Categories
Employment Injunctions

Board of Management Decision Quashed for Failure to Give Reasons for Dismissal of School Principal

This school principal went to the High Court to seek an order quashing the decision by the Board of Management of a national school from terminating her employment as a school principal and teacher.

The allegations against the school principal involved allegations of inappropriate behaviour towards two pupils, made against her by a special needs assistant. The school was a small one with only two teachers, including the principal.

The school principal had been dismissed in March 2018 and appealed the decision to the Disciplinary Appeals Panel. The Disciplinary Appeals Panel (DAP) recommended that the teacher be immediately reinstated to her position as principal. The Board of Management rejected this recommendation.

The teacher’s case to the High Court was that the investigation leading up to, and the decision to terminate her employment was fundamentally flawed and legally indefensible. The core of her argument, however, was that the failure by the Board of Management to give any, or any adequate, reasons for the decision to dismiss her was irrational and unreasonable.

She argued that there was no proper evaluation of the evidence against her, nor had she been told what allegations had actually been found as having been proven against her.

Thus, she argued that the decision was bad at law for having failed to giver reasons for the decision.

She also argued that the decision to ignore the recommendation of the DAP was bad at law having regard to the established case law as to the circumstances where a Board could lawfully depart from the recommendations of the DAP.

High Court Decision

The High Court, Barr J, held that the Board of Management had acted rationally and fairly in the investigation and disciplinary stage of the process.

Where it went wrong, however, was in engaging with the evidence against the Principal and deciding which, if any, allegations were proven against her. The Board had to engage with the evidence in a fair and rational manner and this could only be shown if they could give reasons for their decision.

They had failed to do this.

They also failed to give due regard to the recommendation of the DAP and there was no logical or constructive engagement with the DAP recommendation. For these reasons the High Court set aside the decision of the Board to terminate the Principal’s employment and quashed the decision.

You can read the full 50 page decision of Barr J here: C.D. and The Board of Management of a National School.

Categories
Employment Injunctions The Employment Contract

3 Takeaways from the Ryanair V Peter Bellew High Court Case

The High Court case between Ryanair DAC and Peter Bellew is an important one because it gives us further guidance in the area of restrictive covenants in the contract of employment. A restrictive covenant is basically a covenant in a contract of employment preventing a departing employee from working for a competitor for a certain period of time after departing from his employment.

In Ryanair DAC the airline sought to prevent Mr Bellew from working for a competitor in any capacity for a period of 12 months after leaving Ryanair. This was what Mr Bellew had signed up for when he signed his contract of employment.

Ryanair sought to prevent him from taking up employment with Easyjet and sought an injunction in the High Court to enforce the covenants in his contract of employment with Ryanair. One of those covenants was as follows:

For a period of 12 months after the termination of your employment you shall not, without the prior written consent of the Company, directly or indirectly in any capacity either on your own behalf or in conjunction with or on behalf of any other Person;

a. be employed, engaged, concerned or interested in any capacity in any business wholly or partly in competition with the Company for air passenger services in any market;

b. solicit or entice or endeavour to solicit or entice away from the Company any person who was employed within in (sic.) a senior executive, managerial, or technical capacity by the Company.

1.2 If you receive an offer of employment or engagement during your employment with the Company, or before the expiry of the restriction period set out in this clause, you shall give the person or entity making the offer a copy of this clause.

The defendant in this matter fully admits that he freely signed the covenant and at the time of signing he fully understood its meaning and purpose but makes the case that he is not bound by said covenant.

The case law in this regard provides to be useful and instructive as to the approach adopted by the Irish Courts in relation to restrictive covenants.

Macken v. O’Reilly 1979 I.L.R.M 79

“All interference with an individual’s freedom of action in trading is per se contrary to public policy and, therefore, void. The general prohibition is subject to the exception that certain restraints may be justified. Restraints, restrictions or interferences are permitted if they are, in the circumstances obtaining, fair and reasonable. Whether what is complained of can be justified on this basis involves a careful examination of all the circumstances – the need for restraint, the object sought to be attained, the interests sought to be protected and the general interest of the public. What is done or sought to be done must be established as being reasonable and necessary and on balance to serve the public interest”

Murgitroy & Company Ltd v. Purdy 2005 IEHC 159

This a much more recent decision where the Chief Justice Clarke J. outlined that a restrictive term will not be implemented unless it satisfies the limbs of the following test

  1. The restriction is reasonable between the parties
  2. The restriction is consistent with the interests of public policy

The facts of Murgitroy are as follows. A restrictive covenant in a contract of employment restricted a Patent Lawyer from working in same sector for a period of twelve months in the Republic of Ireland. Clarke CJ.  Found the restriction in relation to the geographical nature (not working in Ireland) and the length of the restriction was reasonable and justified based on the nature of the employers business. However Clarke J. found that the result of allowing the aforementioned restrictions would create another, being the restriction to approach clients who are not pre-existing clients of the employer from being engaged by the ex-employee was too restrictive. The position of this case was affirmed in the more recent example of Net Affinity v Conaghan 2012 3 I.R 67.

