Complainant

Respondent

Parties

Michael  Kiely

Hyph Ireland Limited

Complainant

Respondent

Parties

Michael Kiely

Hyph Ireland Limited

Representatives

 O'Mara Geraghty McCourt Solicitors/Jason Murray BL

 Whitney Moore Law Firm/MP Guinness BL

Act

Complaint Reference No.

Date of Receipt

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

CA-00048926-001

03/03/2022

Complaint seeking adjudication by the Workplace Relations Commission under Section 12 of the Minimum Notice & Terms of Employment Act, 1973

CA-00048926-002

03/03/2022

The Complainant was CEO, Chairman, and founder of the Company.

In the initial statement of claim dated the 3rd of March 2022 the Complainant detailed that his pay period was fortnightly and his gross pay per fortnight was €13090 gross. He worked 40 hours per week.

He commenced employment with the Company on the 20th of June 2013 and his employment ended on the 19th of November 2021.

The Complainant alleged that his dismissal was contrived based on an allegation that his visa status did not comply with US law. On or about the 19th of November 2021 the Chief of Staff of Xhail Group in an email to the Complainant stated that the Complainant was no longer an employee of Xhail:

“Hello Mick Pursuant to Steve's email earlier and considering you are no longer an employee of Xhail, you are prohibited from accessing or entering Xhail premises by any means unless accompanied by an Xhail employee. Please understand it will be considered trespassing if you do so, and Xhail will not treat such an unlawful act mildly. Please let me know if you have any questions.”

 On the 20th of November 2021, the Complainant stated that he was locked out of the company premises of the Xhail Group and that his access to his email and other company information had also been blocked since then. In his claim form he stated that he was the CEO, director, and employee of Xhail Ireland Limited (formerly Score Music Interactive Limited) under a contract of employment dated 8th of February 2018 which is deemed to have commenced on 1st August 2013. The Complainant stated that it was his belief that the correct commencement date in fact was the 20th of June 2013, the date the Company was founded.

The Complainant based on his service also claims 4 weeks statutory notice or payment in lieu as provided for in his contract of employment.

I note that effective the 16th of August 2022 the company name changed from Xhail Ireland Limited to Hyph Ireland Limited. The Company Registration Office details the following changes in name:

·        Company Number: 529294

·        Company Name: Score Music Interactive Limited

·        New Name: Xhail Ireland Limited

·        Effective Date: 15th May 2021

And

·        Company Number: 529294

·        Company Name: Xhail Ireland Limited

·        New Name: Hyph Ireland Limited

·        Effective Date: 16th August 2022

The Respondent and Complainant Solicitors have confirmed that the correct legal entity is Hyph Ireland Ltd. I continue to use Xhail Ireland Limited in the narrative as that was the entity at the time of dismissal.

The Complainant’s submission solely relates to quantum of loss as the Respondent does not dispute that the Complainant was Unfairly Dismissed.

The Respondent has conceded that the contract is governed by Irish Law, Xhail Ireland Limited (the Respondent) that since the termination changed its name to Hyph Ireland Limited, was his employer, and the Respondent has conceded that the Complainant was unfairly dismissed.

As detailed in the WRC Complaint Form, the Complainant’s salary was €13,090.43 gross fortnightly.

The Complainant is 58 years old and has worked in the music industry and specifically in a business he founded in 2013 that merged his knowledge of that business with software development. It is difficult for a 58-year-old to rebuild what took many years to establish.

The Complainant was subject to a non-compete clause:

You covenant that you will not without the prior written consent of the Board (not to be unreasonably withheld) at any time during the continuance of this Agreement, and for the period of twelve month (less any Garden leave Period pursuant to Clause 9.3) following your Termination Date ( as defined below), however arising, directly or indirectly, either alone or jointly with or on behalf of any third party and whether on your own account or as principal, partner, shareholder, employee, consultant or in any other capacity whatsoever:

18.2.1 engage, assist or be interested in any business, trade, concern or commercial activity competing, taking preparatory steps to compete or intending to compete with the Company or any Group Company in the Prohibited Area in the Business.

The Complainant on or about February 2022 requested permission from the Respondent to form a new company to continue his innovative work. The Complainant stated that he was refused permission to commence a new company and/or to become a contractor of the Respondent.

During 2022 numerous meetings were held with the Respondent which the Complainant now believes were used to frustrate the Complainant’s options to mitigate his loss as the Respondent initiated these meetings and were not without prejudice discussions.

