ADJUDICATION OFFICER DECISION

Adjudication Reference:  ADJ-00051206

Parties:

Complaints:

Date of Adjudication Hearing:  17/06/2024 & 28/10/2024

Workplace Relations Commission Adjudication Officer:  Aideen Collard

Procedure:

These complaints were referred under Section 41 of the Workplace Relations Act 2015, Section 8 of the Unfair Dismissals Act 1977 and Section 39 of the Redundancy Payments Act 1967 to the Workplace Relations Commission (hereinafter ‘WRC’) on 26th February 2024 and 29th April 2024.  Following delegation to me by the Director General, I inquired into these complaints and gave the Parties an opportunity to be heard and to present any relevant evidence.  The complaints were heard by remote hearing on 17th June 2024 and 28th October 2024.  As a matter of public record, the Respondent had ceased trading from 26th February 2024 following the arrest of its CEO.  Initially, the CFO indicated that she had requisite knowledge of the Respondent’s affairs to partake in these proceedings but thereafter declined to attend both hearings.  I satisfied myself that the Respondent was properly on notice of both hearings and had the remote hearing-links.  Follow-up phone-calls to the CFO to join the hearings by WRC Concierge were unanswered.  Both hearings were held in public and the Parties were made aware that their names would be published in the decision herein.  The Complainant who was self-represented attended both hearings and gave evidence under affirmation.  He confirmed withdrawal of the redundancy complaint ref: CA-00061821-009 to pursue a complaint of unfair dismissal.  Complaint ref: CA-00061821-002 was amended to a complaint under Section 6 of the Payment of Wages Act 1996 to reflect the complaint specific details within the complaint form.  The Complainant furnished detailed information and documentation vouching his complaints.  No submissions or documentation was ever received on behalf of the Respondent setting out its position.  I have considered all of the evidence, submissions and documentation proffered within this decision.

Background:

The Complainant has extensive work experience in the food service and third-level qualifications in IT.  He commenced employment with the Respondent as a Digital Transformation Specialist on a fixed-term contract between 8th June 2021 and 31st August 2021 whilst undertaking further third-level studies in IT.  He reported to the CEO, also a Director.  The fixed-term contract was extended until 29th May 2022 when he became a permanent employee as Head of IT and Procurement for the Respondent.  He was employed three days per week on an annual salary of €50,000 or €962 gross per week at the material time of these complaints.  The Respondent operated a garden centre and restaurant at Ballyseedy, Tralee, Co. Kerry along with four other cafes/restaurants around the Country.  The Complainant was responsible for the installation and maintenance of IT, procurement and stock control systems for all of the Respondent’s five sites and the provision of training on same.  His employment was terminated on 13th January 2024 on the purported ground of redundancy.  He claims that he was never furnished with an updated contract of employment, was unfairly placed on short-time and had his wages unilaterally reduced in breach of his contract of employment, was not afforded his correct annual leave entitlement or paid in lieu of same and was unfairly dismissed on the purported ground of redundancy.  To date, he has not been paid a statutory redundancy payment or payment in lieu of his annual leave or minimum notice following the termination of his employment.  The Complainant seeks compensation by way of remedy in relation to all complaints.

CA-00061821-001 - Complaint under Section 7 of the Terms of Employment (Information) Act 1994 – Not notified with changes to terms of employment

Summary of Complainant’s Case:

The Complainant confirmed that he had received a fixed-term contract and extension of same for his role as Digital Transformation Specialist as furnished.  He was also furnished with a Company Handbook.  He had been instrumental in setting up the Respondent’s IT systems to adapt its business following the Covid-19 Pandemic.  Management was happy with his work and he was made permanent from 29th May 2022 in the enhanced role of Head of IT and Procurement.  He took a note of the terms agreed which included moving from €20 gross per hour to an annual salary of €50,000 gross for a three day week.  This included two specified days and any other day of the week to cover IT emergencies.  His duties greatly increased to include responsibility for the Respondent’s IT system and procurement for all of its sites.  He also managed other staff including the marketing team from time to time when required of him.  According to the Complainant, the updating and renewal of staff contracts had lapsed after the HR Manager had left the Respondent.  The issue of updating staff contracts had come up in discussion with management on a number of occasions and the Complainant had also requested an updated contract reflecting his current terms.  Eventually, the Respondent engaged the services of a HR Consultancy.  The Complainant did not receive an updated contract of employment until December 2023.  In the interim, another Director and CFO had unilaterally placed him on short-time on one day a week for a period of eight weeks between September and November 2023 without pay for the remaining two days citing financial issues and had then placed his role at risk of redundancy.  He had no recourse to any terms and conditions within his contract of employment regarding same.  These issues are addressed in more detail within the complaints hereunder.  The contract as furnished was also incorrect in a number of material respects including containing the Complainant’s former title, wrong working days and included a probation period.  He raised these issues with the CFO but was never provided with a correct copy or notified in writing of the nature and date of the changes upon his employment becoming permanent.  He was also adversely affected in other respects including non-receipt of his correct annual leave entitlement.  In this respect, he submitted that the Respondent had acted in contravention of the Terms of Employment (Information) Act 1994.

