Complainant

Respondent

Parties

Edward  Timmins

AB Group Packaging Ireland Limited

Representatives

Ms Kate Kennedy BL instructed by Sinead Curtis, Kennedy Fitzgerald Solicitors

Ms M.P.Guinness BL instructed by  Elizabeth Ryan , Mason Hayes & Curran

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-00041127-001

18/11/2020

The Complainant was employed by the Respondent as Finance Director. Employment commenced in February 2001 and ended on 23rd August 2020.

This complaint was received by the Workplace Relations Commission on 18th November 2020.

By complaint from received 18th November 2020 the Complainant lodged a claim under the Unfair Dismissals legislation alleging that he had been unfairly dismissed.  It is the Respondent’s case that the Complainant’s role was made redundant.  He has not been replaced and his role has been automated and subsumed into other roles.

The Complainant commenced employment with the Respondent as Financial Manager on 12th February 2001.  He became Finance Director later that year. The Respondent is a global high volume paper bag supply chain company.  Its three production plants and warehousing facilities are located in the UK, Spain and its plant in Ireland is located in Blessington.  It has a number of “head office” functions spread between the UK and Ireland.  It has outsourced advisory functions like IT, HR, and legal to Third Party suppliers.  It has in or around 79 employees in Ireland, 48 employees in the UK and 13 employees in Spain.  Most of the employees are involved in production and warehousing.

In 2016 the business expanded into the US.  This expansion was not ultimately successful, and the business exited the USA market and suffered substantial losses that required the business owners to inject their own cash to avoid business closure.  In order to reduce costs and recapitalise the business to secure its future a number of steps were taken by the company since exiting the USA.  In 2017 MD, Mr DB commenced a search for ERP software with a goal to integrate all the existing software systems plus a large volume of stand-alone spreadsheets held on desktop computers with no connection or integration.  In March 2018, the Netsuite was selected.  It is a 5-year investment and work began May 2018. 

Changes to the operation teams were made in October 2018 with a single redundancy of Group Operations Manager.  At the time of that redundancy, the Complainant’s role was also identified as potentially being at risk.  Since then, there have been a number of staff resignations achieving a lower head count.

The Business Rationale

In or around the end of 2019 Adare Human Resource Management were asked to draft a business case for a reorganisation of staff based in Blessington.  Adare Human Resource Management were also retained to advise the CEO to manage the required reorganisation so that the company complied with its responsibilities and its employees’ rights.

Adare prepared a full business case in relation to the reorganisation. That report outlined that the company was facing key financial challenges including the following:

·       Closure costs of the USA business.

·       A period of financial results for the company that moved from profitable trading to a loss position.

·       The need to significantly improve cash liquidity in order to reduce creditor liabilities.  It outlined that the group had liquidity concerns with net current liabilities of €5m, a current ratio of 0.62 and creditor days of 114 as of 28th February 2017.  It was apparent that the group remained dependent on the forbearance of their creditors in order to operate.

The report noted that despite the Respondent’s trading improving significantly in 2018 and 2019, the company still needed to generate significant profits to reverse its bond holder and other debt issues and secure its future.  The liquidity position of the company remained a key driver for the necessary change in the company structure in order to secure the future of the business and protect the majority of the jobs of all the people employed by the group both on national and international level.

The business plan noted that following the exit from the USA market, it was decided that the company would not grow as planned and that the company management structure would revert back to a time when the turnover was slightly less than it was at that time.  At that time there was no Operations Director, and the Finance Director had a much-reduced role.  During the set-up and expansion of the USA business, the business staffing structure grew and given the closure of that business, the staffing structure needed to be realigned.  Given the retraction of the business the finance team staffing structure was reviewed.  One member of the team based in the UK was due to retire in 2019/2020 and was not going to be replaced.  The role of finance director represented a significant and ongoing staffing cost to the business.  The key business goals for 2019 and 2020 included:

·       The urgent need to recapitalise the business and significantly reduce the creditor load to secure its future.

·       The need to increase savings over months and years by approximately €250,000 minimum to reduce the credit loan on the business and unwind the €708k group loss the company would sustain in 2018 alone was essential without even considering previous losses.

·       To improve business agility by streamlining and automating key operational processes.

·       The need to develop financial systems that automatic and enable timely capture and reporting of key financial data to the board.

·       The need to ensure that personnel spend is effectively targeted on key roles and that the staffing structure of the business reflected the retrenchment to its core European markets.

An ERP system had been implemented to replace legacy systems and manual processes within the business.  Netsuite ERP is a powerful and proven cloud solution that covers Finance, CRM, order processing, inventory, procurement and much more.  Popular across multiple industries, it provides a company with everything they need to establish efficient processes and gain transparency across business operations.  It is also a highly flexible financial management solution that can accommodate dynamically changing business needs.  Because of this, it enables the company to manage IT costs, optimise accounting efficiencies, streamline order management and procurement processes, eliminate time-consuming spreadsheet-based reporting and improve overall employee productivity.

Rollout took a number of years across all plants in Ireland, the UK and Spain.  It was anticipated that the implementation of the ERP system would have the following impacts on the staffing of the business:

·       Automated and timely generation of standard financial reports required for business management and oversight will reduce the workload on the finance team.

·       Reduction in the need for formally qualified accounts staff as the system automates key finance tasks and creates better links between orders, planning and invoicing functions.

·       Automated and integrated ordering and planning systems will require less management oversight and have the potential to deliver a more autonomous planning team.

·       Management of the operations in Ireland will become automated and the Managing Director will have direct access to accurate business information and would be able to cover the senior management elements of the role of the Blessington site.

·       Significant reduction in manual document, copy and input into the ERP system.  Some data input duties were likely to remain in a reduced format.

As the ERP system was rolled out across the business, many finance tasks would become automated and reporting would also become automated to a much larger extent.  Reports for senior managers, banks and other funding sources would be template and generated automatically from the ERP system.  As a result of these and other considerations, the role of Finance Director was deemed to be at risk of redundancy as the need for a senior role would be significantly reduced.  The business plan included a detailed analysis of why the role of the Finance Director was at risk and how the company might proceed after his exit.

The Consultation Process

The chronology of the consultation process is as follows:

·       20th January 2020 the complainant was informed that his role was at risk.

·       24th January 2020 consultation meeting 1

·       3rd February 2020 consultation meeting 2

·       11th February 2020 consultation meeting 3

·       24th February 2020 consultation meeting 4

·       24th February 2020 complainant informed his role is redundant and he can appeal by setting out points of appeal within 7 days

On 20th January 2020 a brief meeting was held with the Complainant to confirm that the company wishes to enter into formal redundancy consultation.   By letter dated 20th January 2020 Mr DB, Managing Director wrote to the Complainant thanking him for meeting him earlier that day and confirmed that he had undertaken a review of the staffing structure at the Blessington site and had considered the following key factors:

a)       The retraction of the business to its European markets.  The planned growth in the business into other markets has not maintained and the USA business was now closed.  The management structure of the business needed to reflect the current operational requirements and a simpler structure that suits the business in the years ahead.

b)      A reduction in finance management oversight that would be required due to the implementation of the ERP system which had gone live and would continue to be rolled out into the other group companies.  The ERP system would integrate and automate the key processes in the business and enable provision of timely and up-to-date financial and operational information.  Finance functions would be automated and outsourced where appropriate and it was proposed that the in-house work required could be undertaken by the existing team members in Ireland and the UK.  In addition, the Respondent’s accountants could provide additional services and financial oversight that would allow the business to operate without the role of a Finance Director.

c)       The continuing need to reduce the cost base of the business.  Despite the financial results achieved in financial year 2019, further measures were required to secure the future of the business.  The company needed a period of significant profit generation to continue to recapitalise the business and enable it to continue the programme of reducing the company’s substantial level of debt.  The company needed to continue to take measures to reduce its costs during the next financial year.

The letter went on to notify the Complainant of the risk of his role of Finance Director.  The letter confirmed that there was only an Engineering Manager vacancy at present within the company and no other finance related vacancies which could be an alternative to redundancy.  The letter asked that the Complainant would submit suggestions for avoiding redundancy to Mr DB and a further meeting would be organised to discuss any suggestions in more detail on 24th January 2020.

