Complainant

Respondent

Parties

Paul  Madden

Net Beo Teoranta Clubforce

Complainant

Respondent

Anonymised Parties

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Representatives

 MacSweeney & Company Solicitors

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-00052527-001

31/08/2022

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

CA-00052527-002

31/08/2022

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

CA-00052527-003

01/09/2022

Complaint seeking adjudication by the Workplace Relations Commission under Section 39 of the Redundancy Payments Act, 1967

CA-00052527-004

01/09/2022

The Complainant swore an affirmation at the opening of the hearing.

The Respondent presented the evidence of one witness, Noel Murray, CEO, who gave evidence on affirmation.

Submissions were exchanged between the parties. Both the Complainant and Respondent availed of the opportunity to cross examine.

It was the Complainant’s case that he was unfairly dismissed by reason of redundancy and payment of wages were outstanding.

It was the Respondent’s position that there is no dispute the Complainant was dismissed by way of redundancy which was based on a reasonable rationale of downsizing the headcount due to budgetary reasons.

CA-00052527-001- Payment of Wages Act, 1991

It was the Complainants evidence that he was not paid in lieu of notice in accordance with his contract of employment where he was dismissed from his employment on 8 August 2022.

CA-00052527-002- Unfair Dismissals Act, 1977

The Complainant provided evidence that he was dismissed from his employment on 8 August 2022 following an unfair process.

In addressing the Respondent’s submissions, the Complainant disagreed with the presentation of the target growth figures.

The Complainant gave evidence of the lack of consultation he had with the Respondent and receiving his letter of termination on a Friday night at 11.30 pm. It was the Complainant’s evidence that the Board or SLT were not consulted about the redundancies, and instead, the CEO handpicked key talent for redundancy. It was his evidence that this was a unilateral decision made by the CEO who acted without the necessary redundancy procedures, including selection criteria.

It was the Complainant’s evidence that the Respondent had not produced any evidence of alternatives to redundancy. The Complainant said that a new role had been created the day after he left the company in what he said was an attempt to sideline him. It was the Complainant’s evidence that the announcement that his role had been made redundant came before the appeal window had closed.

It was the Complainant’s evidence that there was no business case put forward for the redundancy, no fair and proper procedures applied. Instead, redundancy was sprung on him during a one-to-one. There was no progress with the appeal, and it was put on hold until the CEO came back from holiday. He felt he was forced to withdraw from the appeal as it was not in good faith and was delayed.

The Complainant relied on JVC Europe Ltd v Ponisi [2011] IEHC 279, Jeffers v DDC Ireland Ltd. UD 169/2000, Keogh v Mentroy Limited UD 209/2009, Mulligan -v- J2 Global (Ireland) Ltd (UD/993/2009), Williams -v- Comp Air (1982) 1 ICR 156, Tracey Ring -v- Student Facilities & Services (UCC) Designated Activity Company (DAC) T/A Unisalon (ADJ-00037197), Component Distributors (CD Ireland) Ltd -v- Brigid (Beatrice) Burns UDD1854, Pauline Kurapatika -v- Home Again (ADJ-00032711)

CA-00052527-003- Payment of Wages Act, 1991

It was the Complainant’s evidence that this payment was due on 26 August 2022 but was not received until the end September 2022. The total sum sought is €9,225 which was made up of annual leave, notice pay and wages.

The Complainant gave evidence that he was left for an extended period without pay which was in breach of his contract of employment.

CA-00052527-004- Redundancy Payments Act, 1967

It was the Complainant’s complaint that he did not receive his redundancy payment at the time of filing his complaint with the Workplace Relations Commission but subsequently received his statutory redundancy.

CA-00052527-001- Payment of Wages Act, 1991

It was the Respondent’s position that the Complainant was paid in full.

CA-00052527-002- Unfair Dismissals Act, 1977

Mr. Murray was appointed as CEO in June 2022. He provided evidence of the Respondent’s financial position prior to, during, and after the Covid-19 pandemic. In particular, he presented detailed evidence based on documents presented at the hearing, including financial accounts and the cost of manpower in the business. Mr. Murray outlined the refusal of a bank loan on 6 September 2022, which the Respondent unsuccessfully appealed. There was oral evidence of attempts to seek investments from a private investment group.

