UDD2448

PARTIES:

DIVISION:

SUBJECT:

Appeal of Adjudication Officer Decision No's: ADJ-00032541 (CA-00043138-001)

BACKGROUND:

The Worker appealed the Decision of the Adjudication Officerto the Labour Court on 9th February 2023 in accordance with Section 8A of the Unfair Dismissals Act 1977 to 2015. A Labour Court hearing took place on 8th October 2024.

The following is the Decision of the Court:-

DECISION:

This is an appeal by Oliver Dixon (‘the Complainant’) of a decision of an Adjudication Officer (ADJ-00032541, dated 5 January 2023) under the Unfair Dismissals Act 1977 (‘the Act’).  The Adjudication Officer held that his complaint of unfair dismissal against his former employer Francis Brophy & Company Chartered Accountants (“the Respondent”) was not well founded. The decision was appealed to the Labour Court on 9 February 2023.

Background

The Complainant commenced employment in October 2004. The Complainant submits that he was unfairly dismissed on 29 September 2020. The Respondent refutes that allegation.

Summary of the Respondent’s Position

The Respondent is a small accounting practice. It operates in a highly regulated environment requiring adherence to rigorous accounting standards and ethical behaviours. Finance professionals are bound by the same standards and can be subject to disciplinary action by the relevant accountancy bodies where they fail to uphold professional standards.

The Complainant joined the practice in 2004 having completed his leaving certificate examination. He qualified as an Accounting Technician in 2006. In 2011 he returned to accountancy studies and qualified as an ACCA in February 2019.

Within the business, a certain amount of private work by employees was allowed with three provisos: the work should not interfere with the performance of the individual’s work with the firm; there should be a clear distinction between private work and work for the firm; and private work should be completed so fully compliant with professional standards and ethical practice.

During the Covid pandemic, accountancy practices were exempt from the regulations regarding home working. After making several requests, the Complainant was permitted to work from home on a one day a week basis from June 2020, during which time it was agreed that he would undertake online professional development courses in addition to his professional client work.

The Respondent became concerned about the Complainant working from home as courses claimed to be undertaking by him were not completed, timesheets were incorrectly recorded and urgent work on client accounts was not completed. Around the same time, the Respondent became aware that the Complainant was engaged in unauthorised work with private clients, by preparing Financial Statements and letters of assurance under the firm’s name.

The managing partner engaged Graphite HRM to conduct an independent investigation on 20 July 2020. The investigation concluded on 27 August 2020 and the Complainant was provided with a copy of the report. He was invited to attend a disciplinary hearing into four alleged offences (i) Fraudulent activities; (ii) Activities likely to cause the loss of faith in the Complainant’s integrity; (iii) Failure to follow instructions in relation to training and professional work and (iv) False declarations on the time recording system.

A disciplinary hearing was conducted on 10 September 2020. The outcome of the disciplinary hearing was the decision to terminate the Complainant’s employment.

The Complainant appealed the outcome, setting out six grounds of appeal: (i) Lack of fair procedures afforded to him by his employer; (ii) the proportionality of the sanction; (iii) The abdication of management and legal responsibilities by his employer; (iv) The lack of management responsibility of his employer; (v) The lack of accountability from his employer and (vi) The lack of credibility of his employer’s claims. 

The Appeal Hearing was conducted by an independent HR consultant from SHRC Limited. The appeal was not upheld.

The Complainant presented a set of client accounts as though they had been completed by the firm rather than as private work. A third party seeing these statutory financial statements would have believed that they had been completed by the Respondent. Written assurances in relation to financial information were presented on company letterhead as though they had been given by the firm. Timekeeping /work recording records were falsified.

The offences, which persisted over a long period of time and were not rebutted by the Complainant, amounted to gross misconduct, as the critical basis of trust and confidence was fundamentally broken. Trust and confidence are required not only by the employer but also by clients, regulators and professional associations. It extends also to affected parties such as lenders and customers of client organisations.

The decision to dismiss fell within the bounds of reasonable responses which an employer might make. The Complainant was engaged as an accountant in a strongly regulated sector where ethical standards are supposed to be followed to the highest degree. He was fully aware of the critical importance of sound ethical practices for accountancy firms. The disciplinary process fully complied with best practice. Two independent, external parties were engaged to conduct the disciplinary investigation and the appeal hearing.  Every effort was made to ensure that the process adopted by this small firm was fair.