By letter dated 23rd January 2020 the Complainant responded to the letter expressing his shock at the contents thereof.  He stated, “the contents of the letter and the purported reasons for redundancy do not make any sense whatsoever and in my opinion are baseless and nothing other than a blatant attempt to portray the unlawful termination of my contract as a redundancy”.  The Complainant argued that the Company had a Finance Director when it was much smaller and at only one site and that there were now three sites, each being a separate standalone company.  He further outlined that to suggest the retraction of the business to European markets was a ground for the role being made redundant was not credible.  He asserted that his role as Finance Director was “essential” for the proper running of the company.  In relation to the ERP system, he indicated that “in his view” it actually required more oversight than the old standalone system.  In relation to the cost base, he argued that it had been reduced considerably over the past year and he “felt” that the company’s debt was at its lowest for many years.  In relation to the request for any suggestions from the Complainant on ways to avoid redundancy, he indicated that in his view it was “little more than an attempt to create the false impression and picture that you are attempting to portray the company as giving me some opportunity to save my job when clearly as Finance Director of the company”.  He further referenced it as “utterly bizarre and disingenuous”.  He asserted that the attempt to remove him from the company was based on other issues and stated that he would “detail same in the appropriate forum if necessary”.

A meeting took place on 24th January 2020.  In attendance were the Complainant, Mr DB, and MS of Adare.  This was the first formal consultation meeting.  MS noted that the Complainant had chosen to attend the meeting on his own and asked was he happy to attend on that basis and the Complainant confirmed that he was.  The Complainant stated at the outset that he did not wish the process to be unnecessarily drawn out.  MS stated that he had been asked to present the context in which the decision to put the Finance Director role at risk of redundancy had been taken by the company.  He presented that as follows:

“The Company has retracted to its European base in the last two years and has no plans to re-enter the USA market.  MS said that the company had taken a commercial decision to run its operations with a reduced overhead and our current team are a significant cost in the business.  The company had already made changes to the operation/structure the previous year, it had completed a re-structure of the warehouse in Blessington, it has not replaced all roles where staff have left the business.  MS stated that the company was investing in a new ERP system which is an investment in a single operating system to ensure that all functions in the business are run efficiently and that margins and profits are maximised.  The company will continue to invest in its ERP system.  The process had come about because the company now wanted to review the finance function within the business”.

The Complainant responded that he knew all about that from the letter and he had already responded in writing.  The Complainant stated that it was a sham and he had nothing he wanted to discuss further.  He indicated that MS could read out his letter detailing his response but he had nothing further to add.  A document titled “Outline analysis of why the role of Finance Director is at risk” was provided to the Complainant for his consideration.

The meeting ended and following that meeting a copy of the meeting notes were sent to the Complainant together with a letter dated 24th January 2020.  In respect of the issues that the Complainant had raised in his previous letter, the company set out in detail its response to the matters raised.  The letter scheduled a further meeting on 28th January.

By letter dated 28th January, the Complainant sought additional time and notwithstanding insisting he did not want a drawn out process he stated that he felt that the pace at which it was moving was alarming and “my rights to due process are being ignored”.

The Respondent agreed to propose a new date and time for the meeting and confirmed that the next meeting would discuss all the items raised in the Complainant’s letter dated 23rd January.  The Complainant would have an opportunity to discuss those points in full and any comments that he wanted to make regarding how the company proposed the key area of his current role would be affected if the proposed redundancy went ahead and any alternative proposals which the Complainant wished to make to avoid the proposed redundancy.

By letter dated 30th January 2020 the Complainant wrote to Mr DB.  He did not accept that the correspondence from the Respondent dealt with the matters raised in his previous letter.  Regarding the other points, he again set out his issue with several of the matters raised.  In relation to the note entitled “outline analysis of why the role of Finance Director is at risk” he indicated that he believed it showed little knowledge of an unwillingness to understand his role in the company.  As the most senior person on site, he stated that he was regularly consulted on a variety of matters:

a)       All legal matters in the company.

b)      All insurance related matters in the company.

c)       He deals with the tax authorities in Ireland and the UK.

d)      Other state authorities.

e)      Building related matters.

f)        Daily consultation with his reports in Ireland and the UK in relation to cashflow.

g)       Monitoring of the business in relation to activity including costs, production and daily sales.

h)      All company secretarial matters.

i)        CSO information.

j)        Currency monitoring.

k)       Maintaining fixed asset registers.

l)        Maintaining lease and loan schedules.

m)    Support of other non-financial staff due to his knowledge of the company having been there 19 years.

n)      Bond holders.

o)      Covering for finance staff during holidays and sickness.

He further outlined other tasks that he believed showed that his role was needed that he stated “it is clear from all the above that my role is not redundant”.

Mr DB responded confirming that all issues raised would be dealt with during the consultation process which consisted of face-to-face meetings.  He proposed a further meeting on 3rd February.  The letter confirmed that the Complainant was entitled to be accompanied should he wish.  As there was no other member of staff at his level of seniority in the business, he was allowed to be accompanied by a friend of his choice.

A second consultation meeting was held on 3rd February 2020.  In attendance were the Complainant, Mr DB and MS of Adare.  The Complainant confirmed that he was happy to attend on his own.

In the meeting MS referred to the letter of 23rd January 2020 and the items that the Complainant had raised.  These items were gone through in detail at the meeting and the Complainant was given the opportunity to put forward his point of view and Mr DB his response.  The Complainant’s view was that the reduction in cost base in the previous year had been a false economy.  He believed that the loss of staff had been a loss to the company and that the business had been lost without those people.  He stated that the proposal to make his role redundant “would weaken the company”.  He stated that there would be “a loss of his knowledge and experience at Blessington”.  He also stated that there would be “a loss in banking relationships”.  Each matter raised by the Complainant was dealt with in detail by the Respondent.  In addition, Mr DB stated that the business model that was being adopted was a simplified one so that the business would not need senior level people.  Where the company did need that in finance, the auditors would be able to provide the support in the future.  Mr DB outlined that the system was automating processes and that the ERP system cost less than the cost of people in the business. 

Following that meeting Mr DB wrote to the Complainant on 5th February confirming that a copy of the notes of the meeting had been sent to him.  The letter confirmed that at the meeting on 3rd February issues raised by the Complainant in his previous correspondence had been discussed.  It confirmed that any additional tasks that the Complainant had not been considered could be raised by the Complainant at the next meeting so that full consideration could be given to the full scope of the Complainant’s role before any decision was taken.  Mr DB confirmed that he was also happy to consider any alternative proposals that he wished to make for the future of his role.  A further meeting was organised.

On 10th February the Complainant sent an email by MS setting out some additional matters which he believed were within his responsibility including:

·       Dealing with new contracts relating to the company.

·       Reviewing of tax computations for the companies.

·       Liaising with creditors to ensure material supply.

·       Monitoring of cashflow in all plants.

·       Various HR issues.

·       Supporting staff and chasing certain suppliers for payment.

·       Working with customers to solve problems.

·       Compiling and monitoring stock reports.

A further consultation meeting took place on 11th February 2020.  The Complainant confirmed he was happy to attend on his own.  MS indicated that the company wished to include on the agenda the points of content of the Complainant’s role that he had emailed to MS on 10th February 2020.  Each of the matters outlined in that email were gone through in detail at the consultation meeting and the Complainant had an opportunity to put his view forward and Mr DB had an opportunity to discuss what the company’s response was in relation to those matters. 

A letter dated 13th February 2020 was sent to the Complainant following that meeting and a final meeting was organised for 24th February 2020.  The purpose of the meeting was to outline the Respondent’s decision in relation to the Complainant’s role.  At that meeting, MS asked the Complainant if he had any further issues or questions to raise following the other meetings.  He confirmed he had nothing to add and he had made all his points previously. MS indicated in that case, the company had considered the matter and had come to a decision.  He said that the company had considered the points that had been raised and discussed and it was believed that the tasks could be managed by a combination of outsourcing, automation, changes to the managing director’s role and changes to finance team roles.  Therefore, the company had decided to make the role of Finance Director redundant.  The Complainant confirmed that he opposed the decision but had nothing to add at that time.