Mr. Murray gave evidence on the considerations around the reduction of wages across the company. His testimony indicated that this was not considered a viable option, given the economy was at full employment, and a salary reduction would result in the loss of key talent. Layoff, short-time, and part-time options were also considered, but the Respondent did not believe these to be workable, especially in a stock-based business with high demand. Mr. Murray believed that reduced working would have only compounded the problem.

In Q3 of 2022, Mr. Murray's evidence stated that nine employees were let go, and within 6-8 weeks, eight found alternative employment. He explained that some resignations occurred, and these positions were not filled. In terms of the organizational structure, there was a decision to focus on sales. Mr. Murray, with experience in this area and a marketing background, took control of these areas. The Complainant had oversight of these areas, and the new organizational structure aimed to resize the Respondent to ensure its viability and retain others in their roles. It was Mr. Murray’s evidence that redundancy was a last resort.

Regarding the consultation process, Mr. Murray provided evidence of meeting the Complainant on 19 July during his weekly 1-1 meetings, where he informed him that his role was at risk. Minutes were taken at the meeting and shared with the Complainant. It was Mr. Murray’s evidence that the redundancy was unrelated to the Complainant’s performance; it was purely a reorganization.

The next meeting on 26 July 2022 was described as "lengthy" by Mr. Murray. During that meeting, the Complainant was given the opportunity to present alternative structures and engage with the process. Mr. Murray confirmed that a final decision had not been made at that time. When asked about the selection process, Mr. Murray stated there was none given that there was only one person in the position.

Mr. Murray referred to an email received from the Complainant on 29 July 2022, following their meeting, stating that he understood the need to restructure. While the Complainant expressed that the redundancy process seemed a foregone conclusion, he discussed an appropriate financial settlement reflecting his role within the company. There were focused discussions between the parties on the ex-gratia payment and purchase of stock options after this email. These discussions were unsuccessful, and a termination letter was issued on 5 August 2022.

On 9 August 2022, the Complainant accepted the ex-gratia offer, and a message was sent to employees on Slack announcing the organizational change resulting from the Complainant’s redundancy. On 12 August 2022, the Complainant lodged his appeal to the decision to make him redundant. On the same day, Mr. Murray gave evidence acknowledging the email and advised he would appoint an Appeals Officer. It was Mr. Murray’s evidence that due to the time of year, it proved difficult to identify a suitable person to hear the appeal. On 19 August 2022, Mr. Murray wrote to the Complainant and the Appeals Officer outlining the process.

On 31 August 2022, the CEO circulated the document to the Complainant and the Appeals Officer. Mr. Murray accepted it was 8 days later than he had hoped, attributing the delay to the document's length and his holiday during that time. By email on 31 August 2022, the Complainant notified Mr. Murray that he was withdrawing his appeal on the basis of unreasonable delay. Mr. Murray noted that the WRC complaint form was lodged the same day.

There was evidence that a further senior position was made redundant around the same time as the Complainant’s consultation process. There was an appeal, and the parties found common ground. The Respondent continues to trade today with further restructuring. The Complainant examined the witness on the company's financials and what was discussed at the board meetings prior to July 2022. It was the Respondent’s evidence that the expected investment did not materialize, nor were the sales achieving the targets. Mr. Murray was questioned on the timing of the termination letter and the time it took to arrange the appeal. The witness was also asked about alternatives to redundancy.

The Respondent provide detailed legal submissions relying on the decisions of Ledger v Frontline Distributors Ireland Ltd [1995] 6 ELR 160, Moloney v W Deacon & Sons Ltd  [1996] 7 ELR 239, Dower v Waterford Star UD151/2010, Ahmed v Trinity College Dublin UDD2030, and Sheehan v Continental Administration Co Ltd, UD 858/1999.