During the period of November 2021 to November 2022, the Complainant operated a holiday business from his home in County Clare and earned circa €10,000 during 2022 from this business.

As an artist the Complainant earned €2000.

After the Complainant’s non-compete clause expired, he began to network and explore new business opportunities.

The Complainant assesses his loss at €478K. The Complainant seeks compensation having regard to the nature of his dismissal and what he perceives to be oppressive conduct by the Respondent.

The Complainant relies on section 7 of the Act that allows the Adjudicator to look at all the circumstances including the conduct of the parties.

The Complainant has failed to mitigate his loss.

The Complainant is a musician and music producer and has provided no evidence that he engaged in a meaningful way to mitigate his loss.

It is denied that the Respondent refused the Complainant permission to form a new company.

There was no requirement to engage the Complainant as a contractor.

There are many areas where the Complainant could have worked both in music and technology that were not subject to the covenant clause or in direct competition with the Respondent.

The Complainant could also have looked outside his area of interest for a temporary period and chose not to.

In fact, the Complainant admits that he did set up a business which consisted of a period Courtyard Home and 6 self-catering cottages. This is a substantial business. This business could have been run successfully; however, the Complainant decided to stay in the US where he could not work and in turn this is the reason why his earnings during this period is relatively modest.

The Respondent stated that up until June 2021 the Respondent paid the Complainant an annual overseas allowance of $74,000.

In June 2021 the Complainant entered a lease for a 3-bedroom house costing $17,500 per month.

The Respondent lent the Complainant $210,0000 to assist him with this lease to be paid back in the short term when the Complainant sold shares.

The Company also lent the Complainant $60,000 to buy furniture.

The Complainant did sell a block of shares but never paid back the Company.

There is an alleged outstanding debt of $231,000 outstanding on the loans and are subject to a separate legal case in the US. The contested issue of a loan between the parties is being litigated separately in the United States of America.

The Complainant made a commitment to repay $3771 every fortnight by deduction in his payslip and this must be considered when determining his actual pay.

The failure to mitigate loss solely rests with the Complainant’s inertia. The facts as evidenced in detailed documents provided to the Court in the US, show that the Complainant believed that he would reach an agreement with the Respondent and arising from that assumption he made no effort to mitigate his loss.

The Respondent asked the WRC to have regard to Sheehan and Continental Administration Company Limited (UD858/1999) which stated as follows: “A Claimant who finds himself out of work should employ a reasonable amount of time each 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 find 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.”

In turn Sheehan has been affirmed by the Labour Court in UDD2242 Access IT CLG/Access IT And Miss Adrea Galgey and in UDD2238 between St John of God Hospital Limited and Ms Catherine McDowell.

The Complainant and Respondent have accepted that the law governing this contract is the Unfair Dismissals Act 1977 as amended and the body to adjudicate on the dispute is the Workplace Relations Commission.

The Complainant gave oral evidence at the hearing to assess quantum.

While a Financial Controller attended at the hearing, he was not party or present at meetings when the Complainant and Mr Max Renard who as a director and executive of the Group in the United States (based on the Complainant’s sworn account) entered into agreements where accommodation was a benefit. It is also alleged that Mr Max Renard a senior executive in the Group initiated the removal of the Complainant as a Chairman, director and ultimately as CEO of Xhail Ireland Limited.

Mr Renard could have given his evidence by remote hearing and did not.

The Complainant states that his Financial Loss based on the facts of this case runs from the date of termination on the 19th of November 2021 until the 1st of May 2023.

He states that during this period his Financial Loss is €477,720.

The Complainant’s sworn oral evidence that he was denied permission to commence a new company must be accepted by the Workplace Relations Commission (WRC) and that he was held to the restrictive covenant in his contract of employment, as no evidence to rebut this was given at the hearing.

The Complainant also denied that he entered into any loan agreement between himself and the Respondent for the sum amounting to the current estimate debt of $231,000 subject to separate court proceedings.

On the evidence given to the WRC the conduct of the Respondent was oppressive and caused very significant financial hardship having regard to the manner of his dismissal.

It is a well-accepted principle that the Employer and Employee share a mutual obligation of trust and confidence. On the oral evidence this trust, and confidence was breached in a particularly cruel manner. In terms of financial loss and totally separate to distress caused to him and his wife which does not form part of my assessment of financial loss, the manner of his summary dismissal did impact on his ability to mitigate his loss and extended the time for him to commence his new venture. The separate holiday home business also was severely impacted by the Covid Pandemic.