The formal letter of redundancy dated 24th February 2020 confirmed the rationale and the key factors which were discussed during the consultation period.  The letter confirmed that at the consultation meetings, all the points raised by the Complainant had been discussed and the company’s response to them and notes of the meetings had been provided to him.  The letter confirmed that Mr DB had considered all the points he had raised when making the decision and summarised it as follows:

1.       “It remained the company’s view that the ERP system, Netsuite is enabling the company to continue to automate and streamline our processes; ensure we have business information produced in a more timely manner across the entire company; will enable the business to be run more efficiently with a lower headcount; and will enable the business to save costs and increase profits in future to reduce its debts and maintain its commitments to bond holders.  The company accepts that there is a considerable cost in implementing the Netsuite system.  This is a one-off investment cost for the future of the business.

2.       Following the implementation of Netsuite the company has taken the opportunity to reduce headcount wherever possible.  This includes a restructure of the warehousing function and saving costs by not replacing all administrative roles at Blessington where staff have left over the last two years.  The view of the finance function and the role of Finance Director is a further phase in this process. 

3.       The company has clearly identified where finance functions relating to your role will require less resource and monitoring through automation and the use of Netsuite or other systems in the future.  These include:

·       Generation of budgets and management accounts.

·       VAT management.

·       Cashflow control.

·       Monitoring of production and sales.

·       Lease and Loan Schedules.

·       HR issues – time and attendance recording.

4.       The company has clearly identified a number of tasks relevant to your role (including tasks raised by you during consultation) where the task is already or will in future be carried out by me in my role as managing director of the company.  These include:

·       Banking relationships.

·       Grant applications.

·       Customer Supply Agreements.

·       Reporting line for the finance team.

·       Liaison with the State authorities.

·       Building related matters.

·       CSO information.

·       Chasing customers for payment.

5.       The company has clearly identified a number of tasks relevant to your role (including items raised by you during consultation) that have already been or will be outsourced to expert providers in the future.  These include:

·       Payroll processing.

·       Credit Agreements.

·       Financial reporting for Spain.

·       Liaison with Tax Authorities.

·       HR advice.

·       Company secretarial.

·       Corporation Tax computations.

6.       I note that you did not propose any alternatives to the current finance structure and/or your current role for the company to consider as an alternative to redundancy during the consultation period.

Having considered all your written submissions and the items that we discussed during the consultation meetings, unfortunately, it has not proved possible to find another solution that provides the company with the longer-term cost savings benefits of the proposed process automation and restructure of the finance team.  Therefore, I have decided to make the role of finance director at the company redundant”.

The letter goes on to state: “should you wish to appeal the decision the company has taken with regard to making the role of finance director redundant, please notify me in writing within seven working days of the date of this letter, detailing in full the grounds for your appeal.  Should an appeal be lodged within this timeframe, the company will appoint an appropriate, impartial person, to consider the written appeal and report their decision on the matter to the company and yourself.  For the avoidance of doubt, the company’s decision to make the role of finance director redundant stands if and until any appeal outcome determines otherwise.” 

There was correspondence regarding the Complainant’s request for immediate holidays and additional unpaid leave during a very busy period within the company.  The Complainant wrote by letter dated 2nd March 2020 in which he indicated that he would be taking 3rd March to 20th March off as “unpaid personal leave”.  An appeal was due to be notified to the Respondent by 3rd March.

The Appeal

By email dated 4th March 2020, the Complainant confirmed his intention to appeal the redundancy of his role.  He did not set out any points of appeal.  By letter dated 5th March 2020, the Respondent wrote to the Complainant asking him to set out the grounds on which his appeal was based on or before Monday 9th March 2020.  The letter confirmed that the company had appointed and authorised Mr Ultan Courtenay of First Call HR to decide on the appeal.  The letter confirmed that on receipt of the Grounds for Appeal Mr Courtenay would exercise his discretion to determine the appropriate appeals process and the information/documentation he would view as part of the appeal.

By letter dated 13th March the Complainant wrote to Mr DB.  He stated that he was “in the dark as to what rule book the Company is working from in relation to this so-called appeal process.  First you appoint someone without consultation with me…... It appears that you are making up the rules as you go along.  This is not a fair process …. before I can partake in this, in the interests of fairness I need a copy of the rule book setting out the timelines ….”

By letter dated 16th March 2020 the Respondent wrote again to the Complainant.  The letter confirmed that he had been requested for grounds of appeal so that the appeal could be dealt with efficiently and expediently.  The letter confirmed that there was no company or statutory procedure or “rule book” associated with an appeal of a company decision.  The letter attached Mr Courtenay’s CV and confirmed that the Respondent had no connection with Mr Courtenay other than this appointment and he would be wholly independent in dealing with the appeal.  It set out the position as follows: “The company is offering you a process that is fair and reasonable.  The process which the company is adopting in timelines have been clearly communicated to you.  If you do not want to progress your appeal against the decision of the company to make the role of finance director redundant by providing to it your grounds of appeal, that is your prerogative, but the company will ask Mr Courtenay to review its decision and give his opinion on its fairness, both substantively and procedurally which will be copied to you.  In the alternative, if you do wish to progress your appeal against this decision by providing your grounds of appeal, I expect to receive them by noon tomorrow 17th March 2020, in default of which the company will proceed on the basis that you do not wish to progress your appeal against the decision of the company to make the role of finance director redundant”.

By letter dated 18th March 2020, the Complainant responded by saying

“I have clearly stated that I do not accept the appointment of Mr Courtenay to hear the appeal given that he was appointed by the company without any reference to me.  Further, you again ask me for grounds of appeal giving a deadline of 12.00 noon on a bank holiday and at the same time you state there is no company or statutory procedure or “rule book” associated with the appeal of the company decision.  This is outrageous and confirms my view that the company is making this up as it goes along.  You also appear to be making up a novel procedure whereby you think it is appropriate to have your appointee, who’s appointment I am opposed to, review the company’s decision and give an opinion on the substantive and procedural grounds without hearing from both sides.  It is clear that you have made the decision to dismiss me from my role of finance director, which role could not possibly be a redundant role in a company this size, and you have embarked on a process to attempt to dress up the decision to illegally terminate my employment as a redundancy”.

By letter dated 18th March 2020 the Respondent responded to the Complainant’s letter outlining that they would proceed to ask Mr Courtenay to review the decision of the company to make the role redundant and to give his opinion on its fairness, both substantively and procedurally.  The letter further stated “In a final effort to facilitate you in progressing your appeal, you can email Mr Courtney by close of business on the 19th March 2020 and outline to him any points which you wish him to consider in his decision making”.  The Complainant responded that his position remained as previously outlined that the whole process including this “arbitrary purported appeals process that you are now embarking upon is a façade being used by you to cover up a blatantly unfair dismissal”.

The Complainant did not engage with Mr Courtney and therefore he provided a report giving an opinion on the process.  He believed the Respondent had discharged its burden of proof that the redundancy was genuine for the following reasons:

“The fact that the requirements of the business for employees to carry out work of a particular kind had ceased or diminished or was expected to cease or diminish or the fact that the employer 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.

The role of financial director had ceased to exist, and the employer proposed to run the company in a different manner with fewer employees and the role of the financial director had been subsumed into other roles and would not be replaced.  The issue of fair selection did not arise where the person holding the role was in a unique position.  There was no other comparable role within the company at the same status or terms and conditions as the role holder”.

In the circumstances, Mr Courtney confirmed that the selection pool was just the role holder and the employer would be justified in selecting that employee for redundancy and this would be in compliance with the Unfair Dismissals Act.

Correspondence was received from the Complainant’s solicitor on 24th April calling upon the Respondent to revoke its decision and confirm he remained in his role as Finance Director failing which they would make “an application to restrain the company from dismissing our client and/or to have our client reinstated to his position as Finance Director”.  There was ongoing correspondence between the Respondent and the Complainant’s solicitor.