Summary of Respondent’s Case:

The Respondent did not attend at either hearing to proffer any evidence in rebuttal of this complaint.

Findings and Conclusions:

Section 5(1) of the Terms of Employment (Information) Act 1994 provides: “Subject to subsection (2), whenever a change is made or occurs in any of the particulars of the statement furnished by an employer under section 3, 4 or 6, the employer shall notify the employee in writing of the nature and date of the change as soon as may be thereafter, but not later than- (a) the day on which the change takes effect, or…”  Based upon the Complainant’s credible evidence as corroborated with the correspondence and documentation furnished, I am satisfied on the balance of probabilities that he was never notified in writing of the nature and date of the changes constituting his permanent contract of employment.  Accordingly, there was a contravention of Section 5 of the Terms of Employment (Information) Act 1994.  I am further satisfied that the Complainant was wholly disadvantaged in terms of enforcing his employment rights. 

Decision:

Section 41 of the Workplace Relations Act 2015 requires that I make a decision in accordance with the requisite redress provisions.  For the aforesaid reasons, I find this complaint to be well-founded.  In addition to various remedies dealing with the provision / content of a written statement, Section 7(2) provides that an Adjudication Officer may “…order the employer to pay to the employee compensation of such amount (if any) as the adjudication officer considers just and equitable having regard to all of the circumstances, but not exceeding 4 weeks’ remuneration in respect of the employee’s employment calculated in accordance with the Regulations under section 17 of the Unfair Dismissals Act 1977.”  Noting the prejudice to the Complainant caused by the absence of a written contract, I direct a maximum sum of €3,848 (4 weeks’ remuneration) in compensation for the breaches as being just and equitable in all the circumstances.

CA-00061821-002 - Complaint under Section 6 of the Payment of Wages Act 1996 – Unilateral deductions from wages and non-payment in lieu of notice

Summary of Complainant’s Case:

On 24th August 2023, the Complainant was called at short notice to a meeting with the CFO.  During the meeting, the CFO who was accompanied by a HR Representative outlined that the Respondent needed to reduce the overall wage bill owing to financial issues.  She asked him to accept a reduction in his hours from three days a week to one day a week in respect of which he would be paid a pro-rata reduction in wages.  She did not provide any financial information to support the contention that the Respondent was in difficulty.  Owing to his access to the Respondent’s financial information within the context of his role, the Complainant was aware that sales were up and the payroll was down.  Therefore he could not understand why the CFO was taking this course.  He surmised that the family wanted to get out of hospitality and were reducing costs to make the Company more attractive to a prospective purchaser.  At the same time, the Complainant did not have a written contract of employment providing for unpaid short-time.  He considered the matter and emailed the CFO to confirm that he would not be accepting the proposed changes to his contract.  The CFO emailed him back confirming that he was being placed on short-time from 4th September 2023 stating: “Please note this difficult decision has been made by the family as the Business Owners and is not a proposal for you to consider.”  His access to email had also been blocked curtailing his ability to undertake his work.  He was also placed under significant financial pressure owing to the unilateral 67% reduction in his wages and became unwell owing to the stress entailed.  He went on certified sick leave on the grounds of work-related stress between 9th October 2023 and 19th November 2023.  He raised various grievances against the CFO with the CEO and when he returned to work, his full hours, pay and email access were reinstated.  As a consequence of this unilateral reduction in pay, a total sum of €8,797 was deducted from his wages (after sick pay) contrary to the Payment of Wages Act 1991. 

The Complainant also confirmed that he was never paid monies stated as being due to him in a letter of dismissal dated 13th January 2024 including redundancy of €3,768 and payment in lieu of notice of €1,923.

Summary of Respondent’s Case:

The Respondent did not attend at either hearing to proffer any evidence in rebuttal of this complaint.

