Complainant

Respondent

Parties

Mario  Kistner

Suirsafe Technologies Limited

Representatives

McInnes Dunne Murphy LLP

 Not Present

Act

Complaint/Dispute Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under section 6 of the Payment of Wages Act, 1991

CA-00051711-001

15/07/2022

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

CA-00051711-002

15/07/2022

The Complainant was employed as the Chief Executive Officer of the Respondent and alleged he was constructively dismissed when the Respondent gave him a choice to work for nothing until the company had new shareholder funds to pay him or immediately resign in breach of the contract of employment where six months’ notice was required from either party to terminate the employment relationship. The Complainant also alleged he was due unpaid wages for a month and a half. The Respondent is engaged in the supply of medical clothing and did not attend the Hearing. The Respondent commenced operation in Ireland in April 2020 and had an active status on the CRO at the time of the Hearing.

The Complainant commenced employment with the Respondent on 1 February 2021 in the position of Chief Executive Officer (“CEO”) pursuant to a contract and a director of the Company’s other entities, Suirtech Holdings, Suirtech UK and Suirtech Technologies (Ireland).  

The Complainant experienced no difficulties in his employment until April 2022, when he was informed by Mr. Li Sen and Ms. Cynthia Ye (“the Shareholders”) that it would not be possible for them to invest further capital in the company. The Shareholders further expressed their hope that the company would continue to function and avoid insolvency, despite the lack of crucial funding. The Complainant was not paid any salary from 1 May 2022, and in mid-May 2022 he was unilaterally demoted to the role of COO, being replaced by Ms. Cynthia Ye. Despite not consenting to this change, the Complainant complied with these changes, in hope that the Shareholders would inject much needed funds into the Company. 

As a result of ongoing issues, the Complainant issued a notice of resignation to the Respondent on 23 May 2022, and agreed to work his six-month contractual notice period, on the assumption he would be paid during this time. However, on 6 June 2022, Ms. Ye informed the Complainant that he would have to work his six-month notice period without pay or resign with immediate effect. His lack of control over any decision making was at that point impeding his duties as a director to the company and coupled with his employer’s refusal to pay his salary, the Complainant decided to resign with immediate effect on 13 June 2022. 

The Complainant then submitted a constructive dismissal complaint form to the WRC against the Respondent in accordance with section 8 of the Unfair Dismissals Act 1977. The Complainant submitted that he acted reasonably in all the circumstances and the conduct of his employer gave him no option but to resign from his role. 

The Complainant commenced employment with the Respondent on 1 February 2021, in the role of CEO, with a gross monthly salary of €18,000. There were no issues between the Complainant and his employer until the 20 April 2022, when the Shareholders wrote to the Complainant and Mr. Rory O’Gorman, the Company Secretary, advising them that “due to political/legal situation in China” it “is currently not possible on the part of the Investor to invest further capital in the Company”. The Shareholders were unable to say when this issue would be resolved and ended the letter by saying they “hope the management of Suirsafe will find ways to survive this critical period and avoid insolvency”.The Company was heavily reliant on funding from the Shareholders to survive, and the Complainant was put in an impossible position, where the Shareholders now placed full responsibility on him for the survival of the company, an entirely unreasonable expectation without fundamental cashflow.  

Notwithstanding this, the Complainant did his utmost to allow the Company to continue to function without this funding and, while had not received his salary since 1 May 2022, he ensured the Company’s other employees were paid for that month. The Complainant put it in writing to the Company on the 12 May 2022 that it was his belief that without an immediate injection of cashflow, the Company would inevitably become insolvent, as the Company had since run out of money.

In early May 2022, in the middle of this funding crisis, the Shareholders unilaterally decided that the Complainant’s role and duties as CEO should be taken over by Ms Cynthia Ye, a clear breach of the Complainant’s contractual rights. The Company claimed this was to enable Ms. Ye to manage Suresafe’s financial issues on behalf of Mr Li. However, no consultation was ever had with the Complainant, nor was he informed why Ms. Ye was now taking over a role and task that the Complainant had been doing, without issue, for over 18 months. The Complainant was then told he would be moved to the role of COO and he was directed by the Shareholders to transfer full control of the Company’s bank accounts to Ms. Ye and that he should no longer have any access to the Company’s accounts. He was also ordered to register Ms. Ye as a director of the Companies.