The Law

Section 7(2) of the Redundancy Payments Act 1967 provides in relevant part that:

“(2) for the purposes of subsection (1) an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is attributable wholly or mainly to:

(a)    The fact that his employer has ceased, or intends to cease, to carry on the business for the purposes of which the employee was employed by him, or has ceased or intends to cease, to carry on that business in the place where the employee was so employed or

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

(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.

Section 6 of the Unfair Dismissals Act provides in relevant parts:

(4) 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 unfair dismissal, if it results wholly or mainly from one or more of the following ….. the redundancy of the employee.

Submissions

It was respectfully submitted that the Respondent is entitled to make a decision that the role of Finance Director will be carried out in a different way.  The introduction of the ERP system led to huge changes in how the role was required going forward and that was reviewed in the context of trying to reduce debt.  The manner in which the duties of the Complainant would be subsumed and dealt with going forward was set out in detail during the comprehensive consultation process.  While the Complainant may be of the view that making his role redundant would “weaken” the company and lead to a “loss of knowledge” those views are not relevant in circumstances where the Company needed to reduce costs and recapitalise the business to secure its future following its exiting of the USA.  The steps taken by the Company started in 2018 with the removal of the Group Operations Manager.  People who exited the business were not replaced and restructuring of other elements of the business took place.  The Complainant was adamant from the outset that the process was a “sham” and referred to “other issues” which he never identified at any stage through the consultation process.  During the course of his employment, he never raised an issue regarding  any matter and could have done so under the Respondent’s procedures for dealing with workplace issues.  The Complainant refused to engage in the Appeal process notwithstanding a completely independent experienced person being appointed.

It is submitted that the process which led up to the Complainant’s redundancy was both fair and reasonable for the following reasons:

·       The Complainant was informed of the reasons why his role was at risk of redundancy.

·       He was given an opportunity to state his case.  In this regard it is submitted that the process undertaken by the Respondent was inquiry like in manner and the Complainant was invited to make a contribution throughout the process.  The Respondent acted in a similar manner to the way in which the EAT suggested in the case of Boucher v Irish Productivity Centre.  The Tribunal in Boucher stated that a process undertaken by an employer would “have the characteristics of an inquiry with the right to the threatened person to make a contribution in defence of any allegation against him or… any unfair or unbalanced view being held by the [employer]”.

·       The case made by the Complainant was considered.

·       The Company engaged with the Complainant regarding alternatives to redundancy as they could not identify an alternative.  The Complainant was asked to put forward any alternatives which he failed to do.  The Complainant now seeks to suggest that reduced hours/salary should have been considered by the Respondent having not put those forward at the time.  It is submitted that neither suggestion is workable where the role has either been subsumed by other employees or been automated.

·       The Complainant was offered an appeal of the decision which he failed to engage in.  It is submitted that the Respondent was not obliged to consult with the Complainant in relation to the appointment of an external independent person to hear the appeal.  Notwithstanding every effort of the Respondent the Complainant refused to engage.

·       It is submitted that a fair, thorough, and transparent consultation process was carried out by the Respondent.  The role of the Complainant no longer exists and has not been replaced.  His role has been subsumed into other roles and also parts have been automated.  The Respondent now runs the company in a different manner which it is entitled to do.  The Complainant was not unfairly dismissed.

RESPONDENT SUBMISSION PART 2

Following the final day of hearing on 5th August 2022 the Adjudication Officer directed that submissions should be made in relation to the evidence and/or documentation provided by the Complainant in relation to his mitigation of loss.  These submissions are to deal with that issue:

The Law

Section 7(1) of the Unfair Dismissals Acts provides in relevant part that 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:

a)      Reinstatement

b)      Re-engagement

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 an 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 ….

(ii) Without prejudice to the generality of subsection (1) of this Section, in determining the amount of compensation payable under that subsection regard shall be had to:

a)…

b)…

c)   the measures (if any adopted by the employee or, as the case may be, his failure to adopt measures to mitigate the loss aforesaid.

In determining the level of compensation that should be awarded in Unfair Dismissal cases, the Labour Court in recent times has been critical of people who have failed to provide proper documentation to support alleged attempts to seek alternative employment and thereby mitigate their loss of income.  The Court consistently relies on the EAT case of Sheehan and Continental Administration Company Limited (UD858/1999) which stated as follows: “A Claimant who finds himself out of work should employ a reasonable amount of time each week day in seeking work.  It is not enough to inform agencies that you are available for work nor merely to post an application to various companies seeking work … The time that a Claimant finds on his hands is not his own, unless he chooses it to be, but rather to be profitably employed in seeking to mitigate his loss”.

Recent cases in which the Labour Court relied on Sheehan include UDD2242 Access ITCLG/Access IT and Miss Andrea Galgey where the Court relied on Sheehan in determining the level of award of circumstances where the Respondent did not dispute the dismissal.  The Complainant provided the Court with printed screenshots of correspondence regarding a reasonably significant number of jobs about which she made enquiries and/or for which she applied.  She told the Court that she applied for hundreds of positions but, in the absence of any documentary evidence of same being produced to the Court to substantiate this statement, the Court stated that they had “no option” but to disregard it and to proceed to make its decision based on the documentary evidence given to it.  While the documentation supports a claim of reasonable effort on the part of the Complainant, it falls short of the requirements enunciated in the Sheehan case as set out above.  Weighing all of these factors, the Court determined that the Respondent should pay a sum of €15,000 to the complainant for her unfair dismissal.

In determination number UDD 2238 between St John of God Hospital Limited and Ms Catherine McDowell the Court stated “the Act at Section 7 requires the Court, when measuring the event of compensation which is just and equitable having regard to all the circumstances, to have regard to the measures adopted by the Appellant to mitigate her loss.  The law has been clarified in many decisions both of this Court and the EAT to the effect that a Claimant must make a real effort to mitigate his or her loss”.  The EAT in Sheehan and Continental Administration Company Limited (UD858/1999) held as follows: “A Claimant who finds himself out of work should employ a reasonable amount of time each week day in seeking work.  It is not enough to inform agencies that you are available for work nor merely to post an application to various companies seeking work ….. The time that a Claimant finds on his hands is not his own, unless he chooses it to be, but rather to be profitably employed in seeking to mitigate his loss.  The Appellant is required to establish that she made every effort to mitigate her loss arising from her dismissal.  The Court is provided with no documentary evidence of applications made or other efforts to secure alternative employment in the period following her dismissal.  She told the Court in evidence that she had made informal or formal application with up to 10 employers and that she had secured employment in October 2020 for 15 hours per week at a lesser rate of pay than had been enjoyed by her in the Respondent’s employment.  She made no submission that she had made any continuing efforts to mitigate her ongoing losses after October 2020”.  The Court, having accepted the financial loss suffered by the Appellant was in the amount of €55,000, concluded that she had failed to meet the standard of effort required to mitigate that loss and decided to reflect that failure in the amount of compensation to be awarded.  The Court considered that a reduction of 55% was just and equitable.  The Court therefore concluded that the level of compensation which was just and equitable in all the circumstances was €25,000.

In a recent case UDD 2237 Doyle’s Veg Prep Limited v Petru Fodor, in making an award of compensation, the Court took into account the lack of evidence submitted to the Court in relation to the Complainant’s efforts to mitigate his losses.  It also took into account the fact that for much of the period since his employment was terminated, the Complainant was unavailable for work because of ill-health and family reasons.  In all of the circumstances, the Court found that the amount of compensation that was just and equitable was €2,000.

The Law applicable to the evidence given by the Complainant

In giving his evidence, the Complainant relied on a document which listed 12 applications for jobs, some of which the organisations were simply referred to as “pharmaceutical”, “building group”, “not for profit”.  In failing to identify either the employers or the dates of the various applications, the Respondent was limited in being able to research what other jobs were available at the relevant time.  No dates of these applications were provided nor the actual applications themselves provided to either the Respondent or the Adjudication Officer.  During his evidence in chief, the Adjudication Officer asked the Complainant to provide “the dates for each application”.  The Complainant responded that “he didn’t have the dates off the top of his head”.  The Adjudication Officer put it to the Complainant “can I presume that [you applied] for one job every two months?” the Adjudication Officer noting that the job application list provided referenced a two-year period.  The Complainant respondent “no, early on I applied for more jobs”.