In JVC Europe Ltd v Jerome Ponisi [2012] 23 E.L.R. 70 Charleton J. stated that Unfair Dismissals Act required Financial Loss to be determined as follows:

27. This section clarifies the consideration that is to be given to compensation for unfair dismissal. Payments under social welfare and income tax legislation are to be disregarded. In assessing compensation, the court should have regard to the implications for dismissal. My task is to assess the financial damage which the dismissal has brought about and then to place the measure of that damage against the maximum amount of compensation that is available. In the event that the compensation that is available, amounting to 104 weeks remuneration, is less than that sum, then that is the measure of damages. Where the quantum of damage is more, then the jurisdiction is limited to that maximum and the amount of damages must thus be reduced to that maximum sum. Where the measure of damages on dismissal is more than the maximum but contributory fault is found in respect of the dismissal against the employee, the reduction is on the totality of those damages, and not on the maximum award. If the result is to reduce compensation within the maximum award, that sum is appropriate. Where the reduction in total damages for contributory fault puts the damages above the maximum award, then the maximum award is the correct measure of compensation for unfair dismissal

My task is to assess the financial damage which the dismissal has brought about subject to the maximum amount of compensation that is available.

The payslips opened to the Commission cover a 230-day period and the last payslip states that earnings to date were:

·        Regular     $199446.15

·        Holiday      $     1476.92

·        Allowance $    15558.99

·        Total           $ 216,482

·        230 days = 33 weeks then average fortnightly pay = $6560 weekly x 2= $13120 based on dollar conversion of .92= €12070

The period of loss is stated to commence on the date of termination on the 19th of November 2021 and ran until the 1st May 2023 which equates to 529 days and converts to 75.6 weeks= 37.8 fortnight periods= 37.8 x €12070 = €456,246.

 The Complainant assesses his Financial Loss to be €477,720.

I note that in In Redmond on Dismissal Law 3rd edition at 24. 31:

‘The legislation does not envisage the deciding body being required to always, or perhaps ever, engage in calculation or mathematical formula by which it determines the extent of the financial loss exclusively to reference by weekly remuneration of an employee’ (Brady v Minister for Social Protection [2016] IEHC 553 Baker J at paragraph 23.

I assess Financial Loss to be of the order of €460,000 adjusting for the fact that the averaging provides an estimate over a relatively long period.

The Complainant was subject to a 12-month restrictive covenant.

The Complainant was a successful entrepreneur and has every right to pursue that goal to re-establish himself in a similar role that he was dismissed from. He has used his time well to do this. It is not reasonable that he compromises that legitimate goal and accept any work that detracts from that objective. The Complainant has now set up a new business and claims for 17 months compensation. There is an obligation to mitigate his loss and I adjust the total loss by an amount equivalent to average industrial weekly earnings of €1000 per week for a period of 5 months an amount that =€20,000. It is not reasonable that he could be expected to mitigate his full loss considering the restrictive covenant. I have had regard to the fact that his holiday business commenced during Covid and that had a limiting effect on what he could earn. It is also a joint business with his wife.

He claims 17 months of loss based on a date where he has begun to trade again.

He has not claimed for future loss.

The obligation to mitigate is just one factor to be considered when determining compensation and not the sole factor.

`I note in Dismissal Law the following:

In Sheehan v Continental Administration Co Ltd 114 the EAT endorsed the position set out in the second edition of this work that ‘[a] claimant who finds himself out of work should employ a reasonable amount of time each weekday in seeking work ... The time that a claimant finds on his hands is not his own, unless he chooses it to be, but rather [is] to be profitably employed in seeking to mitigate his loss.’ 115 This passage was recently adopted and applied by the Workplace Relations Commission in deeming a claimant to have made insufficient effort to mitigate his loss. 116

Where the complainant has been unavailable for work and thereby has not availed of opportunities to mitigate his or her loss, compensation will normally be reduced accordingly.

In Redmond on Dismissal Law 3rd edition at:

[24.72]

The common law rule of mitigation of damages applies to compensation for unfair dismissal. Questions of mitigation are questions of fact. The burden of proof lies on the party seeking to allege that another has failed to mitigate loss. 111 Sir John Donaldson explained the duty in AG Bracey Ltd v Iles: 112

‘The law is that it is the duty of a dismissed employee to act reasonably in order to mitigate his loss. It may not be reasonable to take the first job that comes along. It may be much more reasonable, in the interests of the employee and of the employer who has to pay compensation, that he should wait a little time. He must, of course, use the time well and seek a better paid job which will reduce this overall loss and the amount of compensation which the previous employer ultimately has to pay.