Although the Complainant did not agree with this unilateral and unreasonable change to his role, he complied with all the instructions he received from the Company in the hope that it may result in the promised funds being transferred to enable the Company to continue operations and to save the jobs of his colleagues. Ms. Ye also advised the Complainant by email on 12 May 2022 that “Once you fixed all these procedures, the funds will be transferred to Suirsafe”. However, his faith in Ms Ye and Mr Li was misplaced and no funds have been transferred to date, despite the Complainant complying with the Shareholder’s orders. 

As a result of the ongoing issues, on 23 May 2022, the Complainant emailed notice of his resignation as CEO to Ms. Ye and the Company Secretary. At that time, he agreed to serve out his six-month contractual notice period on the reasonable presumption that he would be paid during this time. However, on 6 June 2022 Ms. Ye emailed the Complainant with an ultimation; that he could either continue working for the Company without a salary until it became profitable or leave his position in the Company immediately “without the 6 months transition period”. This was a clear reference to his contractual notice period. Essentially, the Complainant was informed that he could work for free or leave without pay.  Ms. Ye then advised the Complainant that this ultimatum and the threatened breach of his contractual entitlement to six months’ notice was a test of his confidence “to see if you are capable to manage or guide Suirsafe to success in the near future.”

The Complainant then, by way of email, formally resigned from his role as CEO with immediate effect on the 14 June 2022.The complete disregard that Ms. Ye, on behalf of the Company, showed for the Complainant’s rights as an employee prompted him to resign with immediate effect as an employee of the Company and from all directorships the Complainant held with the Group Companies. As a director and senior manager of the Company, the Complainant had legal duties and responsibilities to fulfil, and he tried to do so. However, his ability to act accordingly was restricted completely by Ms Ye’s actions on behalf of the Shareholders.  Ms Ye now has complete control over the financial affairs of the Group Companies. The Complainant had no oversight of financial or other management matters and could not be expected to continue to work in a role where he may be held responsible for decisions over which he has absolutely no control. The Complainant therefore had no choice but to resign with immediate effect, due to his employers fundamental and blatant breach of his contractual rights, his loss of trust and confidence in them and his exposed risk of breaching his director’s duties, a result of which would have been far beyond his control. 

After he resigned from his role, Ms. Ye cut off all communication with the Complainant, blocked his ability to communicate with her on WeChat (the preferred mode of communication in the Company), and refused to engage with the Complainant by email or phone. She further refused to hold or attend meetings of the directors of the Company.

Despite the Company’s complete lack of regard for the Complainant’s contractual entitlements, the Complainant continued to work without being paid his salary from 1 May 2022 to support the Company and his colleagues, always on the understanding that he would be reimbursed at a later date. However, Ms. Ye advised the Complainant that the Company did not wish to honour his contractual notice period either. After a period of loyal and successful service, the Complainant found the Company’s treatment of him demeaning, unfair and callous, in breach of his employment contract to the extent that it is clear the Company no longer intends to be bound by it. The Company fatally undermined the Complainant’s position, where he lost trust and confidence with the Company, and left him with no choice but to resign from him employment.  

Section 1 of the Unfair Dismissals Act 1977-2015 (“the UDA”) provides that, in order for an employee to prove constructive dismissal, the employee must establish that he/she terminated his/her own employment with the employer “whether prior notice of termination was or was not given to the employer in circumstances in which, because of the conduct of the employer, he was or would have been entitled, or it was or would have been reasonable for him to terminate the contract of employment without giving prior notice to the employer”

This section, coupled with relevant other authorities, establishes a two-step test requiring an employee to demonstrate, firstly, that an employer has been “guilty of conduct which is a significant breach going to the root of the contract of employment, or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract, then the employee is entitled to treat himself as discharged from any further performance” as held in Western Excavating ECC Ltd. V Sharp[1978] IRL 332. The employee must also demonstrate that “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 as such that the employee cannot be expected to put up with it”. (Berber v Dunnes Stores[2009] 20 E.L.R. 61.)  

Citing Conway v Ulster Bank Limited UDA474/1981”, The Labour Court in Ranchin -v- Allianz Worldwide Care S.A. [UDD1636]held “In constructive dismissal cases, the Court must examine the conduct of both parties. In normal circumstances a Complainant who seeks to invoke the reasonableness test in furtherance of such a claim must also act reasonably by providing the employer with an opportunity to address whatever grievance they may have. They must demonstrate that they have pursued their grievance through the procedures laid down in the contract of employment before taking the step to resign.”

