ADJUDICATION OFFICER DECISION

Adjudication Reference:  ADJ-00050566

Parties:

Complaint:

Date of Adjudication Hearing:  17/05/2024

Workplace Relations Commission Adjudication Officer:  Aideen Collard

Procedure:

This complaint of constructive unfair dismissal was referred under Section 8 of the Unfair Dismissals Acts 1977-2015 to the Workplace Relations Commission (hereinafter ‘WRC’) on 9th August 2023.  Following delegation to me by the Director General, I inquired into this complaint and gave the Parties an opportunity to be heard and to present any relevant evidence.  Written submissions and/or supporting documentation was received on behalf of both Parties.  The matter was heard remotely on 17th May 2024.  The Parties were self-represented and Mr David Sumray, Owner and Director of the Respondent appeared on its behalf.  A Romanian interpreter assisted the Complainant with translation.  The hearing was held in public and the evidence was taken under oath/affirmation.  As both Parties were self-represented, I outlined the law and burden of proof in relation to complaints of constructive dismissal.  I allowed a period of time for the submission of documentation by the Parties post-hearing and received payslips from the Complainant. 

It is noted that the Complainant’s brother brought a successful complaint of constructive dismissal on the same basis against the Respondent under ADJ-00047658 which was investigated by a different Adjudication Officer.  My decision is solely based upon the evidence adduced before me in relation to this complaint.

Background:

The Complainant referred a complaint of constructive unfair dismissal to the WRC contending that the Respondent had continuously delayed payment of his wages throughout his eight-year period of employment.  He contended that after a particularly lengthy delay in the payment of his wages, he had no alternative but to leave his employment with the Respondent on 15th February 2023.  He earned €765 gross per week and sought compensation for his financial loss.  This complaint was refuted on behalf of the Respondent, with the contention that it had acted reasonably, and the Complainant had left too hastily.

Summary of Complainant’s Case:

Direct Evidence of the Complainant

The Complainant was employed by the Respondent as a Carpenter between 14th November 2014 and 15th February 2023.  He had moved over to Ireland from Romania to join his brother who had been a long-term employee of the Respondent.  He had not received a written statement of the terms of his employment or written contract until after his resignation from his employment with the Respondent.  He also confirmed that he had not been furnished with any written grievance procedures.  The Company was small and his supervisor was the Owner/Director, Mr David Sumray.  At the material time of this complaint, he earned €765 gross for a forty-five-hour working week paid weekly as confirmed with payslips furnished.  He maintained that throughout his employment, payment of his wages had been regularly delayed.  He would receive payslips setting out his wages and statutory deductions, but payment to his bank account would be delayed.  The delays could be one, two or three weeks long and had become increasingly frequent and prolonged over time.  He was renting a house and had a young family.  The delays in the payment of his wages had caused him and his family financial difficulty, anxiety and distress.  After a four-week delay in receipt of his wages for January 2023 and with €3,043 due and owing, he had compiled the following letter dated 30th January 2023 with the assistance of a free legal support service and handed it to Mr Sumray:

“I am writing to you in relation to non-payment of wages due to me for the last three weekly pay periods 2/3/4/5, I am owed a total EUR 3043 gross.  While you have issued a pay slip for weeks ending 2/3/4/5, I have yet to receive payment to my bank by Electronic Fund Transfer or any other means.  As you can imagine, this is very distressing on my part as I have bills to pay.  I have already completed my working hours and it is grossly unfair that I have not been compensated for same.  It is disappointing that you have made it look like you have paid my wages to date by providing a pay slip for each pay period.  You are in breach of the Payment of Wages Act 1991.  Should this situation not be rectified in the next 7 days, I will have no option but to lodge a dispute with the Workplace Relations Commission under the Act above.  Should I be left with no choice but to resign, please be aware that I may also pursue a Constructive Dismissal Complaint with the Workplace Relations Commission.”