The dismissal clearly falls within the bands of responses which a reasonable employer would consider. The band of reasonableness is well established in the test by which the fairness of a dismissal is assessed, as set out in Noritake Ltd v Kenna (1983); AIB v Purcell 30, Looney & Co. Ltd -v- Looney UD 843/1984; JVC Europe Ltd -v- Panisi (2011) IEHC 279 and Brendan O’Callaghan v Dunnes Stores (UD54/2012).

Summary of Complainant’s Case

The Complainant enjoyed an exemplary work record and had a strong personal and professional relationship with the principal of the firm. He regularly received excellent feedback from clients and consistently received positive appraisals from his employer for his work performance.

On 20 July 2020, the Complainant was advised by letter of the principal’s intention to search boxes relating to his private clients. A second letter requested that he provide details of all works carried out on behalf of private clients that may have involved the Respondent practice. An hour later the Complainant was suspended from work pending a formal investigation. The Complainant was asked to remove his personal effects and leave the office. At no point was he given an opportunity to address any issues other than in the context of a formal disciplinary process.

An investigation meeting was conducted online on 6 August 2020. An Investigation Report was furnished to the Complainant on 4 September 2020, which recommended (i) a Disciplinary Hearing and (ii) that the Respondent put in place written policy to outline and define the parameters that staff must follow if they are undertaking work for private.

A disciplinary meeting was deferred until 10 September 2020 to allow the Complainant an opportunity to review five witness statements in advance of the meeting. One witness, Gerry Martin, voiced his discomfort at participating in the interview, as he was due to attend the disciplinary hearing as the Complainant’s support. A request for an adjournment to allow the Complainant to review the statements and take advice was refused.

The firm’s principal chaired the disciplinary meeting and was the ultimate decision maker notwithstanding the fact that he was also the Complainant and primary witness against the Complainant. The principal failed to meaningfully consider any of the explanations offered by the Complainant, failed to consider all possible alternative sanctions and concluded that there were no mitigating factors to take into account when reaching the decision to dismiss.

An appeal was conducted on 14 October 2020 and the decision to dismiss confirmed.

The Complainant emphatically denies that he perpetrated any fraud. The Complainant provided accountancy services to three private clients with whom he was personally associated. There was no policy on staff doing private work or using work facilities, but it was permitted. Other colleagues also carried out work for private clients after hours.

The Complainant expressly asked the principal if he who could process his brother-in-law (JM) tax returns as a private client under the firm's tax agent number, as the Complainant did not have a tax agent number. The Principal had no issue with this. The complainant added a second private client (TL) in 2012/13 who was a friend of the principals, and a third private client (MC) in 2013/14.

The three clients were openly processed through the firm’s accounting software system. The complainant used the firms tax agent number for over ten years until 2020. The principal of the firm oversaw all aspects of the business and was aware of this custom and practice.

The principal forwarded correspondence to the Complainant from the Revenue Commissioners concerning one private clients without issue. The Complainant issued a letter on headed notepaper in reply. The Complainant would not have used the tax agent number had the principal expressed any reservations. In 2018 he transferred his estranged brother-in-law’s file over to the firm. No issues were raised at that time. A review of that file would have shown the principal’s name as the Tax Agent and correspondence on the firm’s headed notepaper.

The Complainant denies refusing to carry out instructions or making false declarations on the time recording system about training courses completed by him.

The Complainant was subjected to an entirely defective investigation and disciplinary process that was unfair, prejudiced and was conducted with a predetermined outcome. The decision to terminate his employment was a disproportionate step to the offences contended. The Respondent failed to consider a more appropriate sanction in circumstances where the Complainant had never received any prior written or verbal warnings and given his positive work record up to that date. The Respondent dismissed the Complainant without first affording him an opportunity to address the allegations. The Complaining acted in the utmost good faith and integrity.

The Respondent must demonstrate that the disciplinary process was robust, and the process was fair. It must demonstrate that it properly took into account of all matters, including points of mitigation, in reaching its decision. In this case, the process failed to have regards to matters raised by the Complainant and did not take into account any mitigating factors. The sanction of dismissal was inappropriate, disproportionate, and unfair in all the circumstances.