The Labour Court in Mr O v An Employer (no. 2) [2005] 16 E.L.R. 132 noted that failure to invoke an internal grievance procedure will not be detrimental to establishing reasonableness. This was recently reiterated by the Adjudication Officer in Brian Griffin v Sage ADJ-00034467 who noted “The court accepts that in normal circumstances a complainant who seeks to invoke the reasonableness test in furtherance of such a claim must also act reasonably by providing the employer with an opportunity to address whatever grievance they may have. However, there is authority for the proposition that this is not a fixed or universally applicable rule and there can be situations in which a failure to give prior formal notice of grievance will not be fatal.”

Having regard to the foregoing, it is clearly the case that the Complainant meets the statutory requirements, in so far as his treatment by the Shareholders from the 22 April 2022, that he was left with no other option but to resign in the circumstances where the trust and confidence he was entitled to repose in his employer had been broken beyond repair and he had lost complete trust and confidence in his employer. The Complainant attempted to raise his concerns with the Shareholders, but it was evident they were not willing to engage with the Complainant on any level. His exposed legal risk to breaching his own directors’ duties, a breach which would have been beyond his control, his unlawful and unwarranted demotion, and the Company’s clear disregard for any of the Complainant’s contractual rights. It is evident from the facts set out that the Company was in breach of several of the Complainant’s contractual rights, and it would have been unreasonable to expect him remain under employment of the Company.  

It was submitted that the Complainant has clearly established that he was constructively dismissed, particularly when regard is had to “the reasonableness or otherwise of the conduct (whether by act or omission) of the employer in relation to the dismissal” as provided for at section 6 (7) of the UDA.

In relation to the non payment of wages, Section 5 of the Payment of Wages 1991 Act relates to the regulation of “deductions” made by employers to an employee’s wages: 

“(1) An employer shall not make a deduction from the wages of an employee (or receive any payment from an employee) unless– 

(a)            the deduction (or payment) is required or authorised to be made by virtue of any statute or any instrument made under statute,

(b)            the deduction (or payment) is required or authorised to be made by virtue of a term of the employee's contract of employment included in the contract before, and in force at the time of, the deduction or payment, or 

(c)            in the case of a deduction, the employee has given his prior consent in writing to it. 

Section 5(6) goes on to state that:-

“Where— 

(a)            the total amount of any wages that are paid on any occasion by an employer to an employee is less than the total amount of wages that is properly payable by him to the employee on that occasion (after making any deductions therefrom that fall to be made and are in accordance with this Act), or

(b)            none of the wages that are properly payable to an employee by an employer on any occasion (after making any such deductions as aforesaid) are paid to the employee,

then, except in so far as the deficiency or non-payment is attributable to an error of computation, the amount of the deficiency or non-payment shall be treated as a deduction made by the employer from the wages of the employee on the occasion.

Section 6 of the 1991 Act sets out the procedure for the making of complaints by employees in relation to contraventions of s.5 by their employer:

“(1) A decision of an adjudication officer under section 41 of the Workplace Relations Act 2015, in relation to a complaint of a contravention of section 5 as respects a deduction made by an employer from the wages of an employee or the receipt from an employee by an employer of a payment, that the complaint is, in whole or in part, well founded as respects the deduction or payment shall include a direction to the employer to pay to the employee compensation of such amount (if any) as he considers reasonable in the circumstances not exceeding—

(a)   the net amount of the wages (after the making of any lawful deductions therefrom) that—

(i)              in case the complaint related to a deduction, would have been paid to the employee in respect of the week immediately preceding the date of the deduction if the deduction had not been made, or

(ii)             in case the complaint related to a payment, were paid to the employee in respect of the week immediately preceding the date of payment, Or

(b)   if the amount of the deduction or payment is greater than the amount presented to paragraph (a), twice the former amount.” 

(c)    

 Clause 7 of the Complainant’s contract of employment stated the Complainant’s salary is “€216,000 per annum, payable in equal monthly instalments by bank transfer on the 25th day of each month”. The Complainant submitted that the Company unlawfully failed to pay the Complainant his salary for the month of May 2022, due to him on the 25th of that month. They also failed to pay him for work done up to his immediate resignation on the 13 June 2022.

The non-payment of the Complainant’s wages, therefore, constitutes an unlawful   deduction made from his wages, in contravention of the 1991 Act. This deduction from the Complainant’s wages was not authorised by the Complainant, in writing or otherwise, and is therefore in clear breach of s.5 of the Payment of Wages Act 1991. The Complainant requested a finding from the Adjudication Officer to this effect, together with a direction to the Respondent to restore these sums to him.    