In the period 23rd August to 31st December 2020 the Complainant alleged that he had received no income at all.  It was put to the Complainant in cross-examination that there were 80 separate days during that time in which he could have applied for roles and he was asked to identify what roles he had applied for during that first 80 days.  The Complainant was unable to identify any dates on which he made any applications or whether any of the 12 applications listed were ones which he had applied for during that first 80 days.  No documentary evidence was provided to support the applications that he had listed in the document provided to the Adjudication Officer.  On 4th August 2022, the Complainant’s legal representatives sent the Respondent’s legal representatives updated figures of financial loss.  The following morning (5th August) at proceedings held before the Adjudication Officer, it was confirmed that no further documentary evidence was provided by the Complainant’s legal representatives the previous afternoon.  It is submitted that since that date of issuing submissions (on or before 11th January 2022) the Complainant’s mitigation of loss as outlined in appendix in 5 of his submissions remains unchanged and he has not produced any documentary evidence to support his application.  Consequently, the Respondent is unable to deduce from appendix 5 evidence of the Complainant’s mitigation of loss from January 2022 to the present.  At hearing on 5th August, the Complainant also confirmed that since the previous hearing date of 6th July 2022 no further job applications at all had been made since that date.  It is submitted that in line with St John of God Hospital Limited and Ms Catherine McDowell the Complainant has made no submission that he has made any continuing efforts to mitigate [his] ongoing losses after January 2022.

It is submitted that the law is clear that an Adjudication Officer, in determining any award of compensation, may only take into consideration the documentary evidence provided by the Complainant.  It is submitted that no documentation was provided, not even screenshots or confirmation emails to the names organisations (for example Teagasc or Carlow IT).  The Respondent is simply left to rely on the unvouched claims provided by the Claimant at appendix 5 of his January 2022 submissions “He has applied for jobs set out in the attached list without success…. The Complainant has set himself up as a financial consultant but to date it has not yielded a lot of income”.  It is submitted that appendix 5 merely contains a simple list of 12 names without any supporting documentation to verify even those 12 applications.  Even if the Adjudication Officer accepts that the Complainant made those 12 applications without relevant supporting documentation, that is the totality of his attempts to mitigate his loss over a period of almost 2 years.  He alleges that he made “applications online” for which no proof at all was provided.  It is submitted that in line with Sheehan the onus was on the Complainant to satisfy the Adjudication Officer that he spent a considerable amount of time on each day that he was not employed applying for alternative employment.  On his own evidence he indicated that he only applied for jobs that he deemed “suitable”.  It is submitted that the Complainant has absolutely failed to satisfy the test for mitigating his loss and that any award, if made, should reflect the fact that no documentary proof has been provided at all, in relation to his mitigation of loss.

BACKGROUND

The Complainant commenced employment with the Respondent as Financial Manager on 12th February 2001 and became Financial Director later that year.  When he commenced employment, the Respondent operated from one location (Blessington) and had a turnover of €7,000,000.  The Complainant was employment for nineteen years until he was dismissed on 23rd August 2020.  At that time, the Company operated in Ireland, Wales and Spain, employed approximately 140 staff and had a group turnover of €28,000,000.  The Respondent is wholly owned by Mr DB who is also the managing director.

In 2015 Mr DB made the decision to open a site in the USA on foot of its largest customer’s expansion into the US market.  It was initially intended to be a micro plant with only one customer, similar to the successful strategy it had adopted in Spain.  Mr DB unilaterally decided to install five bag machines, funded entirely through borrowings.  The demand from the one customer could have been satisfied with one machine.

The Respondent has always been profitable except during the period it operated in the USA, namely August 2015 to August 2017.  Notwithstanding the profitability of the Respondent, cash flow was always an issue during the Complainant’s employment.  Mr DB always withdrew large amounts of cash from the business, in addition to his salary.  These withdrawals became more critical in 2017 as the costs associated with the US closure was causing severe cash flow problems and impacting the company’s ability to pay its creditors.   The Complainant wrote to the MD on several occasions in 2016 and 2017 expressing his concern about the cash withdrawals.  Mr DB’s response was “I control the cheque book, not you”.  From March to May 2017, Mr DB spent/withdrew cash of €70,000 on company credit cards and from cash advances in addition to a €40,000 tax free dividend per month. 

As a result of the losses incurred in the US, the Respondent could no longer sustain the significant cash withdrawals made by Mr DB.  He agreed to a 20% pay cut from €40,000 to €32,000 per month but, in reality, with his cash withdrawals, he was in receipt of approximately €50,000 per month.  Mr DB insisted that his salary be paid to him regardless of whether there were sufficient funds to pay the staff wages.  This was at a time when some suppliers had not been paid in months and others were being paid on an agreed schedule that the company was unable to meet.

To address the ominous situation, Mr DB sought to obtain a loan that required a guarantee that the company was solvent.  Having taken legal advice, the Complainant, Mr G McC (Operations Director, Dublin) and Mr AR (Chairman) told Mr DB they could not sign the guarantee, despite Mr DB’s demands they do so, unless Mr DB agreed to recapitalise the company.  Mr DB ultimately agreed to sell his house in Killiney, Dublin and the loan was obtained as an interim liquidity measure.  The site in the USA was closed.

Mr DB was furious that he had been “forced” to sell his house and thereafter his relationship with the Complainant and Mr McC deteriorated rapidly.  Mr AR’s involvement with the Respondent ceased in July 2017, as, in Mr DB’s words, he had not supported Mr DB.  Weekly management meetings ceased, and MR DB began excluding and undermining the Complainant and Mr McC.  Mr McC was dismissed on the grounds of a purported redundancy in April 2019.

Relations between the Complainant and Mr DB deteriorated to the extent that a severance agreement was drafted in October 2017 but never executed as Mr DB proposed paying the Complainant a severance package over six months and the Complainant had no faith in Mr DB actually honouring the agreement once he left his employment.

A Genuine Redundancy?

In its submissions, the Respondent relies upon a business case for reorganisation of staff prepared by Adare HR Management at the end of 2019 to justify the Complainant’s dismissal.  Although the report indicates that it was updated in 2020, the Company data relied upon therein dates from 2017.  The report identified financial challenges the company was facing namely:

1.       Closure costs of the US business.

2.       The Company had moved from trading profitably to a loss.

3.       The need to significantly improve cash liquidity in order to reduce creditors.

None of the challenges identified by Adare existed in 2019.

1.       The issues to be addressed due to the closure of the US were the lease of the US premises, the disposal of stock and the sale of machinery.  The costs associated with closure of the US business were addressed in 2017 and early part of 2018 but were fully resolved by 2019.  The company made a profit in the year ending February 2019 of €1,700,000 and to February 2020 of €1,300,000.  These figures are net of any US closure costs. 

2.       The contention that there was a need to significantly improve cash liquidity was based on net current liabilities, a current assets ratio and creditor days as of 28th February 2017, almost three years earlier and at the worst time financially in the company’s history.  Further, Adare cite the Respondent’s dependency on creditor forbearance to operate.  Creditor forbearance had been relied upon in 2017 but not in 2019.

3.       While referring to the need to significantly improve liquidity, the business case is entirely silent on the biggest contributor to any liquidity issues, namely the huge dividends paid to and cash withdrawals by Mr DB.  During January and February 2020, when the “consultation” process was taking place with the Complainant, Mr DB withdrew cash of €32,000 and €34,000 respectively on top of a monthly tax-free dividend of €32,000.  Credit card withdrawals in March and April 2020 amounted to €41,000 and €28,000 respectively.  The business case notes that “the role of financial director represents a significant and ongoing staffing cost to the business”.  The Complainant’s basic remuneration is €108,000 per annum, significantly less than the money taken from the company in January and February 2020 by Mr DB.