Evidence Of Mr Brophy – Principal of the Firm

Mr Brophy was aware that the Complainant carried out private work, which is allowed under his contract employment. In his 34 years in practice, three or four staff had carried out private work which did not concern him, as he trusted staff. Private work is allowed provided that permission is sought, it did not interfere with work and was distinguished from the company’s work. The Complainant never sought permission to carry out private work. When he discovered that he was doing so, he did not have a problem with that fact but told him that he should have sought permission.

A trainee accountant can prepare records but is not allowed to sign off accounts or certify income tax returns. They cannot hold tax certificates. The company has an agent link which allows the company file tax returns electronically. It is a self-assessment process and 99% of applications are approved. He was aware that the Complainant applied for a tax agent number but there was some issue. He was not concerned about it at that time. The ACCA rules prohibit the Complainant (i) finalising accounts (ii) signing off accounts or (iii) submitting tax returns.

The company's brand name is vital. You cannot sign off on accounts unless you are a practising certified accountant. If a letter of assurance proves to be incorrect it has implications for the company's reputation and its professional indemnity insurance. Honesty and integrity are emphasised on a regular basis through training.

The Complainant started working from home in June 2020. It was not ideal as there was no direct access to the office. They agreed that he would complete coursework and accounts for a client that were at an advanced stage.

On 16 July 2020, an issue arose with timesheets, as the Complainant stated that he did 15.5 hours of training yet recorded 37 hours on his timesheet. Two courses undertaken were not authorised. A further issue arose on the same day, when he saw from the Complainant’s office computer which was switched on that he was working remotely and typing an e-mail to a private client. The email had attachments in his name.

He did not immediately raise his concerns with the Complainant using his name for private clients as it was a serious issue, and he wanted to be certain before challenging him. He sought advice from Peninsula, and they drafted wording for three letters.

The first letter, which he gave to the Complainant on Monday 20 July 2020 at 12pm, related to searching personal boxes in the Complainant’s office as he needed information for his professional indemnity insurance. On searching the boxes, he found numerous sets of accounts and assurance letters for three private clients over a period of six-eight years all purporting to come from his practice. The Complainant said that he had permission, but no such conversation ever took place. In his view the quality of the private work undertaken by the Complainant was poor; there was no anti money laundering completed, no passport details obtained, no letters of engagements and accounts were not signed.

He contacted Graphite and was advised to report the matter to the Institute and his insurance company in case of issues with personal indemnity.

He issued a second letter requesting a full report, but did not expect a full reply that day.

The third letter, which he gave to the Complainant at 3.00pm, set out the terms of reference for the investigation process. At 3.00pm he suspended the Complainant and asked him to return his keys.

He handed the investigation process over to Graphite. The investigation was conducted by Mr Nicholas Young, who found the Complainant had a case to answer in relation to three issues.

Mr Brophy conduced the disciplinary hearing and made the decision to dismiss the Complainant on the grounds of gross misconduct for misrepresenting himself in relation to accounts and assurance letters over a period of nine years. He considered mitigating factors, but the matter was so serious that nothing could mitigate the loss of trust. Trust is the bedrock of everything in accounting. If you do not trust an employee, nothing else counts. He was exposed from a professional indemnity perspective.

Mr Hannaway was engaged to conduct the appeal. Mr Brophy took no part in that process.

Under cross examination, Mr Brophy said that the Complainant was a good worker. They had a good working and personal relationship and he had attended his wedding.

Mr Brophy refuted that he was building a case against him. He was not concerned about the Complainant setting up on his own practice. He had no real concerns about him working from home. The issue regarding timesheets and not following instructions were small issues. They would have been sorted.

When asked if his decision to suspend the Complainant was premature as he had not spoken to him at that point, Mr Brophy said he suspended the Complainant on advice from Graphite. He had completely lost trust in the Complainant, who had been so dishonest and so underhand that he could not trust him. His trust was gone when he saw the documents. The locks were changed as the Complainant would not return his keys. He had no choice given the level of dishonesty.