Considering the facts of this case, and on any reasonable and objective analysis, it was submitted that the Respondent’s conduct towards the Complainant, as referred to above, was so unreasonable as to leave the Complainant with no option but to resign his employment immediately.  The Complainant attempted to warn the Company of the potential financial damage they were exposed to, and also attempted to discuss matters with Ms. Ye, who refused any contact with him. That the Complainant was constructively dismissed is, it was submitted, beyond question, and the Adjudication Officer was requested to so find. It was also submitted that the non-payment of the Complainant’s salary in May and June 2022 constitute unlawful deductions from his wages and the Adjudication Officer wis requested to so find. 

A Complaint was received by the Director General of the Workplace Relations Commission by the Complainant on July 15th 2022 alleging that his former employer contravened the provisions of the Unfair Dismissals Act 1977 and the Payment of Wages Act 1977 in relation to him. The said complaints were referred to me for investigation. A Hearing for that purpose was held on May 22nd 2023. There was no appearance by or on behalf of the Respondent at the Hearing. I am satisfied that the said Respondent was informed in writing of the date, time and place at which the Hearing to investigate the complaint would be held and were not present at the Hearing. I wish to note the particular efforts of the WRC to provide details of the Hearing date and time to the Respondent. Notice of the Hearing was sent by ordinary and registered post to the Respondents address, by email to the new CEO, to an associated company email address given to the WRC for correspondence and to the Respondents Accountants on record with the CRO.

Unfair dismissal Complaint

The Complainant, a German National, advised he was resident in Ireland for the duration of this contract and alleged the actions of the Respondent amounted to constructive dismissal.

Section (1b)  of the Unfair Dismissals Act 1977 states “the termination by the Complainant 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 Complainant was or would have been entitled, or it was or would have been reasonable for the Complainant, to terminate the contract of employment without giving prior notice of the termination to the employer”.

The claim is one of constructive Dismissal pursuant to Section 1 of the Unfair Dismissal Act 1977. The burden of proof, which is a very high one, lies on the Complainant. They must show that his resignation was not voluntary. As is set out in Western Excavating ECC Limited –v- Sharp, the legal test to be applied is “an and / or test”. Firstly, the Adjudicator must look at the contract of employment and establish whether or not there has been a significant breach going to the root of the contract “if the employer is guilty of conduct which is a significant breach going to the root of the contract of employment, or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract, then the Complainant is entitled to treat himself as discharged from any further performance”. If the Adjudicator is not satisfied that the “contract” test has been proven, then they are obliged to consider the “reasonableness” test.  

Clause 23 of the employment contract required the Respondent to pay the Complainant for six months during the notice period in the event of termination of the contract. Having considered the uncontested evidence of the Complainant I find that the actions of the Respondent went to undermine the core of the contractual relationship, they implemented a significant breach of the contract by not paying the Complainant during the notice period or expecting him to work for six months for no pay and that the Complainant was entitled to immediately terminate the employment contract without the use of the grievance procedure and I find the Complainant was unfairly dismissed.

Previous decisions on this issue at the Workplace Relations Commission note the decision of the Employment Appeals Tribunal in the case Sheehan v Continental Administration Co Ltd (UD858/1999) where it stated, “a claimant who finds himself out of work should employ a reasonable amount of time each weekday 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”. It is clear that there is a legal duty to mitigate financial loss by taking diligent steps to secure comparable alternative employment and case law shows that the standard required is a high one. The Complainant advised the Hearing he gained new employment on January 1st 2023 and while he engaged with a number of prospective employers from the date of his termination until he gained new employment, new employers were reluctant to hire him due to the six month notice period/prohibition in his contract from seeking new employment due to possible adverse/legal issues that may arise until the six months timeframe had elapsed. I find this a perfectly reasonable explanation why the Complainant did not commence employment until after the six months had elapsed.  The Complainants loss during the period amounted to 108,000 Euros.

Payment of Wages Complaint

Section 5 of the Payment of Wages Act 1991 states the following:

I find that the Complainant was properly entitled to his wages from May 1st 2022 to June 13th 2022 and this amounted to an illegal deduction of 25,800 Euros.