The business plan noted that following the exit of the US market “the company management structure would need to revert back to a time when the turnover was slightly less”.  “At that time, there was no Operations Director, and the Finance Director had a much reduced role”.  This statement is untrue.  The Operations Director was employed four years prior to the sudden decision to enter the US market. The Complainant’s role had expanded year on year in line with growth from a single site with a turnover of €7,000,000 to a multinational company with a turnover of €28,000,000.  There was no such “much reduced role” to revert to.  Any attempt by the Respondent to portray the closure of the US site as a significant curtailment of the Respondent’s operations, warranting management restructuring is simply misleading.  The Respondent and/or Mr DB provided Adare with outdated accounting data from February 2017, misrepresented the significance of the US closure and failed to identify the biggest cause of any liquidity issues, to justify dismissing the Complainant.

The business plan then details the impact it was anticipated the NetSuite system would have and concludes that the Finance Director role was at risk of redundancy as the need for a senior role would be significantly reduced.

The Complainant was first notified by letter of 20th January 2020 that his role was at risk of redundancy.  The grounds relied upon by the Respondent were:

1.       The retraction of the business to its European markets, the loss of the US business and the need for the management structure of the business to reflect the current operational requirements.

2.       A reduction in financial management oversight due to the implementation of the ERP system together with reallocation or outsourcing of some of the Complainant’s existing duties.

3.       The continuing need to reduce the cost base and “substantial debt levels” of the business.

From the outset, the Complainant challenged the legitimacy of any purported redundancy and his grounds are detailed in letters to the Respondent, the minutes of various meetings held, and correspondence sent on his behalf by his solicitors to the Respondent, all of which are appended to the Respondent’s submissions.

An Unfair Dismissal

The Complainant contends his dismissal was unfair and the redundancy a sham on the following grounds:

1.       UK and Spanish sales increased in 2019 by 6% and 15% respectively and profits overall increased.  The US business had closed in August 2017, the costs incurred as a result had been addressed and the Respondent’s performance in the other markets in which it operated had improved since the US business had ceased.

2.       The Complainant had been employed when the Respondent operated from one site with approximately 25% of the present turnover and it is not credible that the Respondent required a simplified management structure when it comprised five companies, operating in three jurisdictions, employing 140 people with a turnover of €28,000,000.

3.       The new software system provided some gains, but the Complainant’s experience of it prior to his dismissal was that it actually required more oversight on his part than the previous system.  When the Complainant reported this to Mr DB, he replied he didn’t accept this and insisted that the system would result in a reduction of the Complainant’s workload.  The Respondent contends that it gauged the impact of the ERP system on the Complainant’s role before placing it at risk of redundancy.  However, the business plan prepared immediately prior to the commencement of the redundancy process only refers to anticipated impacts.  It is not clear when or if any such analysis occurred and if it did, it was tainted by the failure to obtain any input from the Complainant and to disregard his actual experience of the system.

4.       The duties which it was proposed to reallocate or to outsource comprised a very small part of the Complainant’s responsibilities (1 or 2 hours per week).  The vast majority of the roles were proposed to the reallocated to the MD which would amount to essentially a full-time finance director role.  This would be in addition to the majority of the Operation Director’s duties which were to be assigned to the MD in 2019 when Mr G McC was dismissed.  Further, Mr DB did not have the requisite financial training, qualifications or experience to perform some of the roles he proposed to undertake.

5.       The Respondent conducted an analysis of the Complainant’s role in the context of the proposed reallocation of his duties.  The analysis was incomplete and inaccurate as significant elements of the Complainant’s work were omitted and therefore not considered for reallocation.  The redundancy process was concluded without a proper assessment of the role that the Respondent proposed to make redundant.

6.       The Respondent did not have substantial debt levels and was servicing any loans in accordance with the terms thereof.  Bank debt for the Irish operation had reduced 36% in the four years to February 2020 to €2,300,000 in large part due to the financial management of the company by the Complainant.  The Respondent claims that it has to maximise profits to repay its shareholders.  Mr DB is the only shareholder.  On 29th February 2020, Mr DB’s director’s loan account showed the amount owing to him to be €141,087 despite the fact that he injected capital of €2,600,000 into the company in 2018.  This director’s loan balance reflects the cash withdrawals from the company from 2018 to February 2020.  The director’s loan account does not reflect the additional €32,000 paid monthly to Mr DB as these are offset against an annual dividend. 

7.       The Respondent did not give any consideration to alternatives to redundancy, including inter alia a salary reduction or reduced hours.  Further, the Respondent failed to consider the issue of redundancy within the finance team/s as a whole or more generally within the company.

8.       The redundancy lacked impersonality and was motivated by the inter-personal difficulties that first arose in 2017 between Mr DB and the Complainant resulting in the significant deterioration of their working relationship thereafter.  Mr DB resented that he was “forced” to sell his house and that the Complainant tried to limit his ability to withdrawal funds from the company when the Complainant feared the Company was insolvent.

9.       The Complainant was denied an effective appeal process and was denied any input into the selection of the person hearing the appeal.  Moreover, the Respondent misled Mr C who noted that “critically” the Complainant had stated in a letter to Mr DB dated 23rd January 2020 that the redundancy was based on “other issues of which you are well aware”.  Mr C specifically queried whether there were any other issues that might impinge on the redundancy and was advised that there were “none”.  The Respondent did not provide the Complainant with a complete copy of Mr C’s report until it furnished its submissions with the report appended thereto.  The Complainant had previously only been provided with page 18 of the report.  Mr C’s report also notes that the Complainant “declined to make reply or response to this review”.  At no stage was the Complainant requested to reply or respond to the review by either Mr C or anyone on behalf of the Respondent.

10.   Most significantly, the Respondent engaged a Mr PC to “oversee the implementation” of the NetSuite system for what was supposed to be a six-month period in August 2018 at a cost of €100,000 per annum.  The system had been installed but Mr PC remained on with the Respondent as a “consultant” and his role had expanded far beyond the implementation of the ERP system to include inter alia production meetings, implementation of cost savings and reduction measures and the reallocation of Ms C’s duties (Finance UK).  Mr PC was still working for the Respondent when the Complainant’s employment ceased.  Mr PC had no IT experience when he was engaged to oversee the implementation of the ERP system.  In fact, he is a qualified accountant who worked as a financial controller from June 2002 until May 2016. 

11.   The Respondent contended that Mr PC’s role was wholly separate and distinct from the Complainant’s namely to “project manage the implementation of NetSuite”.  This is despite the system having been fully implemented across all group companies by 1st May 2020 as confirmed by Mr DB.  Mr PC continues to work for the Respondent and the Complainant contends that his redundancy was a sham, and he was in fact replaced by Mr PC.  The Complainant relies on JVC Europe Limited v Jerome Parisi.

The Complainant’s Loss

The Complainant’s loss to date, together with details of job applications made in an effort to mitigate said loss was included in the submission.

COMPLAINANT SUBMISSION PART 2

The Law

In determining the appropriate level of redress to award to an employee that has been unfairly dismissed, regard shall be had to the measures, if any, adopted by the employee, or, as the case may be, his failure to adopt measures to mitigate the financial loss attributable to the dismissal.

In assessing financial loss, the WRC, or Labour Court, must first consider the entirety of the financial loss sustained by an employee who has been unfairly dismissed.  It must then be determined whether the employee’s effort to mitigate that loss were sufficient, having regard to the decision of the EAT in Sheehan and Continental Administration Company Limited (UD858/1999).  Sheehan requires a claimant should finds himself out of work to employ “a reasonable amount of time each weekday in seeking work”.  It is not enough to notify agencies or companies that you are available for work, a claimant must be proactive in seeking work.

Where a claimant falls short of the requirements of Sheehan compensation for the dismissal may be reduced so as to ensure that the amount awarded by the WRC or Labour Court considers just and equitable.

In Access IT CLG/Access IT and Miss Andrea Galgey the Labour Court determined that the claimant’s full financial loss was €19,410.96.  The Complainant provided printouts of electronic applications, was employed for a two-month period and a further period of six weeks and gave evidence of having made hundreds of informal inquiries regarding work but did not provide any documentary evidence of same.

