ADJ-00031003

Complainant

Respondent

Parties

John Carroll

Randor Computers

Representatives

Denise O’Brien, Watch Your Back Ireland

Ken Stafford Management Consultancy Services

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-00041180-001

22/11/2020

Complaint seeking adjudication by the Workplace Relations Commission under section 77 of the Employment Equality Act, 1998

CA-00041180-004

Withdrawn

22/11/2020

The respondent employs 10 people and provides a support and repair service for electronic equipment used in a variety of industries.  The complainant has a specialist diploma in Lean Systems and he commenced working with the company on October 18th 2012 to develop contacts and to increase business.  From the commencement of his employment, he reported to the general manager, Mr Regan.  When he started, the complainant worked 20 hours a week over three days and he was paid €15.00 per hour.  This increased to €18.00 in February 2013, when the complainant was issued with a contract of employment.  In March 2014, his hourly rate was increased to €20.00 and in November, his hours went to 26 per week.  In November 2019, his hourly rate was increased again to €22.19.  He also received a bonus based on the business he generated.  In 2019, the complainant said that his gross pay was €40,667.

By the time his job was made redundant in July 2020, the complainant said that his role was “business development manager.”  He earned just under €799.64 per week.  While the onset of the Covid-19 pandemic was a factor in the decision to make the complainant’s job redundant, the respondent’s case is that the job was not generating enough profit and that it didn’t make commercial sense to continue to employ a business development manager.  The complainant argues that making his job redundant was an unfair dismissal.

In a submission provided in advance of the hearing of this complaint, Mr Stafford set out the background to the complainant’s role in the company.  He said that sales come primarily from repeat business and from the company’s website and from its reputation for its services.  In addition, until the start of the Covid-19 pandemic, the complainant worked in a sales role for four days a week, with the objective of bringing in new business.  He did this by identifying potential customers and arranging visits, accompanied by Mr Regan.  Mr Stafford said that the complainant’s job was to arrange the introductions and Mr Regan would meet the customers and close the sales.  When the pandemic started, customer visits were no longer possible, and Mr Stafford said that this was “an entirely new situation, and one for which it took some time to evaluate.”

Mr Stafford produced a document at the hearing which shows that the margin on new business generated by the complainant had been reducing since 2017.  The total cost of employing the complainant was around €50,000 a year and a decision was made that there was no commercial sense in continuing to put effort and resources into identifying new customers.

The immediate effect of Covid-19 was that visits to potential customers were off limits, meaning that there would be no return to the business for the cost of employing the complainant.  It then became clear to Mr Regan that his future business model would not require the role carried out by the complainant.  In future, sales would be generated through the existing customer base, and from referrals and recommendations, which Mr Stafford referred to as “inbound inquiries.”

Mr Stafford said that the complainant’s role has not been replaced.  In 2021, the first full year with no one employed on new business sales, the company maintained its overall level of business and 2022 shows further improvement.

Communications

Mr Stafford produced a document that shows that between March 16th and July 7th 2020, Mr Regan phoned the complainant on seven days, and on twice on two days, March 16th and March 31st. 

Mr Stafford said that the complainant did not answer Mr Regan’s calls on April 8th, May 7th and July 7th.  In his own evidence, the complainant said that he was advised to communicate with his employer by email.

Included in the respondent’s documents are copies of 10 pieces of correspondence, comprised of letters and email from Mr Regan to the complainant between March 31st and June 30th 2020.

On March 31st, Mr Regan advised the complainant by email that he was being laid off. 

On April 2nd, in response to an email from the complainant on the same day, Mr Regan said,

“I view this as a temporary lay-off at this point.  As you know, your contract will expire shortly and I hope to be able to have you back with us under a renewed contract when this is over.”

Having tried unsuccessfully tried to contact the complainant by telephone, on April 8th, Mr Regan wrote to the complainant again:

“I just wanted to check in to see how you are and hope you are managing OK?  I also wanted to check that you received my previous message response to your questions and/or if you have any further questions/feedback.  We have processed your payroll and I expect payment should hit your bank account tomorrow/Friday.  Also, if you have any outstanding expenses, please send them in and I will get them taken care of promptly for you.