CA-00052527-003- Payment of Wages Act, 1991

Payment in lieu of notice was paid but at the time the complaint form was submitted to the WRC, the Respondent was holding payment until the outcome of the appeal. It has been subsequently paid but was taken from 5 August 2022 rather than 8 August 2022.

CA-00052527-004- Redundancy Payments Act, 1967

The Respondent’s witness confirmed that statutory redundancy payment has been made. It was on hold until the outcome of the appeal.

CA-00052527-001- Payment of Wages Act, 1991

I find that while it was a shock and very short notice to the Complainant that he would not receive payment less than 24 hours in advance, there is a reasoned explanation why his notice pays and annual were withheld. In the Respondent’s email for 25 August 2022, the CEO explains that where the appeal is ongoing, it would not be correct to make such payments until its outcome. These payments are made upon termination of employment and where the Complainant sought reinstatement , it would be premature for the payments to be made in advance of the outcome of the appeal.

CA-00052527-002- Unfair Dismissals Act, 1977

Dismissal is not at issue between the parties. It is agreed that the Complainant was dismissed on 8 August 2022 by the Respondent. Similarly, the meetings and emails between the parties exchanged during the redundancy consultation process are not in dispute. Therefore, the only question before me is limited to whether the dismissal by way of redundancy was fair?

Section 6 (3) and (4) of the Unfair Dismissal Acts 1977-2015 provide:-

“(3) Without prejudice to the generality of subsection (1) of this section, if an employee was dismissed due to redundancy but the circumstances constituting the redundancy applied equally to one or more other employees in similar employment with the same employer who have not been dismissed, and either—

(a) the selection of that employee for dismissal resulted wholly or mainly from one or more of the matters specified in subsection (2) of this section or another matter that would not be a ground justifying dismissal, or

(b) he was selected for dismissal in contravention of a procedure (being a procedure that has been agreed upon by or on behalf of the employer and by the employee or a trade union, or an excepted body under the Trade Union Acts, 1941 and 1971, representing him or has been established by the custom and practice of the employment concerned) relating to redundancy and there were no special reasons justifying a departure from that procedure,

(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.

then the dismissal shall be deemed, for the purposes of this Act, to be an unfair dismissal.”

In terms of the Redundancy Payments Act 1967 (as amended) Section 7 (2) (c )provides:

“(2) For the purposes of subsection (1), an employee who is dismissed shall be taken to be dismissed by reason of redundancy if for one or more reasons not related to the employee concerned the dismissal is attributable wholly or mainly to—

(c) the fact that his employer has decided to carry on the business with fewer or no employees, whether by requiring the work for which the employee had been employed (or had been doing before his dismissal) to be done by other employees or otherwise, or”

Consultation period

From a procedural and fairness perspective, the Complainant submitted that the initial at-risk meeting should not have been sprung on him at the meeting on 19 July 2022. There is no dispute that he was not on notice of redundancy prior to this meeting. While it is entirely understandable that redundancy is a difficult prospect for people, being told that your position is at risk on a face-to-face basis rather than through an email or letter is far more personable. He was given a letter following that meeting to provide the necessary information along with the minutes he approved.

A further meeting was held on 26 July 2022 with the CEO and the Complainant where there were many questions and proposals but directed to the CEO. Again, this was followed up with minutes that were approved.

The timing of the letter of termination on 5 August 2022 at 11.30 pm on a Friday night was less than ideal. However, it is accepted that this was not intentional on the part of Mr. Murray and instead was a result of his laptop not syncing. In light of the rationale for a face-to-face meeting with the Complainant on 19 July 2022, it is somewhat surprising that the decision to make the Complainant’s role redundant was not delivered with the same courtesy.