The Complainant had continued working for the Respondent whilst awaiting payment of his outstanding wages.  However, when he had still only received a portion by 15th February 2023, he resigned in accordance with his letter by leaving work with the Respondent.  He was of the view that based upon the Respondent’s history of delayed payment of wages, that the situation would never improve.  Eventually, the balance was paid by 20th February 2023.  He had referred the matter to the WRC in February 2023 in the belief that he had referred a complaint of constructive dismissal.  In fact, he had referred the matter for a WRC investigation and upon clarification, he referred this complaint to the WRC on 9th August 2023.

After he had ceased working for the Respondent, Mr Sumray called to the Complainant’s house and also rang him repeatedly, asking him to undertake a forklift training course.  The Complainant had informed him that he was awaiting the WRC outcome.  Mr Sumray had said that he could do the course whatever the outcome.  Accordingly, he returned to the Respondent’s premises to undertake the course on the afternoon of 10th April 2023 as per a Certificate furnished.  Whilst the cost of the course had been covered, he was not paid for undertaking same and did not undertake any further work for the Respondent.  When Mr Sumray had asked him about returning to work, he replied that he would await the WRC outcome.

Thereafter, the Complainant received a letter from Mr Sumray on behalf of the Respondent dated 3rd May 2023 stating: “Since your departure from our company on February 15th, 2023, I have received mixed messages from you regarding your future employment intentions.  As we have not received any letter of resignation from you, and you returned for forklift training, it adds to the confusion around your employment status.  In keeping with Irish workplace policies, we have attached your contract of employment and employee handbook for your attention.  This contract is a copy of the verbal agreement that has been in place since 2014.  Therefore your position remains available to you and I would encourage you to attend a meeting with me to discuss your future at our company.  I hope this email has cleared up any confusion regarding your employment status, and I look forward to hearing from you soon.”

Having secured new employment, the Complainant rang Mr Sumray on 1st June 2023 seeking his P45 for the purposes of commencing same at the request of his new employer.  He received a letter from Mr Sumray on behalf of the Respondent dated 12th June 2023 stating: “I am writing to follow up on our telephone conversation on Thursday, 1st of June.  As per your request, you mentioned that you would like to obtain your P45 from our company, as you are still on our payroll.  Furthermore, you informed me that you have recently started a new job with another company.  In order for us to proceed with the termination of your employment, it is essential that we receive written communication from you confirming your resignation from your position.  Until now, we have not received any communication from you since you left your job at the beginning of the year.  To facilitate the process of ceasing your employment, we kindly request that you reply with written confirmation via post or email, clearly stating your resignation and the date on which it is effective.  This information will allow us to promptly inform the Revenue Services.”

The Complainant replied to Mr Sumray’s letter by email dated 26th June 2023 as follows:

“With reference to the correspondence I received from you today as you are aware through numerous emails, texts and verbal communications on your premises we are in dispute with your company through the WRC since February 2023 this case is still ongoing and whilst it is ongoing we cannot work for your company, which is why I requested my P45 from you three weeks ago and am still waiting to receive it.”

Mr Sumray responded by letter dated 4th July 2023 on behalf of the Respondent as follows:

“I want to clarify that apart from the letter dated January 30th, 2023, we have not received any official communication from you regarding your employment status even though we have sent 4 letters and numerous emails.  Neither have we received any correspondence from you regarding any claim.  We also have not received any correspondence from the WRC or any other party informing us of any claim.  A WRC assessor did visit our premises (on) March 15th, 2023, and requested us to update our company documents which we have since completed.  We received official communication from the WRC, dated June 8th, 2023, thanking us for our cooperation and that their case with us has now been concluded.  They did not inform us of any claim being made against us.  You did, however, contact me via phone call on June 1st, 2023, and informed me that you had commenced a new job and requested your P45.  Under these circumstances we cannot be expected to hold your job indefinitely.  I acknowledge the information you have provided in your e-mail regarding your inability to continue working for our company.  Based on this I will consider it as your formal resignation, effective from the date you left your position, which was April 7th, 2023.  Consequently, I will proceed to notify the Revenue Commissioners that your employment has ceased.”

The Complainant confirmed that his preference would have been to have remained working for the Respondent, but he could no longer tolerate the regular delays in the payment of his wages going forward.