“These are difficult times for us all.  I hope you are OK, if you wish to discuss this or anything, please feel free to give me a call.”

On April 28th, the complainant wrote to Mr Regan asking when his temporary lay-off would come to an end.  Mr Regan replied that he was “really unsure at the moment when things will change” and he said that he would contact him again when he had “a bit more visibility.”

On May 18th, having been laid off for six weeks, the complainant wrote again to Mr Regan asking for an update.  Mr Regan replied by letter.  He said that he couldn’t give the complainant an indication when the period of lay-off would end.  He said that he was looking at how the business might operate in the future and he said that sales might come from just two sources, regular, returning clients and new clients who find the company on its website.  Mr Regan said that, if he came to the conclusion that the complainant’s job could not be sustained into the future, he would discuss the possibility of redundancy and he said he would try to finalise his planning in two weeks.

On May 29th, the complainant wrote to Mr Regan asking when he would be returning to work.  Mr Regan replied the same day, with a letter informing the complainant that, with sales and marketing activities being focussed on the company’s existing customer base, his job would be made redundant.  He asked the complainant to revert to him with comments, questions or suggestions.  The complainant sent an email to Mr Regan on June 2nd (copy not provided) and, the following day, Mr Regan wrote to the complainant, issuing him with notice of redundancy, with a termination date of July 7th 2020.  The letter included details of the complainant’s statutory redundancy entitlements.  Based on his service from November 26th 2012, he was entitled to a lump sum of €9,744.  Mr Regan proposed to pay the complainant four weeks’ pay in lieu of notice, and this amounted to €3,198.62.

Mr Regan wrote to the complainant again on July 1st, confirming that the redundancy payment of €9,744 would be paid on July 7th.

Evidence of the General Manager, Mr Maurice Regan

In his direct evidence, Mr Regan said that it is not the case that the complainant’s job was redundant because of Covid-19, but that Covid was a factor.  He said that, based on the cost of the employment, the complainant’s job wasn’t generating enough profit.  Mr Regan said that the redundancy of the complainant’s role wasn’t the only cost-saving measure.   One other employee was laid off and two others were made redundant, one on March 16th and the second on March 20th.  An offer to a new recruit was rescinded.  On March 30th 2020, an associated company, Computers Unlimited, was closed and remained closed on the date of the hearing, March 11th 2022.  Mr Regan provided information about other cost-reduction efforts, such as reducing online subscriptions, reducing insurance costs, reducing land lines and mobile phones and cancelling a UK free-phone number.  He also negotiated lower premises costs and, I n April 2020, he moved the physical data recovery centre from one property to another.

Mr Regan said that the complainant didn’t answer his phone calls after March 31st and that he did not engage with him regarding the decision to make his job redundant or the consideration of any alternative options.

Mr Regan said that the complainant’s job was business development, to line up meetings with potential customers.  He said that he was paid a bonus for getting new customers and also for existing customers.  Mr Regan said that all queries, questions and technical issues were dealt with by the internal team.

Mr Regan said that the financial data produced in evidence is all based on the complainant’s figures.  He said “the data all came from John” and is just about his accounts.

Mr Regan said that he agreed with the complainant that he would work for a year after he was 65.  He said that he was very good at dealing with customers and that he has no animosity towards him. 

Asked why he didn’t consider letting the complainant go in 2017, when it appears that the gross margin on outbound sales began to decline, Mr Regan said that the complainant had been successful in previous years and that there was “no squeeze on” that required him to look at things.  He said that company was profitable and he could live with the situation as it was.

Cross-examining of the Mr Regan

On behalf of the complainant, Ms O’Brien asked Mr Regan about the process to be followed by an employer contemplating a redundancy.  Mr Regan said that he knew what the process was and that he got advice.  He said that he knew that the job had to be genuinely redundant and that he had to consider if it was feasible to continue with the job.  He said that he looked at alternatives and he decided that there was nothing else that he could do.

When the restrictions were introduced as part of the Covid-19 pandemic, Mr Regan said that there was no work for the complainant, and he suggested to him that he could claim the PUP.  He said that the lay-off gave him some time to consider what to do, but that he didn’t look at the possibility of redundancy at that time.  He said that he closed a premises that he had operated out of for 21 years.