Mr Brophy contacted the Chartered Accountants of Ireland, the professional regulatory body, and his insurers. He was advised that depending on the outcome he should consider reporting the Complainant to the regulatory body. He did so 18 months later in March 2022 after a review of the files and many months seeking information from the Complainant through his solicitor.

He conducted the disciplinary hearing with Amy Doran who said it was a good idea to interview the staff. There were ten employees at the time. Mr Brophy attended those fact find meetings as a note taker. In his view that was not prejudicial. The Complainant received the interview notes the day before the hearing. His request for an adjournment was refused, as 24 hours was sufficient time to review the notes.

Mr Brophy accepted that the disciplinary hearing was contentious, and that Ms Dolan had to intervene once or twice. The meeting lasted for two hours or so.

The decision to dismiss was based on gross misconduct. The fact that the Complainant had used his name was the sole issue. No other employees carried out private work in the company name.

When asked how he could be an impartial decision-maker when he was both the complaint- and decision-maker, Mr Brophy said that he was the most senior person in the company as he was a sole practitioner with no partners. There was nobody else who could make that decision. His trust and confidence were broken. He followed as fair a process as possible and was guided by Graphite. There was an independent investigation and an independent appeals process. There were enough checks and balances, as two-thirds of the process was outside of the company.

Mr Brophy accepted there was no formal policy or checks and balances in place about private clients. It never occurred to him that he would need a policy to tell staff they were not allowed to use his company name or letterhead to say that work was coming from his practice. The Complainant was an experienced chartered accountant who had completed exams all of which have an ethics module. He was not a school leaver and had enough training to know it was not right. The ACCA Code of Ethics says that he should not be engaged in private work.

Mr Brophy denied authorising the Complainant’s request to undertake private work in a conversation in 2011. He denied ever having a conversation with the Complaining about using the firms tax agent link. He would have said an emphatic no, as there is a big difference between using company software, which was allowed, and using the company name.

Mr Brophy opened the physical post. He denied ever getting a letter from the Revenue Commissioners about the Complainant’s private clients through the postal system. When asked how he did not see the names of private clients on letters of assurance issued by the Complainant, Mr Brophy said that the Complainant looked after the Revenue system.

Mr Brophy accepted that one of the Complainant’s private clients came into the practice in 2018, and that he did the due diligence. That clients first year of trading was presented on the file as 2016.

The dismissal letter directed the Complainant to send any appeal to him. Mr Brophy said that he passed the appeal on and played no further part in it.

Mr Brophy accepted that after the dismissal he gave a positive reference to the Complainant’s  new employer. He said that he told the new employer what had happened, and that the Complainant was a capable employee.

Evidence of Oliver Dixon - the Complainant

He had three private clients; all were family connections. The first client was in a long-term relationship with his sister, the second was also a close friend of Mr Brophy and they sat the same table at his wedding, and the third client was his other sister’s husband.

In 2011 he asked Mr Brophy if he could use the company's software and tax agent number to file his brother-in-law tax returns. He was a trainee at the time and did not have a tax number. The conversation took place in Mr Brophy's office and was reasonably brief. Mr Brophy said he could use the software and the tax agent number. Approval was given verbally by Mr Brophy. It was clear from his perspective that he had permission.

All clients have numbers to distinguish them, so he added his initials “OD” to distinguish his private work from the firms. Mr Brophy was aware of the tax link as letters came into the office from his private clients and online correspondence from Revenue was addressed to Mr Brophy because of the tax agent link. He later applied for tax agent number one, but there was a glitch, so he continued using the firm’s link.

Mr Brophy opened all the post himself; nothing happened without his knowledge. Mr Brophy never raised any issues about private clients If there was an issue he would have raised it.

In 2018 Mr Brophy agreed to take his first client into the practice. He could not say what due diligence was conducted. That was an obvious time for him to raise any issues. It is not true that Mr Brophy took on that client as a first year of trading. It was clear from the register for tax that was not true.

The Complainant said that Mr Brophy’s evidence about correspondence referenced in the dismissal letter was contradictory and not credible. Mr Brophy was aware of all correspondence in the firm.