Between 8 August 2022 and 9 August 2022, the Complainant appears to change his mind as to whether he is accepting the ex-gratia payment or appealing the decision on three separate occasions. The complaint that an announcement was made before the time for lodging an appeal expired is not accepted, as the Complainant himself wrote an email at 13:23 on 9 August 2022 accepting the redundancy package. Based on this email, the Complainant took issue with the promotion of the National Sales Manager to the Director of Sales on 9 June 2022 with a salary increase, which was done without the Complainant’s knowledge and in advance of redundancies of two roles, is questionable. However, from his documentation, it was clear the Complainant was aware of the change in the sales strategy from at least 20 July 2022 by his reference to the Sales Group on Slack. The Complainant raises it again in his meeting of 26 July 2022 and, in particular, questions the salary increases. The Respondent simply notes this but does state “he intends to remove the layer and to communicate directly with the team.” It appears no express confirmation of the promotion comes until the company-wide message on 9 August 2022, after the Complainant accepted the redundancy package. It is further noted that this matter was not put to the Respondent’s witness in cross-examination, and therefore, the evidence is limited to the minutes and letters presented in evidence. Saying that the Respondent's reasoning for redundancy is based on Section 7(2)(c), which does allow for an employee’s work to be absorbed by fellow employees, in this case, the CEO and the Director of Sales.

The EAT in Kinwell V Bradley Designs Ltd ( EAT 0661/02)

“Redundancy can occur where there is a successful employer with plenty of work, but who perfectly sensibly as far as commerce and economics is concerned, decides to reorganise his business because he concludes he is overstaffed. Thus, even with the same amount and the same amount of income, the decision is taken that a lesser number of employees are required to perform the same function. That too is a redundancy situation “

Appeal

The Complainant’s detailed appeal was sent to the Respondent on 12 August 2022, which includes queries about the announcement on 9 August 2022 regarding the sales positions. It does accept that this “may have delivered some cost savings” but not redundancy.

It is accepted by the Respondent that there was somewhat of a delay in the appointment of an Appeals Officer and the submission of the Respondent’s detailed document as to the reason for the dismissal. The Complainant’s evidence suggests that he was forced out of the appeal procedure due to the fact that 13 days after he submitted his appeal, he had no communication from the Respondent.

The Adjudication Officer in the recent decision of Edward Timmins v AB Group Packaging Ireland Limited ADJ-00030801 was critical of a Finance Director’s failure to engage with the appeals:-

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

There are parallels with this case, but I would go a step further and state that the Complainant, in this case, could have raised the commercial points and alternatives to redundancy with the Appeals Officer but instead chose to raise them before the WRC. While it is necessary to examine the reasons for the redundancy in such a case, it is evident that this complaint has been brought on the basis that the commercial negotiations around an ex-gratia payment and the valuation of share options were not to the satisfaction of the Complainant. The Complainant, in this case, acted in haste in referring his complaint to the WRC rather than concluding the appeals process. Where he was seeking a better exit deal, this may have been the forum to achieve his aim. The jurisdiction of the WRC is limited to the question of whether the redundancy was genuine, and fair procedures were followed as provided for in the Unfair Dismissals Act.  This applies to both the Complainant and Respondent. It does not extend beyond those parameters. In this case, I do find that the redundancy was genuine, and fair procedures were followed for the reasons outlined above.

Consequently, I do not find the Complainant was unfairly dismissed.

CA-00052527-003- Payment of Wages Act, 1991

I find the Complainant’s date of termination was 8 August 2022 and not 5 August 2022 and in accordance with his contract of employment at Clause 16.3 he is entitled to 28 days’ notice. I find the Complainant is entitled to one days’ wage of €346.15.

CA-00052527-004- Redundancy Payments Act, 1967

The payment of statutory redundancy was made to the Complainant. This is not now in dispute. Consequently, the complaint is not well founded.

CA-00052527-001- Payment of Wages Act, 1991

I find the complaint is not well founded.

CA-00052527-002- Unfair Dismissals Act, 1977

I do not find the Complainant was unfairly dismissed.

CA-00052527-003- Payment of Wages Act, 1991

I find the complaint is well founded and the Complainant is entitled to one days’ wage of €346.15.

CA-00052527-004- Redundancy Payments Act, 1967

I find the complaint is not well founded.

Redundancy- Unfair Dismissal