Ms O’Brien told Mr Regan that the complainant didn’t know what process was being followed.  She reminded Mr Regan that, on February 28th 2020, he met the complainant for lunch and that they agreed that he would stay working until he was 65, in April 2021.

Mr Regan disputed the allegation that he didn’t give the complainant a fair opportunity to discuss the redundancy situation.  He said that he phoned the complainant and he sent emails.  He asked him how he was and he told him to get back to him with any queries.

Ms O’Brien said that the complainant “ceased taking calls on March 31st, when he was told he was being laid off.”  Mr Regan said that when he contacted the complainant in March, it wasn’t about redundancy, but about the possibility that he could claim the PUP.  Mr Regan said that the complainant didn't respond to his emails, he didn't engage about the prospect of redundancy and he only asked about coming back to work.

Following Mr Regan’s evidence, the complainant said that he wanted to make some comments.  He said that he rejected Mr Regan’s evidence that he tried to engage in consultation.  He complained that he was not offered the opportunity to appeal against the decision to make his job redundant.  He said that Mr Regan is engaged in “post-event rationalisation” at this stage.  He said that Mr Regan did not engage on the detail of the redundancy payment.

The Respondent’s Position that the Redundancy of the Complainant was Not Unfair

In Mr Stafford’s submission, he asserted that the redundancy of the complainant’s job was “brought on by circumstances in the business and was unavoidable.”  He said that, due to Covid-19 restrictions, face to face meetings were not possible; however, exchanges took place in writing, by email and letter, and by telephone.

The complainant’s role was unique in the business, and he had never worked in any other job in the company.   The need for the work he was employed to do had diminished, with the result that he was laid off before a decision was reached to make his job redundant.  Mr Stafford said that it wasn’t possible to identify an alternative job, as the complainant was the only person in the company working in sales.  No other employee has taken on his work, and no external person or agency has been contracted to do the work that he used to so.

Mr Stafford submitted that the redundancy of the complainant’s job meets the definition at section 7(2)(b) of the Redundancy Payments Act 1967:

(b) the fact that the requirements of that business for employees to carry out work of a particular kind in the place where he was so employed have ceased or diminished or are expected to cease or diminish…

Concluding his submission, Mr Stafford addressed the issue of the opportunity for the complainant to appeal against the decision to make his job redundant.  He said that Mr Regan wrote to the complainant on May 29th 2020, confirming that his employment would be terminated on July 7th.  He referred to the last line of the letter in which Mr Regan said that the complainant should come back to him with “comments, questions or suggestions” by June 5th.  Mr Stafford submitted that this demonstrates that the complainant had a chance to appeal the decision to make his job redundant.

Mr Stafford submitted several decisions of the former Employment Appeals Tribunal for me to consider as examples where a termination due to redundancy was found not to be unfair, in circumstances where the process was not as robust as might be expected.

On behalf of the complainant, Ms O’Brien sent a submission to the WRC on November 25th 2020.  In this document, she set out the chronology of events that led the to the dismissal of the complainant on July 7th 2020.

20th February 2020

The complainant met the general manager, Mr Regan to discuss the fact that he would be 65 on April 4th 2020.  The complainant said that he and Mr Regan agreed that he would continue working until he was 66.

19th March 2020

One week into the start of the Covid-19 pandemic, the complainant returned from a week’s holidays.  Mr Regan advised him to work from home.  The complainant said that Mr Regan asked him to send him a sales plan every Friday, for them to review on Tuesdays.  He also sent him a sales plan for 2021 to review and agree.

31st March 2020

Mr Regan phoned the complainant and advised him that, as there was very little work coming in, he was laying him off with effect from Monday, April 6th, that he would be paid up to April 3rd and that the March bonus would be included.  Mr Regan advised the complainant to apply for the pandemic unemployment payment (PUP).  He also suggested that he may not be eligible for the payment after his 65th birthday on April 4th.  The complainant said that Mr Regan advised him that he would be brought back to work when the business picked up.

18th April 2020

The complainant said that he was the only employee in the company on lay-off.  He sent an email to Mr Regan asking him why this was the case, but he got no reply.