Stenhouse ltd v. Philips 1974 A.C 391

The covenant entered into needs to be reasonable between the parties. The holding of this case outlines that the restriction sought must be a reasonable one and cannot restrict an employee from using his skill and knowledge in future endeavors. However, the employer can restrict the employee from using assets or ‘insider knowledge’ that must be regarded as company property.

The accepted proposition that an employer is not entitled to protection from mere competition by a former employee means that the employee is entitled to use to the full any personal skill or experience even if this has been acquired in the service of his employer: it is this freedom to use to the full a man’s improving ability and talents which lies at the root of the policy of the law regarding this type of restraint. Leaving aside the case of misuse of trade secrets or confidential information … the employer’s claim for protection must be based upon the identification of some advantage or asset inherent in the business which can properly be regarded as, in a general sense, his property, and which it would be unjust to allow the employee to appropriate for his own purposes, even though he, the employee, may have contributed to its creation.’

This becomes especially necessary when discussing trade secrets/ confidential information or market sensitive information. Any property or assets of the company that the employee is leaving must be protected by restrictive covenant because it is essentially, company property. Even if the employee may have contributed to the ‘company property’ the employer will still be granted protection for what is ultimately their property.

However, with regard to skill, knowledge and essentially the employee’s property, no restrictive covenant can restrict this movement. It must also be noted that if an employer is seeking to enforce a restrictive covenant simply to protect himself from mere competition, this will not be allowed.

In the Ryan Air case, Allen J. opined that that covenants are generally never reasonable unless if the competition was allowed it would take advantage of the employers trade position.

The High Court also looked at Hernandez v. Vodafone Ireland LTD 2013 IEHC 70 andTillman v Egon Zehnder Ltd from the United Kingdom Supreme Court.

High Court decision

The High Court recognized the difficulty in practice of enforcing a confidentiality clause and referred to Lord Denning in Littlewoods Organisation Limited v Harris [1978]

It is thus established that an employer can stipulate for protection against having his confidential information passed on to a rival in trade. But experience has shown that it is not satisfactory to have simply a covenant against disclosing confidential information. The reason is because it is so difficult to draw the line between information which is confidential and information which is not; and it is very difficult to prove a breach when the information is of such a character that a servant can carry it away in his head. The difficulties are such that the only practicable solution is to take a covenant from the servant by which he is not to go to work for a rival in trade. Such a covenant may well be held to be reasonable if limited to a short period.”

The High Court had a difficulty with whether the restraint that Ryanair sought went further than was necessary for the legitimate protection of its interests. It had no difficulty, interestingly, with the time period of 12 months.

It noted that it could, if the circumstances permitted, use the “blue pencil rule” to remove an unenforceable provision if the character of the contract was not changed as a consequence. However, the covenant in this case applies to “any business wholly or partly in competition with Ryanair for air services”.

With considerable reluctance, but without misgivings as to the applicable law, or my application of the law, I am driven to the conclusion that the clause is void and unenforceable as an unjustified restraint of trade.

195. The other provision of the restraint in this case which troubled me was the prohibition on employment in any business in competition with Ryanair “in any capacity”. It appeared to me that literally construed it would restrain Mr. Bellew from taking up employment with another airline as a pilot or air steward.

208. I find that the plaintiff has discharged the onus of proving that it had a legitimate interest in exacting a covenant from the defendant to protect the valuable sensitive and confidential commercial, operational and financial information that would come to the defendant’s knowledge in the course of his employment. For the reasons given, I find that that interest has not been shown to extend beyond those airlines in competition with the plaintiff in the low cost or low fare sector, to those airlines operating in the legacy or flag or high cost sector.

209. I find that the covenant in this case, properly construed, would prevent the defendant from taking up employment with any European airline, including the legacy carriers, and so goes beyond what the plaintiff has shown to be justified.

210. The legitimate interest of the plaintiff in restraining the defendant from taking up alternative employment is limited to roles which would risk the disclosure or use of its protectable information. I find that the restraint on employment in any capacity goes beyond that interest and has not been shown to be justifiable.