During Covid, the Complainant came to the office every day until June when Mr Brophy agreed to his request to work one day a week from home. On those days he worked on client files and administration and completed training courses that were suggested by Mr Brophy. He undertook regular work from home when the system was made more secure after 9 July 2020. There was no policy or practice in relation to working from home. He did a full day's work on the days he worked from home. He checked in regularly with Mr Brophy who said everything was all OK.

No issues were raised about his work until the 15 July 2020 when Mr Brophy requested his password. He did not realise at the time that Mr Brophy was piecing together a case against him.

Before 20 July 2020 there were absolutely no issues. He always received excellent feedback from Mr Brophy. In 2019 he received an increase in pay an increase in bonus. There was casual mention of a potential partnership. After 20 July everything was crazy. He was suspended from work.  The allegation about false declarations were not true. Mr Brophy was trying to make it look as if the complaint was trying to start out on his own which was not the case at all.

On 20 July 2020 he was given three letters and knew the matter was very serious. He could not process the words fraudulent activity. The first letter was about searching the boxes in his room, but Mr Brophy knew full well what was in the boxes and was taking photographs everywhere. The second letter referred to professional indemnity and requested a full account of his private practice, all assurance letters and email. Mr Brophy refused point blank to speak with him. The third letter which he received before lunch said he was suspended with pay pending an investigation and terms of reference for an investigation. It all happened very quickly. His head was in a spin, and he did not give the keys back accidentally. A few days later Mr Brophy told him to take all his personal effects. The locks were changed. He pleaded with Mr Brophy to talk to him, but he refused to speak with him.

The investigation outcome was that he had a case to answer, and that the employer should implement a policy. The witness statements came after the investigation report, so he asked for an adjournment. The meeting was postponed for one day until the 10 September.

The disciplinary hearing was online. The meeting was very contentious, with contradictions and conflict on both sides. There was the late introduction of witness statements. It became very heated, as it was the first opportunity he had to speak with Mr Brophy directly in a month and a half.

He received a dismissal letter dated 29 September 2020. He thought it odd that Mr Brophy referenced in the letter that he had never received a letter from the Complainant in 2012, as Mr Brophy handled post. He admitted to using the company stationary but refuted logging his working time incorrectly. It was clear that Mr Brophy’s mind was made up from the 13 July 2020. He said as much in his evidence. No account was taken of his 16 years’ service.  Mr Brophy had said that he was a dedicated employee.

He appealed the outcome. Mr Hannaway conducted the appeal online.

The Complainant said that he was always honest and transparent with his employer. The details in relation to his private clients were visible on the software. All staff had access. There were no passwords and no attempt to hide or to deceive. At no time did he believe that he was misleading clients. In hindsight he accepts that he was extremely naive and should have had documents in place.

Under cross examination,the Complainant agreed that ethical principles were important. He believed he was open and transparent in his actions. When asked if a client might be misled if accounts prepared by him were presented in the firm's name, the Complainant said that he was not sure. When asked if he followed the ACCA rules and guidelines, he said that he did not consider himself to be in private practice.

The Complainant had private clients but did not engage in private practice. He did not operate in his own name, have a website or a registered business name. As a student he could provide a level of bookkeeping services but could not be in public practice or sign off accounts in his own name. His work was signed off by his employer. He dealt with his clients in an informal capacity while working under the banner of the firm and was paid separately for that work.

When he sought permission from Mr Brophy the request about using the agent link was a very important part of the question, as the agent number is needed for tax returns. He was allowed to submit income tax returns as a trainee.

The first time he used the firm’s livery for a client was in 2021, as Revenue issued a letter addressed to the firm, so he replied using the firm's letterhead. He did not get permission, as Mr Brophy had given him the letter. He thought he had permission. He placed a lot of emphasis on the fact that Mr Brophy had seen the letter from Revenue.

He used the firm’s letterhead for other requests that came in relation to tax affairs and letters of assurance. He accepted there could be ramifications if someone were to falsely compile a letter of assurance and that they could be sued. His private clients believed that their returns were conducted in the firm's name. He could not say if that exposed the firm.

He was never asked to give more details in relation to the timesheets before the formal process commenced. The timesheets were recorded accurately, but he could see how there might be confusion. He should have added a note to explain the type of courses completed.