The test to be applied is an objective one in determining if the employee acted reasonably to mitigate loss.

I also note in Dismissal Law the following:

[24.67]

When determining compensation, the WRC must take into account all the circumstances of the case, according to the Supreme Court in Carney v Balkan Tours Ltd. 106 Section 7(1) coupled with s 7(2)(d) allow the adjudication body to look at all the circumstances including the conduct of the parties prior to dismissal.

And:

The Supreme Court 107 held on a case stated from the Circuit Court that:

(1) There was no doubt that the conduct of an employee was material in determining his or her rights to redress under the 1977 Act.

(2) Under s 6 of the 1977 Act, if the dismissal resulted wholly or mainly from the conduct of the employee there would be no right to redress whether by way of reinstatement or compensation. The Court remarked: ‘Indeed one of the surprising features of the present case is that the EAT having found that the claimant “contributed substantially towards her dismissal” ... had satisfied themselves that the employee had not contributed wholly or mainly to her dismissal.’

(3) The discretion conferred upon the tribunal (or other adjudicating body) by s 7 of the 1977 Act in relation to the computation of a payment by way of compensation was very wide.

On the facts of this case and in particular the restrictive covenant and making an adjustment of €20,000 for a period of 5 months where the Complainant could have mitigated his loss, I assess financial loss to be €440,000 and order that amount to be paid as compensation to the Complainant.

The Complainant was summarily dismissed without notice.

He commenced employment with the Company on the 20th of June 2013 and his employment ended on the 19th of November 2021.

He is entitled to notice as follows:

Minimum period of notice.

4.—(1) An employer shall, in order to terminate the contract of employment of an employee who has been in his continuous service for a period of thirteen weeks or more, give to that employee a minimum period of notice calculated in accordance with the provisions of subsection (2) of this section.

(2) The minimum notice to be given by an employer to terminate the contract of employment of his employee shall be—

c) if the employee has been in the continuous service of his employer for five years or more, but less than ten years, four weeks,

Based on a fortnightly salary of € 12070 and an entitlement to 4 weeks’ notice I award €24,000 in compensation for the Respondent failure to give adequate notice.

Section 12 of the Minimum Notice & Terms of Employment Act, 1973 states that:

12. (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 4(2) or 5 may, where the adjudication officer finds that that section was contravened by the employer in relation to the employee who presented the complaint, include a direction that the employer concerned pay to the employee compensation for any loss sustained by the employee by reason of the contravention.

I determine that this complaint is well founded and direct that the Respondent pay to the employee compensation of €24,000.

CA-00048926-001 Unfair Dismissal:

The Respondent concedes that the Complainant was unfairly dismissed.

I have considered re-instatement and re-engagement however, in the circumstances of this case where it clear that the mutual obligation of trust and confidence has been fundamentally fractured these are not appropriate remedies.

On the facts of this case such as the level of remuneration, the restrictive covenant in the employment contract and the Respondent’s representations relating to mitigation and making an adjustment of €20,000 for a period of 5 months where the Complainant could have mitigated his loss, I assess financial loss to be €440,000 and order that amount to be paid as compensation to the Complainant.

 Mitigation is only one factor to be considered; however, in this case the Complainant by commencing a new business venture has in fact significantly mitigated his loss having regard to the maximum compensation provided for in the Act that could include future loss. What is more remarkable is that a 58-year-old music entrepreneur has re-established himself in a competitive business in about 17 months. That demonstrates considerable effort and tenacity, and that time was used well.

I have determined that the Complainant has been unfairly dismissed and based on assessing his financial loss to be €460,000 over 17 months prior to any adjustment and considering his remuneration level; the effect of the restrictive covenant; the very reasonable period which the Complainant took to establish a new business which reduced his loss and adjusting this figure for a limited period for not fully mitigating his loss by €20,000, I assess the loss to be €440,000 and order the Respondent to pay the Complainant €440,000 in compensation.

CA-00048926-002 Minimum Notice:

He commenced employment with the Company on the 20th of June 2013 and his employment ended on the 19th of November 2021.

Section 12 of the Minimum Notice & Terms of Employment Act, 1973 states that:

12. (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 4(2) or 5 may, where the adjudication officer finds that that section was contravened by the employer in relation to the employee who presented the complaint, include a direction that the employer concerned pay to the employee compensation for any loss sustained by the employee by reason of the contravention.

I determine that this complaint is well founded and direct that the Respondent pay to the employee compensation of 4 weeks’ notice = €24,000.

Restrictive Covenant-Mitigation