Section 41 of the Workplace Relations Act 2015 requires that I make a decision in relation to the complaint in accordance with the relevant redress provisions under Schedule 6 of that Act. I find in favour of the Complainant in the Payment of Wages Act complaint and award him 25,800 Euros. (CA-00051711-001)

Section 8 of the Unfair Dismissals Acts, 1977 – 2015 requires that I make a decision in relation to the unfair dismissal claim consisting of a grant of redress in accordance with section 7 of the 1977 Act. I find the Complainant was unfairly dismissed and award him compensation of 108,000 Euros for breach of his employment rights.  (CA-00051711-002))

Unfair Dismissal

Complainant

Respondent

Parties

Mario  Kistner

Suirsafe Technologies Limited

Representatives

McInnes Dunne Murphy LLP

 Not Present

Act

Complaint/Dispute Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under section 6 of the Payment of Wages Act, 1991

CA-00051711-001

15/07/2022

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

CA-00051711-002

15/07/2022

The Complainant was employed as the Chief Executive Officer of the Respondent and alleged he was constructively dismissed when the Respondent gave him a choice to work for nothing until the company had new shareholder funds to pay him or immediately resign in breach of the contract of employment where six months’ notice was required from either party to terminate the employment relationship. The Complainant also alleged he was due unpaid wages for a month and a half. The Respondent is engaged in the supply of medical clothing and did not attend the Hearing. The Respondent commenced operation in Ireland in April 2020 and had an active status on the CRO at the time of the Hearing.

The Complainant commenced employment with the Respondent on 1 February 2021 in the position of Chief Executive Officer (“CEO”) pursuant to a contract and a director of the Company’s other entities, Suirtech Holdings, Suirtech UK and Suirtech Technologies (Ireland).  

The Complainant experienced no difficulties in his employment until April 2022, when he was informed by Mr. Li Sen and Ms. Cynthia Ye (“the Shareholders”) that it would not be possible for them to invest further capital in the company. The Shareholders further expressed their hope that the company would continue to function and avoid insolvency, despite the lack of crucial funding. The Complainant was not paid any salary from 1 May 2022, and in mid-May 2022 he was unilaterally demoted to the role of COO, being replaced by Ms. Cynthia Ye. Despite not consenting to this change, the Complainant complied with these changes, in hope that the Shareholders would inject much needed funds into the Company. 

As a result of ongoing issues, the Complainant issued a notice of resignation to the Respondent on 23 May 2022, and agreed to work his six-month contractual notice period, on the assumption he would be paid during this time. However, on 6 June 2022, Ms. Ye informed the Complainant that he would have to work his six-month notice period without pay or resign with immediate effect. His lack of control over any decision making was at that point impeding his duties as a director to the company and coupled with his employer’s refusal to pay his salary, the Complainant decided to resign with immediate effect on 13 June 2022. 

The Complainant then submitted a constructive dismissal complaint form to the WRC against the Respondent in accordance with section 8 of the Unfair Dismissals Act 1977. The Complainant submitted that he acted reasonably in all the circumstances and the conduct of his employer gave him no option but to resign from his role. 

The Complainant commenced employment with the Respondent on 1 February 2021, in the role of CEO, with a gross monthly salary of €18,000. There were no issues between the Complainant and his employer until the 20 April 2022, when the Shareholders wrote to the Complainant and Mr. Rory O’Gorman, the Company Secretary, advising them that “due to political/legal situation in China” it “is currently not possible on the part of the Investor to invest further capital in the Company”. The Shareholders were unable to say when this issue would be resolved and ended the letter by saying they “hope the management of Suirsafe will find ways to survive this critical period and avoid insolvency”.The Company was heavily reliant on funding from the Shareholders to survive, and the Complainant was put in an impossible position, where the Shareholders now placed full responsibility on him for the survival of the company, an entirely unreasonable expectation without fundamental cashflow.  

Notwithstanding this, the Complainant did his utmost to allow the Company to continue to function without this funding and, while had not received his salary since 1 May 2022, he ensured the Company’s other employees were paid for that month. The Complainant put it in writing to the Company on the 12 May 2022 that it was his belief that without an immediate injection of cashflow, the Company would inevitably become insolvent, as the Company had since run out of money.

In early May 2022, in the middle of this funding crisis, the Shareholders unilaterally decided that the Complainant’s role and duties as CEO should be taken over by Ms Cynthia Ye, a clear breach of the Complainant’s contractual rights. The Company claimed this was to enable Ms. Ye to manage Suresafe’s financial issues on behalf of Mr Li. However, no consultation was ever had with the Complainant, nor was he informed why Ms. Ye was now taking over a role and task that the Complainant had been doing, without issue, for over 18 months. The Complainant was then told he would be moved to the role of COO and he was directed by the Shareholders to transfer full control of the Company’s bank accounts to Ms. Ye and that he should no longer have any access to the Company’s accounts. He was also ordered to register Ms. Ye as a director of the Companies.

