This WRC case between Kieran Murray and Sherry Garden Rooms Limited is an interesting one. There are two significant decisions made by the adjudicator in arriving at the calculation of the employee’s financial loss.
One has to do with the statutory redundancy lump sum received by the employee on termination of employment; the other is the disregarding of any PUP payments received by the employee.
The adjudicator’s decision goes against what I, and others, understood to be the case in a redundancy/unfair dismissal case when calculating the employee’s financial loss.
It would generally be accepted that if an employee is made redundant and paid a redundancy payment then if the unfair dismissal claim is successful the amount of redundancy payment received would be offset against what the employee would be entitled to for the unfair dismissal. The argument was that you could not be unfairly dismissed and made redundant-it had to be one or the other.
In other words, if you won your unfair dismissal case arising from a redundancy and you may be entitled to €15,000 for the unfair dismissal you would subtract from this figure whatever redundancy payment you received.
This decision of WRC adjudicator Kevin Baneham in this case does not accord with this line of thinking.
Firstly, he says you do not deduct the lump sum received when calculating how much an employee should be compensated for unfair dismissal.
I set out below Mr Baneham’s decision in respect of the employee’s financial loss and the lump sum paid for redundancy:
For completeness, I note that the complainant was paid a redundancy lump sum payment. He is, therefore, not entitled to compensation for financial loss attributable to any loss or diminution of any entitlement to the Redundancy Payments Act as he was paid the lump sum. Section 19 of the Unfair Dismissals Act provides the circumstances that a lump sum should be repaid to the employer and those circumstances are where the employee is re-instated or re-engaged. Neither applies in this situation, so there is no statutory basis to deduct a lump sum payment made from actual or prospective loss incurred.
It is also not just or equitable to deduct a lump sum already paid, as the lump sum is based on service and financial loss (excluding any loss or diminution) is based on actual or prospective loss. Section 7 already provides grounds to reduce any award of compensation in light of the employee’s contribution to the dismissal or to financial loss, including a failure to mitigate. It also takes account of the employer’s adherence to procedures.
Deducting a lump sum from an award of actual or prospective loss undermines the effectiveness of the protections offered by the Unfair Dismissals Act, especially for employees with long service. Such an employee will have a relatively significant lump sum entitlement and they will have little protection from the Unfair Dismissals Act if the employer gauges that the employee should find employment relatively quickly. This leaves this category of employee open to an egregiously unfair dismissal.
I have found that the complainant’s weekly wage was €980.76 per week. The complainant is entitled to the loss arising from the 12th June 2020 to the 27th October 2020. I assess that the complainant is entitled to the shortfall incurred in the first 40 weeks of the new role. He is likely thereafter to progress in the new role and will also receive increments. I assess the period up to the 27th October 2020 as being 17.5 weeks, taking account of the two weeks of notice awarded below. This is €17,163.30. The complainant’s new weekly rate of pay is €589. The difference between the two amounts is €391.76. This weekly loss over 40 weeks amounts to €15,670.40. The sum of these amounts is €32,833.70. It is well established the awards pursuant to the Unfair Dismissals Act are made in respect of gross pay and are not exempt from taxation per section 192A of the Taxes Consolidation Act.
The second major financial implication when looking at this decision is the way the adjudicator treated the pandemic unemployment payment (PUP) that the employee received after the dismissal.
The adjudicator held that there was no legal basis for having regard to the PUP payments received when calculating financial loss.
He said:
Second, the Pandemic Unemployment Payment is clearly encompassed by the disregard in section 7(2A) of the Act. PUP was initially administered via section 202 of the Social Welfare Consolidation Act 2005 and later given its standalone legislative basis in the Social Welfare (Covid-19) (Amendment) Act 2020. It was paid to employees who lost their employment income during the pandemic. The complainant was entitled to PUP on being put on lay-off and no longer being paid. He was no longer in employment following his dismissal and continued to be entitled to PUP. Given that the disregard is set out in law, there is no legal basis to then have regard to the PUP payments in reducing financial loss.
Read the full decision in Kieran Murray and Sherry Garden Rooms Limited here. I have not gone into the facts of the case as I am more interested in the treatment of these two payments in the decision of the adjudicator.
In short, the employee was terminated on the grounds of redundancy and claimed it was an unfair dismissal, not a genuine redundancy. He won his case.
Conclusion
If you are an employee, or are representing an employee, you will be citing this decision as authority for the proposition that
- Lump sum redundancy payments received can be ignored when calculating financial loss in an unfair dismissal case
- PUP (pandemic unemployment payment) can also be ignored when arriving at a figure for financial loss in unfair dismissal cases