18th May 2020

Mr Regan replied to an email from the complainant enquiring about returning to work when the restrictions were lifted.  Mr Regan advised that he would be making a long-term decision in two weeks and he mentioned redundancy.

29th May 2020

Mr Regan sent the complainant a letter setting out redundancy payment details.  The complainant was asked to make a decision about the proposed redundancy of his job.  The complainant said that he replied saying that he wanted to come back to work.  He also asked for an increase on the statutory payment offered. 

7th July 2020

The complainant’s employment was terminated due to redundancy.

Evidence of the Complainant

The complainant said that he was informed by telephone from Mr Regan after March 20th 2020 that he was being laid off.  He said that he replied to the letters sent to him on May 18th and on June 2nd.  He complained that he was never invited to a meeting to discuss his job. 

The complainant said that the impression is being given that he only looked for new customers; however, he said that he also looked for new business from existing customers.  He said that he knows that customers that he won have come back to the company.

The complainant said that he never saw the document with the financial data which was produced in evidence by the respondent’s side.  He said that if he had been told that there was a problem with figures, he could have done something.  He said that he spent a good bit of time on existing customers and he would work to retrieve business from customers who didn’t return.

Concluding his direct evidence, the complainant said that he wanted to remain working until he was 66, on April 4th 2021.

Cross-examining of the Complainant

Mr Stafford asked the complainant why he stopped communicating with the company after March 31st.  He said that the only serious communication from the complainant was an email on June 2nd 2020 on a “without prejudice” basis.  In this email, the complainant suggested that he would accept an agreed termination payment of €12,000.  Mr Stafford submitted that that was the complainant’s only concern and that he did not challenge the redundancy of his job.

The complainant said that he replied to Mr Regan on the afternoon of March 31st.  He said that Covid-19 provided more opportunities for the company and that business was generated without having to go on sales calls.

Regarding the letter in which he was invited to revert to Mr Regan with any queries concerning his redundancy, the complainant said, “if I had responded, nothing would have changed.”

The Relevant Law

The complainant’s case is that his job was not entirely redundant, because he was engaged in leveraging new business from existing clients.  He also complains that, in the process that led to the termination of his employment on July 7th 2020, there was no proper consultation with him and he was not given the opportunity to appeal.  My task is to consider if there is merit in these arguments, such that, in accordance with section 6 of the Unfair Dismissals Act, the dismissal of the complainant was unfair.

The Unfair Dismissals Acts 1977 - 2015

Section 6(1) of the Unfair Dismissals Acts (“the UD Act”) provides that a dismissal is unfair, “unless, having regard to all the circumstances, there were substantial grounds justifying the dismissal.”  The burden of proof rests with the respondent to provide evidence of the “substantial ground justifying the dismissal” of the complainant.  The respondent’s case is that, at a total cost of €50,000 per year, the new business gained in any year did not justify the retention of the complainant in his business development role.  Regarding the process that ended with his dismissal, the respondent argued that the complainant refused to engage in any meaningful way, apart from a request for an enhanced redundancy lump sum.

Section 6(3) of the UD Act provides that a dismissal will be unfair where an employer acts unfairly in the selection of an employee for redundancy or, where an agreed procedure for implementing redundancies is not followed:

Without prejudice to the generality of subsection (1) of this section, if an employee was dismissed due to redundancy but the circumstances constituting the redundancy applied equally to one or more other employees in similar employment with the same employer who have not been dismissed, and either—

(a) the selection of that employee for dismissal resulted wholly or mainly from one or more of the matters specified in subsection (2) of this section or another matter that would not be a ground justifying dismissal, or

(b) he was selected for dismissal in contravention of a procedure (being a procedure that has been agreed upon by or on behalf of the employer and by the employee or a trade union, or an excepted body under the Trade Union Acts, 1941 and 1971, representing him or has been established by the custom and practice of the employment concerned) relating to redundancy and there were no special reasons justifying a departure from that procedure,

then the dismissal shall be deemed, for the purposes of this Act, to be an unfair dismissal.