Although the Complainant did not agree with this unilateral and unreasonable change to his role, he complied with all the instructions he received from the Company in the hope that it may result in the promised funds being transferred to enable the Company to continue operations and to save the jobs of his colleagues. Ms. Ye also advised the Complainant by email on 12 May 2022 that “Once you fixed all these procedures, the funds will be transferred to Suirsafe”. However, his faith in Ms Ye and Mr Li was misplaced and no funds have been transferred to date, despite the Complainant complying with the Shareholder’s orders. 

As a result of the ongoing issues, on 23 May 2022, the Complainant emailed notice of his resignation as CEO to Ms. Ye and the Company Secretary. At that time, he agreed to serve out his six-month contractual notice period on the reasonable presumption that he would be paid during this time. However, on 6 June 2022 Ms. Ye emailed the Complainant with an ultimation; that he could either continue working for the Company without a salary until it became profitable or leave his position in the Company immediately “without the 6 months transition period”. This was a clear reference to his contractual notice period. Essentially, the Complainant was informed that he could work for free or leave without pay.  Ms. Ye then advised the Complainant that this ultimatum and the threatened breach of his contractual entitlement to six months’ notice was a test of his confidence “to see if you are capable to manage or guide Suirsafe to success in the near future.”

The Complainant then, by way of email, formally resigned from his role as CEO with immediate effect on the 14 June 2022.The complete disregard that Ms. Ye, on behalf of the Company, showed for the Complainant’s rights as an employee prompted him to resign with immediate effect as an employee of the Company and from all directorships the Complainant held with the Group Companies. As a director and senior manager of the Company, the Complainant had legal duties and responsibilities to fulfil, and he tried to do so. However, his ability to act accordingly was restricted completely by Ms Ye’s actions on behalf of the Shareholders.  Ms Ye now has complete control over the financial affairs of the Group Companies. The Complainant had no oversight of financial or other management matters and could not be expected to continue to work in a role where he may be held responsible for decisions over which he has absolutely no control. The Complainant therefore had no choice but to resign with immediate effect, due to his employers fundamental and blatant breach of his contractual rights, his loss of trust and confidence in them and his exposed risk of breaching his director’s duties, a result of which would have been far beyond his control. 

After he resigned from his role, Ms. Ye cut off all communication with the Complainant, blocked his ability to communicate with her on WeChat (the preferred mode of communication in the Company), and refused to engage with the Complainant by email or phone. She further refused to hold or attend meetings of the directors of the Company.

Despite the Company’s complete lack of regard for the Complainant’s contractual entitlements, the Complainant continued to work without being paid his salary from 1 May 2022 to support the Company and his colleagues, always on the understanding that he would be reimbursed at a later date. However, Ms. Ye advised the Complainant that the Company did not wish to honour his contractual notice period either. After a period of loyal and successful service, the Complainant found the Company’s treatment of him demeaning, unfair and callous, in breach of his employment contract to the extent that it is clear the Company no longer intends to be bound by it. The Company fatally undermined the Complainant’s position, where he lost trust and confidence with the Company, and left him with no choice but to resign from him employment.  

Section 1 of the Unfair Dismissals Act 1977-2015 (“the UDA”) provides that, in order for an employee to prove constructive dismissal, the employee must establish that he/she terminated his/her own employment with the employer “whether prior notice of termination was or was not given to the employer in circumstances in which, because of the conduct of the employer, he was or would have been entitled, or it was or would have been reasonable for him to terminate the contract of employment without giving prior notice to the employer”

This section, coupled with relevant other authorities, establishes a two-step test requiring an employee to demonstrate, firstly, that an employer has been “guilty of conduct which is a significant breach going to the root of the contract of employment, or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract, then the employee is entitled to treat himself as discharged from any further performance” as held in Western Excavating ECC Ltd. V Sharp[1978] IRL 332. The employee must also demonstrate that “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 as such that the employee cannot be expected to put up with it”. (Berber v Dunnes Stores[2009] 20 E.L.R. 61.)  

Citing Conway v Ulster Bank Limited UDA474/1981”, The Labour Court in Ranchin -v- Allianz Worldwide Care S.A. [UDD1636]held “In constructive dismissal cases, the Court must examine the conduct of both parties. In normal circumstances a Complainant who seeks to invoke the reasonableness test in furtherance of such a claim must also act reasonably by providing the employer with an opportunity to address whatever grievance they may have. They must demonstrate that they have pursued their grievance through the procedures laid down in the contract of employment before taking the step to resign.”

