Complainant

Respondent

Parties

Aidan Kenny

Textile Recycling Limited

Representatives

Aaron Shearer BL instructed by Deborah Leonard Paul Brady & Co Solicitors

Anna Rosa Raso ESA Consultants

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-00040552-001

22/10/2020

The complainant worked for the respondent from February 2007 to the 20th August 2020, when he resigned. The complainant was placed on lay-off on the 24th April 2020. He was paid €71,500 per year including a bonus. The complainant asserts that the lay-off was not genuine and he had no choice but to resign. The respondent denies the complaint of unfair dismissal.

The complainant gave evidence on affirmation of his employment with the respondent between 2007 and 2020. He outlined that he was put on lay-off on the 24th April 2020 and his income reduced to the Pandemic Unemployment Payment. He sought to return to work and was the only full-time staff member who was placed on lay-off against their will. The complainant challenged the lay-off and asserted that it was to avoid a redundancy lump sum entitlement. He resigned his employment on the 20th August 2020 and commenced a new role on the 7th September 2020.

In cross-examination, it was put to the complainant that he had not appealed the decision to lay him off and nor had he submitted a grievance. The complainant said that he wrote many times to the respondent regarding the lay-off and for financial reasons, had to resign. It was put to the complainant that he could have referred an industrial relations dispute.

Mr Hegarty, general manager gave evidence on affirmation. He outlined that the complainant’s business development work ceased because of the pandemic and denied that the clothes recycling market had reached saturation. There were 6 or 7 staff placed on lay-off. The green schools project resumed in October 2021 and the complainant could have returned from lay-off to this role. In cross-examination, it was put to the general manager that the respondent had ‘smoked out’ the complainant by putting him out on lay-off. It was put to the general manager that the complainant did not know anything about the expansion of the green schools project, and this was not referred to in the correspondence. It was put to the general manager that the owner’s son had joined the management team before 2020.

Mr Clifford, owner gave evidence on affirmation. He outlined that the textile recycling business was not at saturation point and the complainant was fully employed as business development manager. There was no work for the complainant during the pandemic as he could not call to the local authorities and other clients. The complainant had very good interpersonal skills but could not meet people because of the restrictions. The owner said that the complainant was not informed when the lay-off would end as they were ‘working in the dark’ and waiting for the Government to ease restrictions. The owner said that he initially rejected the complainant’s resignation and offered to meet him. The complainant had not raised a grievance. He had placed the complainant on a bonus structure and the complainant could contact the owner directly.

In cross-examination, the owner did not accept that there was no point in the complainant submitting a grievance and no grievance was ever raised. The owner said that they had explore all possibilities and they were in limbo, so the complainant had to remain on lay-off. In respect of the complainant’s duties in late 2019, the owner outlined that the complainant was flexible but everything he did was business development work. He said that his son and another employee commenced in July and August 2021. The owner outlined that they kept the complainant’s lay-off under constant review and he considered whether people were looking to have meetings. It was put to the owner that no explanation was ever given to the complainant, other than a terse, two-line email. The owner said that the complainant should have met him, and it was put to the owner that this engagement was only a ‘gloss’. The owner said that the complainant would have known about the expansion of the green schools project.

The complainant resigned on 20th August 2020, and this is a complaint pursuant to the Unfair Dismissals Act.

Constructive dismissal – burden of proof

The definition of ‘dismissal’ in section 1 of the Unfair Dismissals Act sets out that dismissal includes ‘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.’

This definition sets out two circumstances in which an employee might consider themselves to have been dismissed by the ‘conduct’ of the employer, i.e., where they were ‘entitled’ to terminate their contract or where it was ‘reasonable’ for them to do so.

An employee is ‘entitled’ to consider themselves to have been dismissed when the employer has repudiated the contract of employment. It is ‘reasonable’ for the employee to consider that they have been dismissed when they can no longer be expected to put up with the ‘conduct’ in question.

Berber v Dunnes Stores

In a claim of (constructive) wrongful dismissal, the Supreme Court in Berber v Dunnes Stores (12th February 2009) held: ‘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 assessing whether there has been a breach by the employer what is significant is the impact of the employer’s behaviour on the employee rather than what the employer intended. Having regard to the mutuality of the obligation the impact of an employee’s behaviour is also relevant. The test is an objective one: if conduct objectively considered is likely to cause serious damage to the relationship between employer and employee a breach of the implied obligation may arise.’

Finnegan J. further described the test in the following terms regarding whether an employer’s actions breached the term of trust and confidence:

‘1. The test is objective.

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

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

4. The conduct of the employer complained of must be unreasonable and without proper cause and its effect on the employee must be judged objectively, reasonably and sensibly in order to determine if it is such that the employee cannot be expected to put up with it.’

In Berber, the Supreme Court held that the employer had committed a repudiatory breach that went to the root of the contract of employment through ‘oppressive conduct’ in the light of the employee’s precarious physical and psychological health.