The Complainant confirmed that since leaving the Respondent on 15th February 2023, he had not received any further pay in lieu of qualifying public holidays or accrued annual leave as per his payslips furnished. 

The Complainant said that owing to a language miscommunication, he had been under a misapprehension that he could not work whilst there was a complaint ongoing before the WRC so had not sought alternative employment until early March 2023.  Thereafter, he was out of work for a period of thirteen weeks before finding alternative employment.  He outlined his efforts to find alternative employment and confirmed that on 6th June 2023, he had commenced work with a Security Company in the same role on a similar salary.  He sought compensation for his financial loss of earnings for the thirteen-week period in question.

Cross-examination of the Complainant

Mr Sumray put it to the Complainant that he had not sent him “numerous emails, texts and verbal communications” as referenced in his email of 26th June 2023.  Mr Sumray further put it to him that all of his employees had been in the same situation with “everyone’s wages missed for the same period and everyone’s wages were reimbursed over the same period”.  The Complainant replied that he was unaware of their situation.  When asked about the relevance of this line of questioning, Mr Sumray said that he had met with the staff including the Complainant and explained that the Respondent was going through a difficult financial period.  Apart from the Complainant and his brother, the other two employees had continued to work with him without pursuing any complaints.  Mr Sumray put it to the Complainant that the Respondent’s record of non-payment of wages was not as poor as he contended and the delay in early 2023 had been less than that contended.  The Complainant denied that Mr Sumray had regularly paid him cash to tide him over until payment of his wages.  Mr Sumray put it to him that they had enjoyed a good working and personal relationship.  He had assisted him with his residency and was upset by this complaint.  He asked the Complainant why he had not returned to work once his wages had been fully paid.  He replied that he had anticipated that the delayed payment of his wages would have continued into the future.

Summary of Respondent’s Case:

Mr David Sumray, Owner and Director gave evidence on behalf of the Respondent.  He confirmed that the Respondent salvages and sells sustainable timber products primarily sourced from the US.  It is a small business with 3-4 employees and no HR Personnel.  He confirmed that the Complainant had never been provided with a written statement of the terms of his employment or contract in accordance with Section 3 of the Terms of Employment Information) Act 1994.  Neither had he been provided with a company handbook or any written grievance procedures.  Following the WRC workplace investigation, he had put this in order and provided the Complainant with a written contract under cover of letter of 3rd May 2023. 

Mr Sumray outlined that since the Covid-19 Pandemic, the industry had been subject to market volatility causing cash flow difficulties from the end of 2022 into 2023.  Having explored a number of options to keep the Respondent afloat including closing the business and placing the staff on layoff, it was decided to withhold wages for a short period in anticipation of a much improved cashflow by mid-February 2023.  He had consulted with the staff in early January 2023 and whilst some had expressed dissatisfaction, there was a clear understanding and acceptance of the situation given the alternatives.  However, he had received the letter of 30th January 2023 from the Complainant threatening to resign if his outstanding wages were not reimbursed within 7 days.  During this period, he had offered the Complainant a small sum of cash to tide him over which he declined.  He had commenced reimbursement of his wages on 13th February 2023.  However, just a few days later, the Complainant abruptly left his employment without giving any prior notice, citing financial pressures as the reason for his departure.  Mr Sumray found this perplexing given that his wages were fully reimbursed around the same time and contended that this was unreasonable and hasty.  He had regarded the Complainant as a valuable employee and had done everything that could reasonably be expected to try and persuade him to return to work.  He had reached out to him by calling to his house twice and writing several letters as set out above asking him to return to work.  The Complainant had informed Mr Sumray that whilst he would like to return to work, he felt that he was unable to do so whilst there was a complaint pending before the WRC.  Mr Sumray had offered him the forklift training course (one afternoon) in the meantime.  The Complainant had returned to undertake the course on the afternoon of 11th April 2023.  Whilst the Respondent paid for the training course, the Complainant was not paid for attending.  The fact that he had not returned to work in the circumstances had been confusing to him as an employer.  He had retained the Complainant on the payroll until 4th July 2023 when he was removed at his request to take up alternative employment as set out in correspondence above.  He confirmed that the Respondent had not issued any further payslips, paid him for public holidays that he would have been entitled i.e. 17th March 2023 or discharged his pay in lieu of outstanding annual leave. 