The Labour Court in Mr O v An Employer (no. 2) [2005] 16 E.L.R. 132 noted that failure to invoke an internal grievance procedure will not be detrimental to establishing reasonableness. This was recently reiterated by the Adjudication Officer in Brian Griffin v Sage ADJ-00034467 who noted “The court accepts that in normal circumstances a complainant who seeks to invoke the reasonableness test in furtherance of such a claim must also act reasonably by providing the employer with an opportunity to address whatever grievance they may have. However, there is authority for the proposition that this is not a fixed or universally applicable rule and there can be situations in which a failure to give prior formal notice of grievance will not be fatal.”

Having regard to the foregoing, it is clearly the case that the Complainant meets the statutory requirements, in so far as his treatment by the Shareholders from the 22 April 2022, that he was left with no other option but to resign in the circumstances where the trust and confidence he was entitled to repose in his employer had been broken beyond repair and he had lost complete trust and confidence in his employer. The Complainant attempted to raise his concerns with the Shareholders, but it was evident they were not willing to engage with the Complainant on any level. His exposed legal risk to breaching his own directors’ duties, a breach which would have been beyond his control, his unlawful and unwarranted demotion, and the Company’s clear disregard for any of the Complainant’s contractual rights. It is evident from the facts set out that the Company was in breach of several of the Complainant’s contractual rights, and it would have been unreasonable to expect him remain under employment of the Company.  

It was submitted that the Complainant has clearly established that he was constructively dismissed, particularly when regard is had to “the reasonableness or otherwise of the conduct (whether by act or omission) of the employer in relation to the dismissal” as provided for at section 6 (7) of the UDA.

In relation to the non payment of wages, Section 5 of the Payment of Wages 1991 Act relates to the regulation of “deductions” made by employers to an employee’s wages: 

“(1) An employer shall not make a deduction from the wages of an employee (or receive any payment from an employee) unless– 

(a)            the deduction (or payment) is required or authorised to be made by virtue of any statute or any instrument made under statute,

(b)            the deduction (or payment) is required or authorised to be made by virtue of a term of the employee's contract of employment included in the contract before, and in force at the time of, the deduction or payment, or 

(c)            in the case of a deduction, the employee has given his prior consent in writing to it. 

Section 5(6) goes on to state that:-

“Where— 

(a)            the total amount of any wages that are paid on any occasion by an employer to an employee is less than the total amount of wages that is properly payable by him to the employee on that occasion (after making any deductions therefrom that fall to be made and are in accordance with this Act), or

(b)            none of the wages that are properly payable to an employee by an employer on any occasion (after making any such deductions as aforesaid) are paid to the employee,

then, except in so far as the deficiency or non-payment is attributable to an error of computation, the amount of the deficiency or non-payment shall be treated as a deduction made by the employer from the wages of the employee on the occasion.

Section 6 of the 1991 Act sets out the procedure for the making of complaints by employees in relation to contraventions of s.5 by their employer:

“(1) A decision of an adjudication officer under section 41 of the Workplace Relations Act 2015, in relation to a complaint of a contravention of section 5 as respects a deduction made by an employer from the wages of an employee or the receipt from an employee by an employer of a payment, that the complaint is, in whole or in part, well founded as respects the deduction or payment shall include a direction to the employer to pay to the employee compensation of such amount (if any) as he considers reasonable in the circumstances not exceeding—

(a)   the net amount of the wages (after the making of any lawful deductions therefrom) that—

(i)              in case the complaint related to a deduction, would have been paid to the employee in respect of the week immediately preceding the date of the deduction if the deduction had not been made, or

(ii)             in case the complaint related to a payment, were paid to the employee in respect of the week immediately preceding the date of payment, Or

(b)   if the amount of the deduction or payment is greater than the amount presented to paragraph (a), twice the former amount.” 

(c)    

 Clause 7 of the Complainant’s contract of employment stated the Complainant’s salary is “€216,000 per annum, payable in equal monthly instalments by bank transfer on the 25th day of each month”. The Complainant submitted that the Company unlawfully failed to pay the Complainant his salary for the month of May 2022, due to him on the 25th of that month. They also failed to pay him for work done up to his immediate resignation on the 13 June 2022.

The non-payment of the Complainant’s wages, therefore, constitutes an unlawful   deduction made from his wages, in contravention of the 1991 Act. This deduction from the Complainant’s wages was not authorised by the Complainant, in writing or otherwise, and is therefore in clear breach of s.5 of the Payment of Wages Act 1991. The Complainant requested a finding from the Adjudication Officer to this effect, together with a direction to the Respondent to restore these sums to him.    