Application to the facts

The complainant was placed on lay-off on the 24th April 2020. In late March 2020, he had to isolate for 14 days on his return from the US and then returned to work by placing stickers onto recycling facilities to highlight the green schools initiative. The parties were in agreement that the complainant was flexible in the roles he did, which included meeting Council officials and driving a truck. It is clear that the complainant’s role was evolving in late 2019 and whether or not, it had reached ‘saturation’, the recycling side of the business was certainly at a far advanced point in the business cycle. The complainant was an expensive person to have placing stickers on units.

The Covid-19 pandemic caused businesses and employees to have to grapple with the threat posed by the disease as well as the consequences of the public health restrictions. Some staff members of the respondent, employed under the auspices of a Department of Social Protection scheme for people with disabilities, did not attend work because they could not maintain social distancing. There were two or three others who chose not to attend work because of public health concerns. The complainant, however, clearly wanted to attend work, as set out in his communication with the respondent.

It is entirely unclear why the complainant was selected to be laid off, when other members of management were not. One side of the business grew in the pandemic (wipes) and the respondent did not avail of the wage subsidy schemes as it was not adversely affected. The respondent did not set out why the complainant and not others were selected for lay-off. It has not explained why short-time across the entire management team was not selected instead of placing the complainant alone on lay-off. Differing positions were set out in the respondent’s evidence regarding the complainant’s state of knowledge of the green schools initiative (albeit the complainant was clear that he was not aware of this). Whatever of these differences, what is striking is that the respondent never went through the pipeline of work with the complainant to give him an indication of when he could return to work. Rather, the complainant was simply informed that his lay-off had not ended.

The respondent relied on the contractual clause allowing for unpaid lay-off. The basis of the case law around the employer’s right to put employees on lay-off revolves around the premise that there was no work to be had. I find that there was work to be had in this case and that the complainant’s lay off was not genuine. I reach this finding because the respondent business was not adversely affected by the pandemic and parts of it grew. I note the complainant’s flexibility and years of work for the respondent, growing the textile recycling business significantly. The complainant was shoehorned into a narrow assessment of his role, i.e. meeting Council officials. The respondent did not explain the basis of the complainant’s lay-off and not alternatives such as short-time. It did not go through the pipeline to give an indication of when lay-off might end. Many employees were on genuine lay-off in 2020 but in this case, the respondent placed the complainant on lay-off in a way that was not bona fide. As discussed at the hearing, it is apparent that the role of the owner’s son grew in this time, starting before 2020.

While on lay-off, the complainant was on the Pandemic Unemployment Payment and his income greatly reduced. He was clear that he wanted to return to work and challenged the basis of his lay-off. The respondent was clear that it was entitled to keep the complainant on lay-off, without any indication of when this would end. People were returning from lay-off in August 2020, but there was no such change for the complainant, and none indicated to him.

The complainant being placed on lay-off even though there was work for him to do amounts to repudiation of the contract of employment. It was also reasonable for the complainant to resign. He had challenged the ongoing lay-off and the firm and clear ‘no’ of the respondent meant that he had done all that was required to challenge the respondent’s stance. Senior management was clear as to their position and it would have been futile to formally engage a grievance.

It follows that the complainant was constructively dismissed and that he was unfairly dismissed. The complainant seeks compensation, being the difference in pay between his role with the respondent and the role he commenced on the 7th September 2020.

Redress

Section 7 of the Unfair Dismissals Act permits an employee who has been unfairly dismissed to be awarded such ‘just and equitable’ compensation for financial loss attributable to the dismissal. ‘Financial loss’ is defined: ‘… 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 1973, or in relation to superannuation.’

The words ‘the value of any loss or diminution, attributable to the dismissal, of the rights of the employee under the Redundancy Payments Acts, 1967 to 1973’ are particularly important for an employee such as the complainant who has long service but whose employment was ended unfairly.

The job of the adjudication officer is to give legal effect to the words used in the statutory provision, including the above wording. In this case, it is just and equitable to include as financial loss the total amount of the loss to the complainant of his accrued rights. He worked for the respondent between the 19th February 2007 and the 20th August 2020. This is an accrued entitlement of €16,812 (28 weeks x €600).

I also make an award for actual loss. The complainant was not being paid by the respondent as of the date of dismissal (20th August 2020). He obtained further employment on the 7th September. He is entitled to two weeks of pay for this period (€1,375 x 2), i.e. €2,750.

I note that the complainant was in receipt of €50,000 per annum in his new role while he had been on €71,500 with the respondent. The complainant mitigated his loss exceptionally well, given that this was a sales role during the pandemic. I award prospective loss for 13 months as I expect the complainant, with his wealth of experience, to be able to progress in the new role or on another role. The prospective loss between the two salaries over 13 months is €23,291.66 and I award this as compensation.

Having addressed all components of the definition of financial loss in section 7, the overall award of compensation is the sum of €16,812, €2,750 and €23,291.66, i.e. €42,853.66.

CA-00040552-001

For the reasons set out above, I decide that the complainant was unfairly dismissed, and the respondent shall pay to the complainant compensation of €42,853.66.

Unfair Dismissals Act / lay-off / constructive dismissal / ‘the value of any loss or diminution, attributable to the dismissal, of the rights of the employee under the Redundancy Payments Acts, 1967 to 1973’