The Labour Court considered the claimant had made a reasonable effort to mitigate her losses but did not fully satisfy the requirements of Sheehan.  Accordingly, a 23% reduction was applied to her total financial loss and she was awarded €15,000.

In St John of God Hospital and Ms Catherine McDowell the Labour Court accepted that the Complainant was unfairly dismissed in early March 2020.  The Complainant did not provide with any documentary evidence of applications made or efforts to secure alternative employment.  The Complainant gave evidence that she applied for up to 10 jobs and she secured employment at a lower rate of pay eight months after her dismissal.   She gave no evidence of efforts to mitigate ongoing losses thereafter.  The total financial loss suffered by the Complainant was €55,000.  The Labour Court determined a 55% reduction was appropriate in all the circumstances and awarded €25,000.

The Evidence

The Complainant gave evidence of efforts he has made to mitigate his loss.  He has applied for jobs as detailed on the schedule furnished.  When asked why he had not applied for more jobs, he said there were not a huge number of jobs of a type that he would be suitable for.  He applied for all such jobs.  He also secured a part time position from March 2021 to December 2021 and registered with a Company in a consultancy type role which also generated some income.

The Complainant gave evidence that his job applications were all made online and there were no paper applications which could have been provided in evidence.  He has provided a schedule of all jobs he applied for and the outcome of same to supplement his oral evidence.  This evidence should be contrasted with that in St John of God Hospital and Ms Catherine McDowell where the Claimant merely gave evidence that she had applied for up to ten jobs, without any detail.

It is not correct, as the Respondent submits, that an Adjudication Officer may only take into consideration documentary evidence provided by the Complainant.  This is clear from St John of God Hospital Limited and Ms Catherine McDowell where the Complainant provided no documentary evidence whatsoever and was still awarded compensation amounting to 45% of her total financial loss.  The Respondent submits that the Plaintiff made applications online for which “no proof at all was provided”.  The Complainant gave unchallenged oral evidence of having applied for the jobs listed in the schedule provided.  It was not put to him in oral evidence that he had not, in fact, applied for those jobs.

An Adjudication Officer must evaluate a Complainant’s efforts to mitigate his/her loss having regard to the evidence, both oral and documentary, provided and evaluate whether the Complainant has satisfied the Sheehan test.  If those efforts are deemed to fall short, the compensation awarded should be reduced by an amount that is just and equitable in all the circumstances.

Both parties made comprehensive written submissions for the hearing of the complaint, these have been summarised in detail above.

The Respondent company made an unsuccessful attempt to enter the market in United States of America, an effort that led to substantial financial losses which resulted in the Managing Director and owner having to sell his home to re-capitalise the company.

In 2017 the Managing Director commenced a search for ERP software (Enterprise Resource Planning – a type of software that organisations use to manage day-to-day business activities such as accounting, procurement, project management, risk management and compliance, supply chain operations etc) with a goal to integrate all the existing company software systems plus a large volume of stand-alone spreadsheets held on desktop computers with no connection or integration. In 2018 NetSuite was selected. This was to be a five year investment.

Changes to the operations team were made in October 2018, the position of Group Operations Manager was made redundant. The Complainant was informed at this time that his position of Finance Director was potentially at risk of becoming redundant.

At the end of 2019 Adare Human Resource Management were asked to draft a business case for reorganisation of staff based in Blessington. Adare Human Resource Management were retained to advise the CEO to manage the required reorganisation so that the company complied with its responsibilities and employee rights.

The report from Adare Human Resource Management outlined that the Company were facing key financial challenges including the following:

·       Closure costs of the USA business.

·       A period of financial results for the company that moved from profitable trading to a loss position.

·       The need to significantly improve cash liquidity in order to reduce creditor liabilities.  It outlined that the group had liquidity concerns with net current liabilities of €5m, a current ratio of 0.62 and creditor days of 114 as of 28th February 2017.  It was apparent that the group remained dependent on the forbearance of their creditors in order to operate.

The report noted that despite the Respondent’s trading improving significantly in 2018 and 2019, the company still needed to generate significant profits to reverse its bond holder and other debt issues and secure its future.  The liquidity position of the company remained a key driver for the necessary change in the company structure in order to secure the future of the business and protect the majority of the jobs of all the people employed by the group both on national and international level.

As the ERP system was rolled out across the business, many finance tasks would become automated and reporting would also become automated to a much larger extent.  Reports for senior managers, banks and other funding sources would be template and generated automatically from the ERP system.  As a result of these and other considerations, the role of Finance Director was deemed to be at risk of redundancy as the need for a senior role would be significantly reduced.  The business plan included a detailed analysis of why the role of the Finance Director was at risk and how the company might proceed after his exit.

The Complainant challenges this report compiled by Adare Human Resource Management and has replied as follows:

The Respondent relies upon a business case for reorganisation of staff prepared by Adare HR Management at the end of 2019 to justify the Complainant’s dismissal.  Although the report indicates that it was updated in 2020, the Company data relied upon therein dates from 2017.  The report identified financial challenges the company was facing namely:

                                 I.            Closure costs of the US business.

                               II.            The Company had moved from trading profitably to a loss.

                             III.            The need to significantly improve cash liquidity in order to reduce creditors.

None of the challenges identified by Adare existed in 2019.

         I.            The issues to be addressed due to the closure of the US were the lease of the US premises, the disposal of stock and the sale of machinery.  The costs associated with closure of the US business were addressed in 2017 and early part of 2018 but were fully resolved by 2019.  The company made a profit in the year ending February 2019 of €1,700,000 and to February 2020 of €1,300,000.  These figures are net of any US closure costs. 

       II.            The contention that there was a need to significantly improve cash liquidity was based on net current liabilities, a current assets ratio and creditor days as of 28th February 2017, almost three years earlier and at the worst time financially in the company’s history.  Further, Adare cite the Respondent’s dependency on creditor forbearance to operate.  Creditor forbearance had been relied upon in 2017 but not in 2019.

     III.            While referring to the need to significantly improve liquidity, the business case is entirely silent on the biggest contributor to any liquidity issues, namely the huge dividends paid to and cash withdrawals by Mr DB.  During January and February 2020, when the “consultation” process was taking place with the Complainant, Mr DB withdrew cash of €32,000 and €34,000 respectively on top of a monthly tax-free dividend of €32,000.  Credit card withdrawals in March and April 2020 amounted to €41,000 and €28,000 respectively.  The business case notes that “the role of financial director represents a significant and ongoing staffing cost to the business”.  The Complainant’s basic remuneration is €108,000 per annum, significantly less than the money taken from the company in January and February 2020 by Mr DB.

The business plan noted that following the exit of the US market “the company management structure would need to revert back to a time when the turnover was slightly less”.  “At that time, there was no Operations Director, and the Finance Director had a much reduced role”.  This statement is untrue.  The Operations Director was employed four years prior to the sudden decision to enter the US market. The Complainant’s role had expanded year on year in line with growth from a single site with a turnover of €7,000,000 to a multinational company with a turnover of €28,000,000.  There was no such “much reduced role” to revert to.  Any attempt by the Respondent to portray the closure of the US site as a significant curtailment of the Respondent’s operations, warranting management restructuring is simply misleading.  The Respondent and/or Mr DB provided Adare with outdated accounting data from February 2017, misrepresented the significance of the US closure and failed to identify the biggest cause of any liquidity issues, to justify dismissing the Complainant.

The business plan then details the impact it was anticipated the NetSuite system would have and concludes that the Finance Director role was at risk of redundancy as the need for a senior role would be significantly reduced.

What is Redundancy?

The definition of redundancy in Ireland is set out in the Redundancy Payments Act, 1967 and amended by the Redundancy Payments Act 1971 and 2003.