“Subsection (2)” referred to here is subsection 6(2) which addresses the termination of employment for reasons related to trade union membership, religious or political opinions or for having made a protected disclosure and other matters that are not relevant to the complainant in this case.

In the case under consideration, “the circumstances constituting the redundancy” was the fact that, when the Covid-19 pandemic commenced, the complainant had to stay at home, because it wasn’t possible for him to visit new customers in their premises.  The respondent then found that customers contacted them through their website and from referrals and recommendations from existing clients.  They found that the inability of the business development manager to identify new customers and arrange meetings did not impact on their business and they decided that it didn’t make commercial sense to retain him in his role.

Section 6(4) of the UD Act recognises the right of an employer to dismiss an employee due to redundancy: 

 “…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

(c) the redundancy of the employee.”

Subsections (a), (b) and (d) of this section are not relevant to this complaint.

We know from section 6(3) that this right is predicated on an obligation to select employees for redundancy on the basis of fairness, and to adhere to an agreed procedure or a code of practice regarding dismissals.  Section 6(7) expands further on the issue of reasonableness and provides that, in considering a complaint of unfair dismissal, I may have regard,

“(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.”

In the case of this former employee, he was not a member of a trade union and no evidence was submitted that the respondent had a procedure for how redundancies would be implemented.  In the absence of an agreed procedure, the respondent was required to ensure that the fair procedures that apply in the case of any dismissal were afforded to the complainant.  These include the right to notice, the right to be represented at meetings and the right of the employee to respond to the employer’s decision to make his job redundant. 

The Redundancy Payments Acts 1967 - 2014

The starting point for a consideration of the respondent’s position is the definition of redundancy at section 7 of the Redundancy Payments Acts (“the RP Act”).  Section 7(2) sets out five definitions of redundancy and, for our purpose here, we need to concern ourselves only with subsection (c):

“…an employee who is dismissed shall be taken to be dismissed by reason of redundancy if, for one or more reasons not related to the employee concerned, the dismissal is attributable wholly or mainly to—  

“(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 been doing before his dismissal) to be done by other employees or otherwise[.]”

Considering the case made by the respondent that the work that the complainant was employed to do was not required because of the tendency of customers after the onset of Covid-19, to contact them directly, his dismissal would appear to fall within the definition of redundancy at section 7(2)(c) of the RP Act, but I will explore this further now. 

Was it Reasonable to Make the Complainant’s Job Redundant?

Across the globe, the Covid-19 pandemic presented managers and owners with enormous challenges; how to stay in business, how to retain customers, how to “pivot” to do business in a radically changed environment.  This employer faced these challenges, and, in his evidence at the hearing, the general manager listed the actions taken to reduce costs from March 2020 onwards.  Apart from the difficulties faced by companies, many were also presented with new ways of running their businesses because of the imposition of changes on all the stakeholders.  Customers quickly got up and running with digital technology, people had fewer or no face-to-face meetings, meetings were held online and everyone curtailed their travelling.  Some of these changes have remained as efficiencies not anticipated or planned, but which have revealed themselves as better and cheaper ways of working.

I am satisfied that the job that the complainant was employed to do is redundant, because potential customers are contacting the company by accessing information online and by finding what they need on its website.  I am also satisfied that the commercial decision to make the job of business development manager redundant was based on a financial assessment that revealed that new business generated did not justify the cost of the job.  This is not a reflection on the complainant, and I noted that the general manager had a positive regard for him, despite the submission of this complaint.

As the only person in the job of business development manager, I am satisfied that the complainant’s job was redundant when the respondent decided that the work that he had been employed to do should be done “otherwise,” as provided for at section 7(2)(c) of the Redundancy Payments Act which I have referred to above.

Was the Process Fair?

While I am satisfied that the complainant’s job was redundant, section 6(7) of the UD Act requires me to consider the fairness or otherwise of the process that ended with the termination of his employment. 