Findings and Conclusions:

It is necessary to examine the facts giving rise to this complaint in light of the relevant statutory provisions.  Section 1(i) of the Payment of Wages Act 1991 defines ‘wages’ in relation to an employee as “…any sums payable to the employee by the employer in connection with his employment, including- (a) any fee, bonus or commission, or any holiday, sick or maternity pay, or any other emolument, referable to his employment, whether payable under his contract of employment or otherwise, and (b) any sum payable to the employee upon the termination by the employer of his contract of employment without his having given to the employee the appropriate prior notice of the termination, being a sum paid in lieu of the giving of such notice:”  There is no issue in the instant case that the sum sought constitutes ‘wages’ under the Act.

In relation to deductions from wages, Section 5(1) of the Payment of Wages Act 1991 provides: “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.”  It is well-settled law that a reduction in wages constitutes a deduction from wages under Section 5 of the Act.  The remainder of Section 5 provides for other circumstances in which an employer can make a lawful deduction from an employee’s wages not applicable to the instant case.  Section 6 of the Act provides for the referral of complaints to the WRC and the available redress.

As stipulated in Marek Balans -v- Tesco Ireland Limited [2020] IEHC 55 approving Dunnes Stores (Cornels court) Limited -v- Lacey [2007] 1 1R 478, a decision-maker must firstly determine what wages are properly payable under the employment contract before determining whether there has been a deduction under Section 5 of the Payment of Wages Act 1991.  In the instant case, I am satisfied that the Complainant was contractually entitled to €50,000 for a three day working week as verbally agreed and acted upon to date.  He was also contractually and statutorily entitled to payment of wages in lieu of two weeks’ notice for 2-5 years’ service pursuant to Section 4(b) of the Minimum Notice and Terms of Employment Act 1973.

The next question to be considered is whether the Respondent was lawfully entitled to reduce the Complainant’s wages under Section 5 of the Payment of Wages Act 1991.  In relation to an employee’s consent to a deduction from wages, the legislation is unequivocal and Section 5(1)(c) of the Payment of Wages Act 1991 expressly requires the employee’s prior written consent.  Based upon the Complainant’s explicit refusal to accept the proposed reduction in days and pay and the CFO’s decision to proceed to reduce his days and pay in the absence of a contractual provision for unpaid short-time, I am satisfied on the balance of probabilities was in breach of Section 5 of the Payment of Wages Act 1991.  I am further satisfied that the failure to discharge pay in lieu of two weeks’ notice constituted a further breach.  I have addressed the loss of payment of statutory redundancy separately within the unfair dismissal complaint.

Decision:

Section 41 of the Workplace Relations Act 2015 requires that I make a decision in relation to this complaint in accordance with the relevant redress provisions.  I find this complaint to be well-founded for the reasons set out aforesaid.  Once a complaint has been declared well-founded, Section 6(1) of the Payment of Wages Act 1991 provides that an Adjudication Officer may direct an employer to pay an employee compensation of such amount (if any) as considered reasonable in the circumstances not exceeding: “(a) the net amount of the wages (after the making of any lawful deduction 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, where 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 referred to in paragraph (a), twice the former amount.”  I consider it reasonable in all of the circumstances including the financial pressure suffered to direct that the Respondent pays the Complainant compensation in the sum of €12,000 (comprising of €10,720 in unpaid wages subject to any lawful deductions and €1,280 in compensation).

CA-00061821-003 - Complaint under Section 8 of the Unfair Dismissals Act 1977 – Unfair Dismissal

Summary of Complainant’s Case:

The Complainant outlined that upon his return to work on full pay and hours in December 2023, the CFO notified him that his role was at risk of redundancy.  He was not provided with any financial information justifying same or selection criteria.  He was never consulted in relation to alternative employment or afforded the opportunity to attend any consultation meetings to discuss same.  At the same time, the CEO informed him that he required him to continue working within his current role for the Respondent.  He was aware that a number of other staff from the marketing team had either left or been let go.  By letter emailed on Saturday 13th January 2024, he was notified of his dismissal by reason of redundancy.  The letter required his signature in agreement to a non-disclosure clause, notwithstanding that the sums related to his statutory entitlements without any ex gratia sum.  Two minutes before receipt of this letter of dismissal, the Complainant had received an email from the CEO seeking further information regarding his grievances.  However, there was no further communication in relation to same.  He appealed the decision to make him redundant to a HR Consultancy nominated by the Respondent to hear same and furnished grounds of appeal.  However, the HR Consultancy informed hm that it was discontinuing the appeal because it had not been furnished with documentation requested from the Respondent and referred him back to the Respondent.  The Complainant heard nothing further in relation to his appeal.  He learned that the Respondent had ceased trading on 26th February 2024.  He never received any of the payments including statutory redundancy outlined in the dismissal letter and on 8th March 2024 received an email from the CFO stating: “Unfortunately, the company is no longer in a financial position to pay you redundancy.  However, I can apply for state redundancy for you if you wish.”  Thereafter, the CFO refused to meet with him or answer the Complainant’s calls.  As a consequence of his dismissal, he was unable to continue with an application for mortgage approval and had to apply for Jobseekers.  He submitted that his dismissal was substantially and procedurally unfair contrary to Section 6 of the Unfair Dismissals Act 1977 (as amended).