In his written submissions, Mr Sumray referred to the Complainant as having “abruptly resigned” on 15th February 2023 and in his letter of 4th July 2023, to considering 7th April 2023 as the date of his resignation whilst at the same time, contending that he had remained an employee until taking up new employment.  Mr Sumray also submitted that “he had contentiously demonstrated a willingness and strong desire to resolve the issue whilst the Complainant had shown a complete lack of interest in resolution” and the Complainant’s “actions had also been contradictory which cast doubt on the consistency of his complaint against the Respondent who was committed to providing a fair and transparent resolution process”.

This Adjudication Officer asked Mr Sumray if he thought it was reasonable to employ someone without providing them with written terms of employment or grievance procedures to enable a course of complaint whilst regularly delaying the payment of wages.  Mr Sumray replied that the Respondent had been in a difficult financial position and that he was a “naïve director” and could not afford HR advice but was not seeking to justify his actions.  He accepted that his treatment of the Complainant had been “wrong” and was apologetic.  When pressed as to how often wages had been late, Mr Sumray agreed that it had been twenty percent of the time over an eight-year period but insisted that the delay was by a matter of days as opposed to weeks.  Notwithstanding these admissions, he maintained his defence to this complaint contending that the Complainant had acted too hastily in leaving his employment in all the circumstances. 

Findings and Conclusions:

For a successful complaint of constructive dismissal referred to the WRC under Section 8 of the Unfair Dismissals Act 1977, the Complainant must satisfy the definition in Section 1 which provides: “dismissal, in relation to an employee means- (b) the termination by the employee of his contract of employment with his employer, whether prior notice of the termination was or was not given to the employer, in circumstances in which, because of the conduct of the employer, the employee was or would have been entitled, or it was or would have been reasonable for the employee, to terminate the contract of employment without giving prior notice of the termination to the employer,…”  This statutory definition is mirrored in the classic formulation of the ‘contract’ and ‘reasonableness’ tests required for a constructive dismissal set out by the UK Court of Appeal in Western Excavating (ECC) Ltd -v- Sharp [1978] IRLR 27.  The tests are interchangeable and satisfaction of one or both tests will suffice.  The ‘contract test’ provides: “If the employer is guilty of conduct which is a significant breach going to the root of the contract of employment, or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract, then the employee is entitled to treat himself as discharged from any other performance.”  The reasonableness test requires an assessment of whether the employer “conducts himself or his affairs so unreasonably that the employee cannot fairly be expected to put up with it any longer, if so the employee is justified in leaving.”  In the context of a complaint of constructive dismissal Berber -v- Dunnes Stores [2009] E.L.R. 61, the Supreme Court noted that in determining whether there has been a breach of the implied term of mutual trust and confidence in an employment contract: “1. The test is objective.  2. The test requires that the conduct of both the employer and the employee be considered.  3. The conduct of the parties as a whole and the cumulative effect must be looked at.  4. The conduct of the employer complained of must be unreasonable and without proper cause and its effect on the employee must be judged objectively, reasonably and sensibly in order to determine if it is such that the employee cannot be expected to put up with it.” 

Unlike the position in relation to complaints of unfair dismissal provided for by Section 6 of the Unfair Dismissals Act 1977, the definition of constructive dismissal provided by Section 1 firmly places the burden of proof on the employee to show that termination of the employment contract was justified.  The caselaw also overwhelmingly supports the position that an employee must have firstly exhausted all alternative avenues before terminating the contract e.g. Conway -v- Ulster Bank Limited UD 474/1981.  However, there are situations whereby employees have been found to be justified in resigning with immediate effect e.g. where there has been a fundamental breach of contract, the employee has not been provided with any grievance procedures and/or grievances have not been investigated in a proper or timely manner.

