were raised at any stage of the proceedings.

The Complainant was engaged as an executive pastry chef within the Respondent. On 23rd March 2020, the Complainant received notification that the hotel was to close as a result of the restrictions arising from the Covid-19 pandemic and, as a consequence of the same, the Complainant was to be placed on lay-off from that date.

On 17th June, the Complainant received a call from the hotel’s head chef. At this point the Complainant was asked to return to work for three days in order to prepare the premises for re-opening. At this point, the Complainant advised that he would be the only member of his team returning, and that he would be expected to operate in all areas of the kitchen, not just the bakery, when the premises re-opened. The Complainant expressed his misgivings regarding this arrangement, stating he could not provide the quality of output the standard of the hotel required in these circumstances.  On 18th June, the Complainant received formal correspondence from the Respondent regarding his return to work. This correspondence outlined that a pay reduction of 9.8% would be imposed on the Complainant on his return to employment, and that this pay cut would be in force for the foreseeable future. The following day, the Complainant spoke with the Respondent’s HR manager. In the course of this conversation, the HR manager advised that if he did not agree to the proposed changes to his contract he could resign his position. At this point the Complainant enquired as to whether the Respondent intended to make his role redundant. By response, the HR manager advised that they did not intend to make his role redundant as the business required an executive pastry chef. At this point, the Complainant had formed the view that the new conditions of employment and the proposed reduction in salary were unacceptable to him. Aside from the issue regarding the Complainant’s salary, he was concerned that all decisions regarding the operation of the bakery were being left to the head chef, who did not have expertise in these matters.

On 19th June, the Complainant emailed the Respondent with his account of the conversation of the previous day and outlining why he believed the proposed terms to be unacceptable to him. He also stated that he believed that he should be made redundant at this point. The Complainant further stated that he believed that he had been dismissed as his contract of employment had been fundamentally altered. By return, the Respondent denied that he was instructed to resign his employment and alleged that he was aggressive during the calls with the HR manager and the head chef.

On 5th August 2020, the Complainant received a phone call from the General Manager of the hotel. During this conversation, the Complainant was informed that the hotel was experiencing difficulties in his department and was generally very busy. At this point, the General Manager informed the Complainant that if he agreed to consent to the change to his terms of employment, he would reimburse the Complainant for his traveling expenses. The purpose of this arrangement was that the Complainant would receive the same net pay each month, whilst still agreeing the amendment to contract.  The Complainant refused this offer on the basis that it still represented a fundamental alteration of one of the core terms of the employment and would affect any redundancy payment he may receive in due course. On 13th August 2020, the Respondent again informed the Complainant that there was no possibility of making the Complainant redundant at the relevant time.

On 19th August the Complainant raised a formal grievance regarding these issues with the Respondent. On 26th August, the Complainant was informed that a manager within the group would investigate the Complainant’s grievance. On 1st September 2020, the Complainant met with the investigator. During this meeting, the Complainant outlined that the business was busier than ever and required his services. In these circumstances, the Respondent should permit the Complainant to return to work and honour his existing term and conditions of employment. On 7th September, the Complainant was informed that his grievances had not been upheld. The Complainant duly appealed the same, in accordance with the Respondent’s internal policies. On 17th September the Complainant issued notice of his resignation. At point, he had extremely significant personal commitments that required him to earn an income. The Complainant also became aware that a former employee had been appointed head pastry chef and he believed there was no reasonable chance of him being returned to his former role on his agreed terms and conditions.

At the outset, the Respondent denied that the Complainant had been constructively dismissed and submitted that his complaint must fail.

They agreed that the Complainant was placed on lay-off from 23rd March 2020. In June 2020, following the partial lifting of some of the Covid-19 restrictions, the Respondent made arrangements for the reopening of the hotel. In this regard, the head chef spoke with the Complainant advising that the kitchen would re-open with a reduced staff and an expectation that all staff members would assist in other departments. As the hotel had suffered a significant drop in revenue, it was proposed that all staff that were to be recalled from lay-off would have to accept a reduction in salary of 9.8%. This proposal was communicated to the Complainant via email on 18th June 2020. By response, the Complainant advised that he did not wish to accept this proposal and suggested that he be made redundant. The HR Manager of the Respondent denied that she ever suggested that the Complainant resign his employment if he was unhappy with the arrangement. The Respondent referred to their email of 26th June, which categorically stated that the Complainant had not been dismissed from his employment. At the point, the Complainant had elected to remain on lay-off.