To date (10 months later), the Complainant had been unable to secure alternative employment.  In terms of mitigation, the Complainant provided detailed documentation confirming his efforts to find alternative work including applications for similar positions and is also on a panel for the Civil Service.  He has also been undertaking third-level courses to upgrade his training and make him more employable.  He outlined a number of instances whereby he was close to securing a suitable position but when the prospective employer learned of the identity of his previous employer, the job offer inexplicably became unavailable.

Summary of Respondent’s Case:

The Respondent did not attend at the hearing to proffer any evidence in rebuttal of this complaint.

Findings and Conclusions:

It is firstly necessary to set out the requisite statutory provisions pertaining to this complaint.  Section 6 (1) of the Unfair Dismissals Act 1977 (as amended) imposes a burden of proof upon the employer to show that a dismissal is fair with substantial reason/s justifying the dismissal.  The relevant provisions are 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:..  (c) the redundancy of the employee, and…

(7) Without prejudice to the generality of subsection (1) of this section, in determining if a dismissal is an unfair dismissal, regard may be had, if the adjudication officer or the Labour Court, as the case may be, considers it appropriate to do so- (a) to the reasonableness or otherwise of the conduct (whether by act or omission) of the employer in relation to the dismissal, and…”

It is further noted that Section 6(3) provides for specific circumstances where a redundancy is deemed to be automatically unfair subject to the generality of Section 6(1), none of which apply in the instant case.

Redundancy is defined by Section 7(2) of the Redundancy Payments Act 1967 (as amended) as follows:

“(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 concernedthe dismissal is attributable wholly or mainly to-

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

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

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

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

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

Subject to the generality of Section 6(1), Section 6(4)(c) of the Unfair Dismissals Act 1977 provides that the dismissal of an employee is deemed not to be unfair if it results wholly or mainly from redundancy.  As observed by Charlton J. in the leading case of JVC Europe Ltd -v- Ponisi (2012) E.L.R. 70: “In an unfair dismissal claim, where the answer is asserted to be redundancy, the employer bears the burden of establishing redundancy and of showing which kind of redundancy is apposite.  Without that requirement, vagueness would replace the precision necessary to ensure the upholding of employee rights.”  The legislation as interpreted by caselaw including that cited above requires the employer to (1) establish that a genuine redundancy situation existed and if so, that the dismissal resulted wholly or mainly from redundancy and (2) conduct itself reasonably throughout including adherence to fair procedures.  This includes a fair selection process and the taking of reasonable steps to identify alternative employment.  Invariably these requirements will be inextricably linked.  Where an employer has no agreed redundancy selection policy, it is well-established in caselaw that the employer must act fairly and reasonably. 

The Complainant is an impressive witness and provided a credible account of the circumstances giving rise to his dismissal as corroborated with correspondence confirming a complete absence of fair procedures.  In the absence of any evidence from the Respondent discharging its burden of proof to show that the Complainant’s dismissal was fair, I find that his dismissal was both substantially and procedurally unfair.

Decision:

Section 8 of the Unfair Dismissals Acts 1977-2015 requires that I make a decision in relation to a complaint of unfair dismissal in accordance with the relevant redress provisions.  For the aforesaid reasons, I find that the Complainant was unfairly dismissed by the Respondent through no fault of his own.  Once a complaint has been declared well-founded, Section 7(1) sets out the various forms of available redress including reinstatement, re-engagement and financial compensation as the Adjudication Officer “as the case may be, considers appropriate having regard to all the circumstances.”  Section 7(1)(c) provides for compensation of up to 104 weeks remuneration in respect of the employment from which an employee was dismissed for financial loss attributable to the dismissal and up to 4 weeks if no financial loss was incurred.  Section 7(2) sets out the various factors to be considered in determining the amount of compensation payable under Section 7(1) including applicable to this case: “(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, (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,….  Section 7(3) further provides that: ““financial loss”, in relation to the dismissal of an employee, includes 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 1973, or in relation to superannuation;”