Considering the facts of this case, and on any reasonable and objective analysis, it was submitted that the Respondent’s conduct towards the Complainant, as referred to above, was so unreasonable as to leave the Complainant with no option but to resign his employment immediately.  The Complainant attempted to warn the Company of the potential financial damage they were exposed to, and also attempted to discuss matters with Ms. Ye, who refused any contact with him. That the Complainant was constructively dismissed is, it was submitted, beyond question, and the Adjudication Officer was requested to so find. It was also submitted that the non-payment of the Complainant’s salary in May and June 2022 constitute unlawful deductions from his wages and the Adjudication Officer wis requested to so find. 

A Complaint was received by the Director General of the Workplace Relations Commission by the Complainant on July 15th 2022 alleging that his former employer contravened the provisions of the Unfair Dismissals Act 1977 and the Payment of Wages Act 1977 in relation to him. The said complaints were referred to me for investigation. A Hearing for that purpose was held on May 22nd 2023. There was no appearance by or on behalf of the Respondent at the Hearing. I am satisfied that the said Respondent was informed in writing of the date, time and place at which the Hearing to investigate the complaint would be held and were not present at the Hearing. I wish to note the particular efforts of the WRC to provide details of the Hearing date and time to the Respondent. Notice of the Hearing was sent by ordinary and registered post to the Respondents address, by email to the new CEO, to an associated company email address given to the WRC for correspondence and to the Respondents Accountants on record with the CRO.

Unfair dismissal Complaint

The Complainant, a German National, advised he was resident in Ireland for the duration of this contract and alleged the actions of the Respondent amounted to constructive dismissal.

Section (1b)  of the Unfair Dismissals Act 1977 states “the termination by the Complainant 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 Complainant was or would have been entitled, or it was or would have been reasonable for the Complainant, to terminate the contract of employment without giving prior notice of the termination to the employer”.

The claim is one of constructive Dismissal pursuant to Section 1 of the Unfair Dismissal Act 1977. The burden of proof, which is a very high one, lies on the Complainant. They must show that his resignation was not voluntary. As is set out in Western Excavating ECC Limited –v- Sharp, the legal test to be applied is “an and / or test”. Firstly, the Adjudicator must look at the contract of employment and establish whether or not there has been a significant breach going to the root of the contract “if the employer is guilty of conduct which is a significant breach going to the root of the contract of employment, or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract, then the Complainant is entitled to treat himself as discharged from any further performance”. If the Adjudicator is not satisfied that the “contract” test has been proven, then they are obliged to consider the “reasonableness” test.  

Clause 23 of the employment contract required the Respondent to pay the Complainant for six months during the notice period in the event of termination of the contract. Having considered the uncontested evidence of the Complainant I find that the actions of the Respondent went to undermine the core of the contractual relationship, they implemented a significant breach of the contract by not paying the Complainant during the notice period or expecting him to work for six months for no pay and that the Complainant was entitled to immediately terminate the employment contract without the use of the grievance procedure and I find the Complainant was unfairly dismissed.

Previous decisions on this issue at the Workplace Relations Commission note the decision of the Employment Appeals Tribunal in the case Sheehan v Continental Administration Co Ltd (UD858/1999) where it stated, “a claimant who finds himself out of work should employ a reasonable amount of time each weekday 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”. It is clear that there is a legal duty to mitigate financial loss by taking diligent steps to secure comparable alternative employment and case law shows that the standard required is a high one. The Complainant advised the Hearing he gained new employment on January 1st 2023 and while he engaged with a number of prospective employers from the date of his termination until he gained new employment, new employers were reluctant to hire him due to the six month notice period/prohibition in his contract from seeking new employment due to possible adverse/legal issues that may arise until the six months timeframe had elapsed. I find this a perfectly reasonable explanation why the Complainant did not commence employment until after the six months had elapsed.  The Complainants loss during the period amounted to 108,000 Euros.

Payment of Wages Complaint

Section 5 of the Payment of Wages Act 1991 states the following:

I find that the Complainant was properly entitled to his wages from May 1st 2022 to June 13th 2022 and this amounted to an illegal deduction of 25,800 Euros.

Section 41 of the Workplace Relations Act 2015 requires that I make a decision in relation to the complaint in accordance with the relevant redress provisions under Schedule 6 of that Act. I find in favour of the Complainant in the Payment of Wages Act complaint and award him 25,800 Euros. (CA-00051711-001)

Section 8 of the Unfair Dismissals Acts, 1977 – 2015 requires that I make a decision in relation to the unfair dismissal claim consisting of a grant of redress in accordance with section 7 of the 1977 Act. I find the Complainant was unfairly dismissed and award him compensation of 108,000 Euros for breach of his employment rights.  (CA-00051711-002))

Unfair Dismissal