In August 2020, the General Manager of the Respondent offered to reimburse the Complainant’s travel expenses in an effort to facilitate his return to employment. Unfortunately, the Complainant elected to decline this offer and chose to remain on lay-off and again requested that he be made redundant.

On 19th August the Complainant raised a formal grievance in respect of these matters. A formal grievance meeting was arranged for 1st September. By outcome dated 7th September the Complainant’s grievance was not upheld. By correspondence dated 9th September the Complainant stated that he wished to appeal the findings of the grievance investigation. However, prior to an appeal being convened, the Complainant issued notice of resignation on 17th September 2020. By response, the Respondent stated that they were in the process of arranging an appeal of the complaint’s grievance with an independent third party, and consequently requested that he reconsider his resignation. On the same date, the Complainant declined this offer, instead confirming that he was to bring the present complaint.

Section 1 of the Unfair Dismissals Act, 1977, defines constructive dismissal as follows:

“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”

In Berber v Dunnes Stores [2009] 20 ELR, the Supreme Court held that,

“There is implied in a contract of employment a mutual obligation that the employer and the employee will not without reasonable and proper cause conduct themselves in a manner likely to destroy or seriously damage the relationship of confidence and trust between them. The term is implied by law and is incident to all contracts of employment unless expressly excluded. The term imposes reciprocal duties on the employer and the employee.”

In Western Excavating (ECC) Ltd v Sharp (1978) IRL 332 the Court stated that,

‘If 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, then the employee is entitled to treat himself as discharged from any further performance. If he does so, then he terminates the contract by reason of the employer’s conduct.”

In the matter of A Former Employee -v- A Building Supply Company ADJ-00022607, the test to be applied was summarised as follows,

“…the correct approach to be taken by an adjudicator in considering whether there has been a constructive dismissal is: whether there has been a repudiatory breach by the employer, or, if there has not been a repudiatory breach whether the employer engaged in conduct which made it reasonable for the employee to terminate his contract.”

In the present case, the Complainant has alleged that the Respondent has repudiated the contract of employment by imposing a unilateral reduction in salary.

In the matter of Cantor Fitzgerald International v Callaghan [1999] I.R.L.R. 234, it was held that,

“…it is difficult to exaggerate the crucial importance of pay in any contract of employment. In simple terms the employee offers his skills and efforts in exchange for his pay: that is the understanding at the heart of the contractual arrangement between him and his employer.”

More recently, in the matter of Oaklodge Fostering Limited -v- Lareina Kirwan UDD 2161, the Labour Court held that a 50% reduction in wages, on foot of a 50% reduction in hours, was deemed to be a “significant breach going to the root of the contract” and on that basis the Complainant was entitled to terminate the contract.

In the present case, I note that the reduction in pay was imposed, not on the basis of a pro rata reduction in hours, but because the Respondent had suffered a reduction in revenue due to the restrictions arising from the Covid-19 pandemic. This being the case, it is apparent that the Respondent sought to simply pay the Complainant less for completing the same amount of work. Such an amendment represents a fundamental alteration to the contractual relation between the parties and serves to repudiate the contract of employment.

Notwithstanding the same, the Respondent has submitted that the reduction in pay was not in fact imposed on the Complainant. They submitted that the reduction in pay was offered to the Complainant in an effort to facilitate his return to employment. When the Complainant refused the same, he remained on lay-off until such a time as he could return to employment on his normal terms.

In this regard, Section 11(1) of the Redundancy Payments Act 1967 provides that lay-off occurs in circumstances whereby,

“…an employee’s employment ceases by reason of his employer’s being unable to provide the work for which the employee was employed to do”.

In the present case, the employer was clearly in a position to provide the work for which the Complainant was employed to do. In this regard, it is common case that the Complainant was invited back to work to fulfil his role in June 2020. Furthermore, the General Manager of the Respondent specifically requested that the Complainant return to work in August 2020. Having regard to the same, the Complainant cannot be described as laid-off on foot of his refusal to accept the reduction in pay. Rather, it appears that the employer refused to allow him to return to work until he accepted the reduction in pay. Again, these actions demonstrate that the Respondent no longer intended to be bound by a core term of the contract, and the Complainant was duly entitled to consider himself dismissed on foot of the same.