In terms of mitigation, I find the Complainant’s evidence of actively seeking alternative employment as vouched to be wholly credible.  I have no doubt that all of the work undertaken by the Complainant on behalf of the Respondent was bone fides.  Unfortunately his ability to secure suitable alternative may have been curtailed by the manner in which the Respondent ceased trading.  However, with his qualifications and experience, it is anticipated that he should be in a position to secure alternative employment on a similar salary shortly.  I further note that as the Respondent ceased trading on 26th February 2024, he would have been entitled to a redundancy payment under the Redundancy Acts of circa €4,000 had he properly remained in the Respondent’s employment.  Accordingly, I award the Complainant €50,000 (less any lawful deductions) equating to one year’s remuneration in compensation as being appropriate having regard to all the circumstances and direct that this sum is paid by the Respondent to the Complainant. 

CA-00061821-004 - Complaint under Section 27 of the Organisation of Working Time Act 1997 – Non-receipt of annual leave entitlement / pay in lieu of same

Summary of Complainant’s Case:

As set out in correspondence, the Complainant outlined ongoing issues in terms of obtaining the correct calculation and payment of annual leave including rolled-over annual leave and Public holidays taken as leave.  Whilst the CFO had acknowledged that same was due and owing and required correct calculation, the CFO had been unable to correctly calculate same.  The letter of termination dated 13th January 2024 contained an incorrect calculation of pay in lieu of annual leave entitlement which was never discharged.  A sum of €10,840 had accrued and was due and owing at the time of the termination of his employment as vouched with a detailed breakdown and payslips.  In this respect, the Complainant submitted that the Respondent had acted in contravention of Section 23 of the Organisation of Working Time Act 1997.

Summary of Respondent’s Case:

The Respondent did not attend at either hearing to proffer any evidence in rebuttal of this complaint.

Findings and Conclusions:

In relation to compensation in lieu of annual leave entitlement upon the cessor of employment, Section 23(1)(a) of the Organisation of Working Time Act 1997 provides: “Where- (i) an employee ceases to be employed, and (ii) the whole or any portion of the annual leave in respect of the relevant period remains to be granted to the employee, the employee shall, as compensation for the loss of that annual leave, be paid by his or her employer an amount equal to the pay, calculated at the normal weekly rate or, as the case may be, at a rate proportionate to the normal weekly rate, that he or she would have received had he or she been granted that annual leave..”  In circumstances where the Complainant has provided vouched and credible evidence, I am satisfied on the balance of probabilities that as of the date of the termination of his employment, €10,840 in lieu of annual leave was due and owing by the Respondent to the Complainant.

Decision:

Section 41 of the Workplace Relations Act 2015 requires that I make a decision in accordance with the requisite redress provisions.  For the aforesaid reasons, I find this complaint to be well-founded.  Section 27(3) of the Organisation of Working Time Act 1997 provides: “A decision of an adjudication officer under Section 41 of the Workplace Relations Act 2015 in relation to a complaint of a contravention of a relevant provision shall do one or more of the following, namely: (a) declare that the complaint was or, as the case may be, was not well founded, (b) require the employer to comply with the relevant provision, (c) require the employer to pay to the employee compensation of such amount (if any) as is just and equitable having regard to all of the circumstances, but not exceeding 2 years’ remuneration in respect of the employee’s employment.”  I consider it just and equitable in all of the circumstances including the loss of benefit of annual leave, to direct that the Respondent pays the Complainant compensation in the sum of €12,000 (comprising of €10,840 in unpaid wages subject to any lawful deductions and €1,160 in compensation).

Overall Award:

For the avoidance of doubt, the overall award to the Complainant in respect of all complaints is €77,848.

Dated:   01-11-24

Workplace Relations Commission Adjudication Officer:  Aideen Collard

Key Words: Non-notification in writing of the nature and date of the changes constituting a permanent contract of employment contrary to Section 5 of the Terms of Employment (Information) Act 1994 – reduction in wages and non-payment of pay in lieu of minimum notice contrary to Section 5 of the Payment of Wages Act 1991 – non-payment of pay in lieu of outstanding annual leave entitlement upon cessor of employment contrary to Section 23(1)(a) of the Organisation of Working Time Act 1997 – Unfair Dismissal on the ground of redundancy contrary to Section 6 of the Unfair Dismissals Acts 1977-2015