Section 7(2) (as amended) of the Act reads as follows:

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 –

a)      the fact that his employer has ceased, or intends to cease, to carry on the business for the purpose of which the employee was employed by him, or has ceased or intends to cease, to carry on that business in the place where the employee was so employed, or

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, or

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, or

d)      the fact that his employer has decided that the work for which the employee had been employed (or had been doing before his dismissal) should henceforward be done in a different manner for which the employee is not sufficiently qualified or trained, or

e)       the fact that his employer has decided that the work for which the employee had been employed (or had been doing before his dismissal) should henceforward be done by a person who is also capable of doing other work for which the employee is not sufficiently qualified or trained.

In the instant case the Respondent has decided the work for which the Complainant was employed to do has diminished through the introduction of the ERP system and what remains will be done by other employees (including himself).

The notion of change runs through all the five paragraphs which define redundancy. This was emphasised by the EAT in its leading determination in St Ledger v Frontline Distribution Ltd [1995] ELR 160, followed in Lefever V The Trustees of the Irish Wheelchair Association (UD 492/1995 and Hurley v Royal Cork Yacht Club [1997] ELR 225.

‘This means change in the workplace. The most dramatic change of all is a complete close down. Change may also mean a reduction in needs for employees, or a reduction in numbers. Definitions (d) and (e) involve change in the way the work is done or some other form of change in the nature of the job. Under these two definitions change in the job must mean qualitative change. Definition (e) must involve, partly at least, work of a different kind, and that is the only meaning we can put on the words “other work”. More work or less work of the same kind does not mean “other work” and is only quantitative change. In any event the quantitative change in this case is in the wrong direction. A downward change in the volume of work might imply redundancy under another definition, (b), but an upward change would not’.

The Consultation Process.

A comprehensive consultation was commenced on 20th January 2020 and concluded on 24th February 2020. During this period 4 consultation meetings were held with the Complainant. A comprehensive summary of this process is included in the summary of the Respondent’s case.

By letter dated 24th February 2020 the Complainant was issued with formal notice of redundancy. Redundancy would take place on 23rd July 2020.

This letter also informed the Complainant that he had the right of appeal, and should he wish to appeal the decision he should notify the Managing Director within 7 working days and detail in full the grounds for such an appeal.

If exercised, the appeal would be conducted by an appropriate, impartial person.

The Appeals Process.

By email dated 4th March 2020, the Complainant confirmed his intention to appeal the redundancy of his role.  He did not set out any points of appeal.  By letter dated 5th March 2020, the Respondent wrote to the Complainant asking him to set out the grounds on which his appeal was based on or before Monday 9th March 2020.  The letter confirmed that the company had appointed and authorised Mr Ultan Courtney of First Call HR to decide on the appeal.  The letter confirmed that on receipt of the Grounds for Appeal Mr Courtney would exercise his discretion to determine the appropriate appeals process and the information/documentation he would view as part of the appeal.

By letter dated 13th March the Complainant wrote to Mr DB.  He stated that he was “in the dark as to what rule book the Company is working from in relation to this so-called appeal process.  First you appoint someone without consultation with me…... It appears that you are making up the rules as you go along.  This is not a fair process …. before I can partake in this, in the interests of fairness I need a copy of the rule book setting out the timelines ….”

By letter dated 16th March 2020 the Respondent wrote again to the Complainant.  The letter confirmed that he had been requested for grounds of appeal so that the appeal could be dealt with efficiently and expediently.  The letter confirmed that there was no company or statutory procedure or “rule book” associated with an appeal of a company decision.  The letter attached Mr Courtney’s CV and confirmed that the Respondent had no connection with Mr Courtney other than this appointment and he would be wholly independent in dealing with the appeal.  It set out the position as follows: “The company is offering you a process that is fair and reasonable.  The process which the company is adopting in timelines have been clearly communicated to you.  If you do not want to progress your appeal against the decision of the company to make the role of finance director redundant by providing to it your grounds of appeal, that is your prerogative, but the company will ask Mr Courtney to review its decision and give his opinion on its fairness, both substantively and procedurally which will be copied to you.  In the alternative, if you do wish to progress your appeal against this decision by providing your grounds of appeal, I expect to receive them by noon tomorrow 17th March 2020, in default of which the company will proceed on the basis that you do not wish to progress your appeal against the decision of the company to make the role of finance director redundant”.

By letter dated 18th March 2020, the Complainant responded by saying

“I have clearly stated that I do not accept the appointment of Mr Courtney to hear the appeal given that he was appointed by the company without any reference to me.  Further, you again ask me for grounds of appeal giving a deadline of 12.00 noon on a bank holiday and at the same time you state there is no company or statutory procedure or “rule book” associated with the appeal of the company decision.  This is outrageous and confirms my view that the company is making this up as it goes along.  You also appear to be making up a novel procedure whereby you think it is appropriate to have your appointee, who’s appointment I am opposed to, review the company’s decision and give an opinion on the substantive and procedural grounds without hearing from both sides.  It is clear that you have made the decision to dismiss me from my role of finance director, which role could not possibly be a redundant role in a company this size, and you have embarked on a process to attempt to dress up the decision to illegally terminate my employment as a redundancy”.

By letter dated 18th March 2020 the Respondent responded to the Complainant’s letter outlining that they would proceed to ask Mr Courtenay to review the decision of the company to make the role redundant and to give his opinion on its fairness, both substantively and procedurally.  The letter further stated “In a final effort to facilitate you in progressing your appeal, you can email MrCourtney by close of business on the 19th of March 2020 and outline to him any points which you wish him to consider in his decision making”.  The Complainant responded that his position remained as previously outlined that the whole process including this “arbitrary purported appeals process that you are now embarking upon is a façade being used by you to cover up a blatantly unfair dismissal”.

The Complainant did not engage with Mr Courtney and therefore he provided a report giving an opinion on the process.  He believed the Respondent had discharged its burden of proof that the redundancy was genuine for the following reasons:

“The fact that the requirements of the business for employees to carry out work of a particular kind had ceased or diminished or was expected to cease or diminish or the fact that the employer 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.

The role of financial director had ceased to exist, and the employer proposed to run the company in a different manner with fewer employees and the role of the financial director had been subsumed into other roles and would not be replaced.  The issue of fair selection did not arise where the person holding the role was in a unique position.  There was no other comparable role within the company at the same status or terms and conditions as the role holder”.

In the circumstances, Mr Courtney confirmed that the selection pool was just the role holder, and the employer would be justified in selecting that employee for redundancy and this would be in compliance with the Unfair Dismissals Act.

Correspondence was received from the Complainant’s solicitor on 24th April calling upon the Respondent to revoke its decision and confirm he remained in his role as Finance Director failing which they would make “an application to restrain the company from dismissing our client and/or to have our client reinstated to his position as Finance Director”.  There was ongoing correspondence between the Respondent and the Complainant’s solicitor.

The Complainant’s refusal to participate in the appeal process was, I believe, a major mistake on his part. It would have provided the opportunity to air many of the points he had raised throughout the consultation process.

In An Employee v An Employer (ADJ – 0000381) the Adjudication Officer commented as follows:

‘An appeal is not just an afterthought or a procedure that must be completed as a matter course. It is a very important part of the disciplinary process and the greater the sanction that has been imposed the greater its importance. An appeal allows a dismissed employee the last chance to make their case, highlight any mitigating factors and seek protection for faulty procedures or disproportionality of sanction’.

Whilst the circumstances of the instant case are different to this example, the example does highlight the importance of the appeal process.

Mr Ultan Courtney carried out an in-depth review of the process and paperwork and concluded as follows:

“I am of the opinion that the proposed redundancy of the position of Finance Director of AB Group Packaging Ireland Limited is genuine and the selection of the FD is fair and reasonable in the circumstances and that fair procedures have been followed throughout this process.”.

On the final day of the hearing the wife of the Managing Director of the Respondent attended the hearing representing her husband. When asked was the Complainant ever replaced, she answered No.

Having considered the evidence and submissions I must conclude that the complaint as presented under S.8 of the Unfair Dismissals Act, 1977 is not well founded. This was a genuine redundancy situation.

Having considered the evidence and submissions I must conclude that the complaint as presented under S.8 of the Unfair Dismissals Act, 1977 is not well founded. This was a genuine redundancy situation.

Redundancy.