The Complainant accepted that he had a fair opportunity to present himself during the investigation, disciplinary and appeal process. He accepted that an investigation was underway by the ACA. He said that he was never given a report of the investigation, only the meeting transcript. He was not aware if there was a written disciplinary procedure. He received the full report sometime in September.

The Relevant Law:

Section 6 of the Unfair Dismissals Act 1977, as amended, states, in relevant part, as follows:

6.— (1) Subject to the provisions of this section, the dismissal of an employee shall be deemed, for the purposes of this Act, to be an unfair dismissal unless, having regard to all the circumstances, there were substantial grounds justifying the dismissal.

(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 an unfair dismissal, if it results wholly or mainly from one or more of the following:

 (a) the capability, competence or qualifications of the employee for performing work of the kind which he was employed by the employer to do,

(b) the conduct of the employee,

(c) the redundancy of the employee, and

(d) the employee being unable to work or continue to work in the position which he held without contravention (by him or by his employer) of a duty or restriction imposed by or under any statute or instrument made under statute.

Discussion and Deliberation

In reaching its decision the Court has taken account of all written and oral submissions of both parties and has had full regard to the evidence adduced during the appeal hearing.

The issue before the Court on the appeal is not whether the Complainant committed gross misconduct by misrepresenting his own client work as being completed by the company and using company stationery and livery for personal purposes. The issue is whether in all circumstances the Respondent was justified in dismissing the Complainant having regard to his conduct, his explanation for his conduct and the surrounding facts established by the Respondent after it became aware that the Complainant was undertaking work for three private clients under the name of the Respondent firm. 

Within the business a certain amount of private work by employees was allowed. Mr Brophy, the principal of the firm, said that he was fully aware that the Complainant carried out private work. He said that he did not have a problem with that fact.

Mr Brophy confirmed that his decision to dismiss was based solely on the fact that the Complainant had misrepresented himself by using the company name to carry out private work on behalf of private clients without permission over a period of nine years. His evidence was that he had no real concerns about the Complainant working from home or completing timesheets, which in his view were issues that would have been sorted.

The Complainant’s position is that he provided accountancy services to three private clients with the express approval of the principal of the firm.

The Court was faced with a direct conflict of evidence on several matters including: what was agreed and understood between the principal of the firm and the Complainant, what if any conversations took place in 2011, the use of the firm’s tax agent link, what permissions were granted, as well as details relating to the migration of one private client account across to the firm and who had sight of what correspondence.

The Court had difficulty with much of the evidence presented. In the view of the Court, it does not seem plausible that the principal would expose his firm to risk from a reputational or a professional indemnity perspective by granting the Complainant permission to issue letters of assurance or financial statements in the company name, before the Complainant became a fully qualified accountant. The Complainant  qualified as a Chartered Accountant and was admitted as a member of the ACCA in February 2019. Equally, it does not seem plausible that the principal, who oversaw all aspects of the business, including opening the physical post in the office, was totally unaware of the nature and extent of the work undertaken by the Complainant for private clients until July 2020, when he happened across the Complainant typing an email while working remotely.

Both witnesses were emphatic in their evidence to the Court about what was agreed between them in relation to carrying out private work. On balance, the Court accepts the evidence of Mr Brophy that he did not give express permission to the Complainant to use the firm’s tax agent link or letterhead stationery and is inclined towards the view that the Complainant clearly misunderstood the parameters of what was agreed.

The Complainant described his private client work as work conducted in an informal capacity under the banner of the firm. His evidence was that he did not believe that he was engaged in private practice work, as he did not advertise in his own name or have his own website or letterhead. When asked, the Complainant replied that he was unsure if his clients were misled when work prepared by him was presented in the firm's name. The Complainant is an experienced chartered accountant and, in the view of the Court, displayed a clear lack of judgment in relation to the nature and extent of the work he carried out for private clients. His own evidence was that, in hindsight, he was naïve.

The dismissal letter stated that he was dismissed for “misrepresenting private client work as being completed by the company and in the use of company stationery and livery for personal purposes”. Mr Brophy’s evidence was that trust is the bedrock of everything in accounting and his trust and confidence was broken. The Respondent operates in a highly regulated sector and the Court is satisfied that such a serious matter falls within the definition of Serious Misconduct.