I must apply the law to the factual matrix herein to determine on the balance of probabilities whether the Respondent has behaved in such a way that amounts to a repudiation of the employment contract.  Aside from the date of the Complainant’s resignation, there does not appear to be any material dispute as to the facts.  The Complainant contends that he had no alternative but to leave his employment with the Respondent owing to a history of delayed payment of his wages whilst the Respondent maintains that it had acted reasonably in all the circumstances and the Complainant was too hasty in leaving his workplace.

The Respondent’s position as to when he considered the Complainant to have resigned was somewhat unclear.  For the avoidance of doubt, I am satisfied that his resignation from his employment was effective from 15th February 2023.  The date of the Complainant’s resignation is borne out by his letter of 30th January 2023 threatening to refer a dispute to the WRC and/or pursue a constructive dismissal complaint if his wages were not fully discharged within a 7-day period, and acting accordingly by leaving work with the Respondent on 15th February 2023.  The Respondent’s position that the Complainant had remained an employee for some time thereafter lacks credence.  In particular, it is noted that he was not paid in lieu of the 17th March 2023 public holiday or issued with a final payslip including pay in lieu of accrued annual leave.  I consider reliance upon the fact that the Complainant had returned to undertake a forklift training course for an afternoon and indicated a desire to return to work to be disingenuous.  I am also of the view that the Respondent’s correspondence misrepresented the true position by giving the impression that the Complainant had abandoned his position whilst the Respondent had reasonably kept his position open.

The timely payment of wages for work undertaken is a fundamental term of any employment contract.  By Mr Sumray’s own admission, payment of the Complainant’s wages was delayed twenty percent of the time during the eight-year period of his employment.  It was not confined to the difficult financial period experienced by the Respondent in late 2022 to early 2023.  The Complainant had bills to pay and a family to support and the ongoing situation had clearly caused him financial difficulty, anxiety and distress.  He was of the view that this situation would not improve.  The Respondent had not provided the Complainant with a written contract or grievance procedures by which he could complain about the ongoing situation.  When he did raise the matter in writing on 30th January 2023, there was no written response on behalf of the Respondent.  Nor did Mr Sumray seek to avail of professional HR advice or make any arrangements for a formal meeting to resolve matters as referenced in his letter of 3rd May 2023.  Given that there was no payment in lieu of public holiday or annual leave entitlement even after a WRC inspection, I have no doubt that this pattern of conduct toward the Complainant would have continued.  Overall, I found the lax attitude and complacency exhibited towards the Complainant’s plight and the Respondent’s legal obligations to be troubling and would hope that valuable lessons will be taken from this process.

Applying the contract test to the factual matrix, I am satisfied that the prolonged and repeated nature of the delay in payment of the Complainant’s wages alone constitutes a significant breach going to the root of the contract of employment and shows that the Respondent no longer intended to be bound by one or more of the essential terms of the contract.  Accordingly, in all the circumstances, I find that the Complainantwas entitled to consider himself constructively dismissed.  Having so found, it is unnecessary to apply the reasonableness test.  It is however noted that it would have been open to the Complainant to have referred additional complaints to the WRC for other breaches of his statutory rights as outlined above.

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 constructively 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 unfairly dismissed for financial loss attributable to the dismissal and up to 4 weeks remuneration if no financial loss was incurred.  Section 7(2) sets out the various factors to be considered in determining the amount of compensation payable.  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 note that after a short period when the Complainant was under a misapprehension that he could not seek alternative employment whilst there was a complaint pending before the WRC, he was unemployed for a thirteen-week period whilst seeking alternative employment.  I found his account of the efforts he had made to seek alternative employment to be reliable and to his credit, he secured a position with a similar salary.  Weighing up all the factors, I award the Complainant €9,945 (less any lawful deductions), equating to thirteen weeks’ pay in compensation as being appropriate having regard to all the circumstances and direct that this sum is paid by the Respondent to the Complainant within 42 days hereof. 

Dated: 14th of January 2025

Workplace Relations Commission Adjudication Officer:  Aideen Collard

Key Words: Constructive Unfair Dismissal – Sections 1 & 8 of the Unfair Dismissals Acts 1977-2015 - contract and reasonableness tests - delay in payment of wages in breach of contract of employment