Notwithstanding the preceding points, and in contemplation of the Complainant’s contention that the termination of his employment was reasonable given the conduct of the parties, the Respondent submitted that as the Complainant did not exhaust the internal grievance procedures, his resignation cannot be said to be reasonable in all the circumstances. In particular, Respondent submitted that the Complainant’s failure to engage with the appeal of his grievance was fatal to his complaint.

To succeed in a complaint of constructive dismissal, it is incumbent on a Complainant to demonstrate their engagement with the Respondent’s internal procedures. In the matter of Beatty v Bayside Supermarkets UD 142/1987 the Employment Appeals Tribunal held that,

“…it is reasonable to expect that the procedures laid down in such agreements be substantially followed in appropriate cases by employer and employee as the case may be, this is the view expressed and followed by the Tribunal in Conway v Ulster Bank Limited UD 474/1981. In this case the Tribunal considers that the procedure was not followed by the claimant and that it was unreasonable of him not to do so. Accordingly, we consider that applying the test of reasonableness to the claimant’s resignation he was not constructively dismissed”.

In the matter of Travers v MBNA Ireland Limited, (UD720/2006), the Complainant’s role was changed by the employer in a manner which was “not in keeping with the contract of employment”. While the Complainant in this matter initiated the company’s internal grievance procedures, he resigned without lodging a final appeal. In this instance the Tribunal found that,

“…the claimant did not exhaust the grievance procedure made available to him by the respondent and this proves fatal to the claimant’s case”

And,

“…in constructive dismissal cases it is incumbent for a claimant to utilise all internal remedies made available to him unless good cause can be shown that the remedy or appeal process is unfair”.

Notwithstanding the same, the requirement to engage with an internal appeal is not prescriptive in nature, rather it speaks to the reasonableness of the Complainant in terminating the contract of employment. In this regard, I note Beatty states that such procedures must be “substantially” followed. In this regard, the evaluation Complainant’s reasonableness in terminating the contract of employment are very much dependent on the broader factual matrix.

In the present case, the Complainant raised an objection regarding the proposed pay decrease on five separate occasions. At the outset he raised the matter with the HR manager and was duly informed that there was no prospect of the decision being reversed. After disputing the matter with the HR Manager, he raised the issue with the General Manager and received the same answer. Finally, the Complainant formalised the complaint and attended a grievance meeting chaired by an independent third party, where the Respondent’s position was again confirmed. At this point, the Complainant had been out of work for a period of approximately six months, with the matter at hand being in contest for three months. The Complainant gave evidence regarding significant personal responsibility regarding the serious illness of one of his dependents. In the circumstances, the Complainant stated that he simply could not continue any longer with without an income and consequently resigned his employment.

Having regard to the foregoing, I find that the Complainant raised his grievance with the Respondent both informally and formally. By the date of his resignation he received negative responses from all levels of management and an independent third party. At this point the matter had been in contest between the parties for a considerable period of time, and having regard to the Complainant’s personal circumstances, I find that the termination of his contract was reasonable in circumstances.

Having regard to the totality of the foregoing points, I find that the Complainant’s was unfairly dismissed within the meaning of the Act, and consequently his application is well-founded.

I find that the Complainant was unfairly dismissed within the definition of the Acts and consequently I find that his application is well-founded.

In relation to redress, Section 7(1) empowers me to order re-instatement, re-engagement or a payment of compensation to be made to a successful Complainant under the Act. Given that neither party wished for the employment relation to recommence, I find that compensation is the most appropriate remedy in this circumstance.

In calculating such compensation, regard must be had to the Complainant’s attempts to mitigate his losses following his dismissal. In this regard, I note that the Complainant’s evidence that he secured alternative employment shortly after his dismissal, however the same was at a much lower rate of pay and was not permanent in nature. The Complainant also outlined his efforts to re-train and seek employment in an alternative field. Having regard to the Complainant’s efforts to mitigate his losses, I award him the sum of €9,000 in compensation.

Constructive Dismissal, Grievance Appeal, Repudiation of Contract