The Court considers that the sanction of dismissal is a response which any reasonable employer would consider for such misconduct. However, the Court must also assess whether the dismissal was fair from a procedural perspective and a proportionate and appropriate sanction having regard to the specific facts of this case.

Mr Brophy’s evidence was that he followed as fair a process as possible and was guided by an external organisation, Graphite. There was an independent investigation and an independent appeals process. Mr Brophy said that there were enough checks and balances, as two-thirds of the process was outside of the company.

The Court notes that the Complainant was aware of the allegations in advance of the disciplinary hearing. He was offered the right to be represented during the hearing. The Complainant accepted that he had a fair opportunity to respond to allegations at the investigation, disciplinary and appeal stages. He availed of the right to appeal the decision to dismiss.

Notwithstanding the above the Court cannot accept the assertion that the disciplinary process fully complied with best practice. Having handed the investigation process over to Graphite, Mr Brophy then inserted himself into that process by participating in fact find meetings as a note taker; witnesses were interviewed after the investigation report was concluded; an additional allegation was added the day before the disciplinary hearing; the Complainant was not provided with a copy of the investigation report or the disciplinary procedure and a request for an adjournment to review the witness statements and take advice was refused. However, on the facts as presented, the Court does not find that these procedural flaws were so significant as to render the dismissal to be unfair, as there was an opportunity to address and remedy those issues during the disciplinary process.

In any disciplinary hearing an employee has the right to a fair and impartial determination of the issues concerned, which takes into account any representations made and any other relevant evidence.

The disciplinary hearing was conducted by Mr Brophy who said that he was the most appropriate person to conduct the hearing as he was a sole practitioner and the most senior person in the firm. He was not, however, impartial. He elected to chair the disciplinary meeting and was the ultimate decision maker notwithstanding the fact that he was the primary witness against the Complainant. His own evidence was that his mind was made-up from the start when he suspended the Complainant after seeing documentation issued in the firm’s name. His evidence was that he had completely lost trust in the Complainant “who had been so dishonest and so underhand that he could not trust him.”

Mr Brophy said that he considered mitigating factors, however, he did not. His own evidence was his mind was made up from the outset and nothing could mitigate the loss of trust. He concluded that there were no mitigating factors when reaching the decision to dismiss.

That decision to dismiss was made without regard to the several mitigating factors including: the Complainant’s length of service, with no prior issues; the fact that the Complainant did not deny undertaking private work, which was allowed under the terms of his contract of employment; the absence of any policy or checks and balances regarding private work; the fact that the Investigation Report recommended that a written policy be put in place to outline and define the parameters that staff must follow if they are undertaking work for private. Furthermore, the Court further notes that after the dismissal Mr Brophy gave a positive reference to the Complainant’s new employer. He said that he told the new employer what had happened, and that the Complainant was a capable employee.

The dismissal was upheld on appeal. Mr Hannaway, an independent third party who heard the appeal, acknowledged in the outcome letter that there was no attempt by the Complainant to deny what had happened and no evidence of fraud. In rejecting the appeal, Mr Hannaway found that the Complainant remained unaware of the significant professional impact of his actions. Although he took account of the Complainant’s length of service, he found that his service was offset by the other issues relating to “working from home and the apparent falsification of the timesheet”. The Court notes those other issues did not overly concern Mr Brophy, whose evidence to the Court was that they would have been sorted. The sole reason for the dismissal was misrepresenting private client work in the firm’s name.

The Court acknowledges that small companies can face particular challenges when dealing with disciplinary matters and may need to balance the right to fair procedures against other considerations. However, the small size of a company does not mean that a fair process need not apply. For this reason, the Court assesses each case before it on its own merits. The Court accepts that in this case efforts were made by the Respondent to ensure the fairness of the process. However, for the reasons outlined, the Court does not find that the actions of the Respondent in terminating the Complainant’s employment was procedurally fair or impartial.

It is for the Respondent to demonstrate that, having regard to all of the circumstances, the dismissal was fair. Having regard to the band of reasonableness test, and the facts as set out in this case, the Court does not consider that the decision to dismiss was an impartial one or that due consideration was given to mitigating factors or to any alternative options to dismissal. Considering that fact, the Court concludes that the dismissal was not procedurally fair.