In February 2020, when the complainant and the general manager agreed that he would stay working until his 65th birthday in April 2021, the manager didn’t mention that, based on cost versus revenue, his job didn’t make commercial sense.  By mid-May, it is apparent that the general manager had an opportunity to review his business and to plan for when the Covid-19 restrictions would be lifted.  On May 18th, he wrote to the complainant setting out his findings that clients were contacting the company through their website and from other clients.  He told the complainant that he was examining sales and margin data “to see what level of sales would be needed to justify your full-time sales role.”  He concluded his letter by indicating that he might have to discuss the possibility of redundancy.  It is evident that, by writing to the complainant in these terms, the respondent was putting the complainant on notice that he was considering the possibility of making his job redundant.  The complainant did not respond to this news.

The general manager phoned the complainant on May 27th, but he got no answer.  The complainant sent an email on May 29th in which he acknowledged the letter of May 18th, but did not refer to the proposed redundancy, but he asked the general manager to “revert to me with confirmation of the cessation of lay-off and a return-to-work date.”  On the same day, the general manager wrote to the complainant, confirming that his job would become redundant on July 7th.  He asked the complainant to reply to him with “comments, questions or suggestions;” however, the complainant did not reply.  On June 3rd, the general manager wrote again to the complainant, giving him details of his redundancy lump sum and his pay in lieu of notice.  On July 1st, the general manager wrote again, confirming that the complainant’s employment would end on July 7th.

While Covid-19 made communications difficult on many fronts, I find it strange that, having been informed of the redundancy of his job, the complainant didn’t contact his employer in April and May 2020, to let him know his response to that decision.  At the hearing, he said that he was advised to communicate by email, but, in the only email he sent on May 29th, he asked for a return-to-work date and he made no mention of the fact that, in the letter of May 18th, his employer said he was considering making his job redundant.  I accept that it is the responsibility of the employer to consult with an employee who is at risk of redundancy, but the person affected by the redundancy must collaborate in the consultation process. 

It was open to the complainant at any stage after he was laid off, to contact his employer and to ask for a meeting by phone or Zoom or some other online method, to discuss his job, the effect of Covid-19 on the outbound sales effort and for him to suggest some other work he may have been able to do in the company.  The fact that the complainant had advice at this stage indicates that he had someone with whom he could discuss his rights and entitlements.  He could have requested an online meeting and he could have asked his advisor to attend with him to discuss an alternative to being made redundant.  It is regrettable that he waited until the hearing of this complaint to suggest that he could have done other work.  He did not give his employer an opportunity to explore the options that he had in mind, or to reject them.

I note the case law presented by Mr Stafford, and the decisions of the former Employment Appeals Tribunal in circumstances where a redundancy situation was found to have existed, but the process fell short in terms of fairness.  Some of the precedents submitted do not reflect the particularity of the case we are considering.  However, in An Employee v An Employer, UD1853 2009, the circumstances reflect, to some degree, the situation of the parties in the case we are considering.  Finding that the consultation process was too rushed and that the employer did not propose alternatives to redundancy, the Tribunal noted also the failure of the employee to actively participate in the process.  The Tribunal found that the dismissal was not unfair.

In the present case, in a small company, where the complainant and the general manager knew each other well, it seems to me that, if the complainant had replied to the general manager and informed him of his objection to his proposed redundancy, some alternative might have been worked out until the complainant’s 66th birthday.  I am satisfied that the respondent gave the complainant notice of the fact that he was considering making his job redundant and that the complainant had an opportunity to respond.  I am satisfied that the employer gave the complainant proper and adequate written notice of his intention to make his job redundant and that at that stage, on May 29th 2020, he asked him to respond.  I am satisfied also that, as he had the benefit of advice, the complainant knew that he had a right to appeal against the decision to make his job redundant and that it was not necessary for the respondent to invite him to do so. 

Conclusion

I have considered the complainant’s predicament in 2020 and I have listened to the evidence of the parties at the hearing.  I have reached the conclusion that the complainant’s job as outbound sales manager was no longer required in the company and that his job was redundant.  I find that, from the perspective of consultation and engagement, the process that led to the termination of the complainant’s employment was not perfect, but that some of the responsibility for this lies with the complainant.  I am satisfied that, in the manner in which he communicated with the complainant before his employment was terminated, the general manager treated the complainant fairly.  In conclusion therefore, I find that the dismissal of the complainant on the ground of redundancy was not unfair.

I decide that this complaint is not well founded.

Dismissal on the ground of redundancy