Redress

The Court enquired of the parties what their preferred remedy was under the Act if it determined the appeal were to succeed. Both parties expressed a preference for an award of compensation. The Court does not consider reinstatement or reengagement to be appropriate forms of redress in circumstances where the relationship between the parties has deteriorated so significantly and where the bond of trust was clearly broken. Section 7(1)(c) of the Act sets out the limit in respect of any award of compensation as follows:

(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 in 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, or

(ii) if the employee incurred no such financial loss, payment to the employee by the employer of such compensation (if any, but not exceeding in amount 4 weeks remuneration in respect of the employment from which he was dismissed calculated as aforesaid) as is just and equitable having regard to all the circumstances,”

The purpose of any award of compensation for unfair dismissal is to compensate for financial losses actually incurred because of the dismissal. There is no provision for including an amount intended as a punitive award. The limit of 104 weeks’ remuneration is a limit on the total amount of compensation that can be awarded, rather than in respect of the time for which loss can be claimed. 

Financial loss and determining the compensation payable

Section 7(3) of the Act defines financial loss as follows:

“In this section— “financial loss”, in relation to the dismissal of an employee, includes any actual loss and any actual loss and any estimated prospective loss of income attributable to the dismissal and the value of any loss or diminution, attributable to the dismissal, of the rights of the employee under the Redundancy Payments Acts 1967 to [2014], or in relation to superannuation;

“remuneration” includes allowances in the nature of pay and benefits in lieu of or in addition to pay.”

The total loss of earnings asserted by the Complainant amounts to €24,791.84 comprising (i) a monthly loss of pay was €133 (i.e. the difference between his gross monthly salary of €4,800 when employed by the Respondent and his gross monthly salary of €4,667 when he secured employment with another accounting firm in October 2020), (ii) annual bonus earnings of €7,200, (iii) employer pension contributions of €3,600 and (iv) regular expenses €10,999.20 and (v) disputed annual leave deduction of €997. The Respondent disputed aspects of those losses. There was disagreement between the parties and a lack of clarity at the hearing about the components that make up the loss of earnings suffered by the Complainant for his unfair dismissal.

In determining the amount of compensation payable under the Act the Court is obliged to consider a number of different factors. Section 7(2) of the Act sets out as follows:-

“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) the extent (if any) to which the financial loss referred to in that subsection was attributable to an act, omission or conduct by or on behalf of the employer,

(b) the extent (if any) to which the said financial loss was attributable to an action, omission or conduct by or on behalf of the employee,

(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,

(d) the extent (if any) of the compliance or failure to comply by the employer, in relation to the employee, with the procedure referred to in subsection (1) of section 14 of this Act or with the provisions of any code of practice relating to procedures regarding dismissal approved of by the Minister,

(e) the extent (if any) of the compliance or failure to comply by the employer, in relation to the employee, with the said section 14, and

(f) the extent (if any) to which the conduct of the employee (whether by act or omission) contributed to the dismissal.”

The Court is obliged to consider the extent to which any financial loss incurred was attributable to an act, omission, or conduct, on the part of the employer or on the part of the employee.

In determining the amount of compensation, which is just and equitable, the Court also has regard to the contribution made by an employee to his or her own dismissal.  In this case, the Court is of the view that the Complainant contributed significantly to his own dismissal. As an experienced chartered accountant, the Complainant lacked judgement in relation to the manner in which he undertook private work for three clients under the banner of the firm. 

Weighing all these factors, and having regard to all of the circumstances, the Court determines that the appropriate amount of compensation as just and equitable is €5,000.

Determination

The Court finds, for the reasons stated above, that the Complainant was unfairly dismissed. The appeal is well-founded.

The Court requires that the Respondent pay to the Complainant the sum of €5,000 being the amount that the Court considers just and equitable in all the circumstances.

The decision of the Adjudication Officer is varied accordingly. The Court so determines.

	Signed on behalf of the Labour Court
	Katie Connolly
CC	______________________
18th December 2024	Deputy Chairman

NOTE

Enquiries concerning this Decision should be addressed to Ceola Cronin, Court Secretary.