211. For the reasons given, I find that the covenant to which the defendant, for valuable consideration, freely agreed is, as a matter of law, void and unenforceable as an unjustified restraint of trade.

Conclusion

Ryanair DAC were refused their injunction because the High Court found

  1. The restraint preventing the departing employee from working “with any European airline” went beyond what was justified
  2. The restraint preventing Bellew from taking up employment “in any capacity” goes beyond the legitimate interest of Ryanair and was not justifiable.

For these reasons the High Court decided the covenant was void and unenforceable and an unjustified restraint of trade.

Takeaway for employers

  1. Employers need to understand that any restrictive covenant is drafted to reflect the specific relationship between employer and employee in any particular circumstance and a “one size fits all approach” runs the risk of being found unenforceable. If it goes too far and is too wide it is unlikely be justified as being necessary to pursue a legitimate interest.
  2. Twelve months, as a temporal restraint, is acceptable and unproblematic.
  3. Confidentiality clauses, whilst necessary and acceptable, are difficult to enforce in practice as confidential information can be used and abused without any evidence of the breach-for example in negotiating terms with competitors.

Read the full decision here: Ryan Air DAC v. Peter Bellew 2019 6239 P , Decided 23rd December 2019.

Categories
Employment Injunctions

High Court Injunction Applications in Employment Cases-2 Contrasting Decisions?

judicial review

It has long been the case that at common law an employee could have her employment terminated for good reason, bad reason, or no reason. Any remedy then open to the employee would be a statutory claim-that is, a claim under unfair dismissal legislation such as the Unfair Dismissals Act, 1977.

But once the employer had terminated in accordance with the contract of employment and had given the contractual notice period the employee had no cause of action in the Courts for breach of contract.

Two decisions from the High Court on this point at the end of 2018 appear to be inconsistent, however. Both cases involved the employees seeking an injunction to prevent their dismissal by way of a no fault termination-that is, dismissal for good, bad or no reason.

Obtaining an injunction in employment cases

The normal standard for obtaining an injunction is set out in the principles in the ‘Campus Oil v Minister for Industry and Energy [1983]’ as follows

  1. That there is a fair or bona fide issue to be tried-in other words the claim must not be frivolous or vexatious;
  2. If there is a bona fide issue to be tried the Court must then consider whether damages would be an adequate remedy or not. If so the Plaintiff will be required to give an undertaking as to damages, that is, in the event of the injunction being refused the Plaintiff will pay damages to the person injuncted;
  3. That the balance of convenience favours the granting of the injunction rather than its refusal.

The test for an injunction in an employment case is higher, however, and the applicant must show “that at least he has a strong case and that he is likely to succeed at the hearing of the action” (Supreme Court, Maha Lingham v Health Service Executive).

Two High Court Decisions

In Whooley v Merck Millipore Limited and Merck KGaA [2018] IEHC 725 the company terminated the employee’s employment on ‘no fault’ basis and gave her the contractual notice. The High Court refused her application for an injunction preventing her dismissal as her contract had already been terminated. The Court opined, however, that she may have succeeded in an injunction application prior to the termination of her contract.

In Grenet v Electronic Arts Ireland Limited [2018] IEHC 786 the employee succeeded in the injunction application as the Court accepted the employee’s argument that a later no-fault termination was merely an earlier faulty termination dressed up in different clothes and the earlier termination would have had serious reputational consequences for the employee and would have prevented him from vindicating his good name.

So, two High Court applications seeking an injunction to prevent a dismissal from employment; one successful, the other unsuccessful.

Read the decisions here:

Grenet v Electronic Arts Ireland Limited [2018] IEHC 786

Whooley v Merck Millipore Limited and Merck KGaA [2018] IEHC 725

Learn more about injunctions and contracts of employment here.

Categories
Employment Injunctions

Statutory Appeals and Judicial Review in Employment Law in Ireland

judicial review

If you appeal a decision of the WRC to the Labour Court and you are still dissatisfied with the outcome you have two options that may be open to you:

  1. A statutory appeal to the High Court on a point of law
  2. A judicial review

A judicial review is appropriate where your case has been handled so badly that you can reasonably argue that you have not had a fair hearing in the first instance-for example at the WRC. An example of a failure by a statutory body, the Employment Appeals Tribunal, to exercise its power properly was in Mythen v Employment Appeals Tribunal [1990] E.L.R. 1. In this case the High Court held that Mythen should not be expected to appeal the decision of the EAT to the Circuit Court when it had failed to hear the case on a mistaken basis thus failing to exercise its statutory power.

In Board of Management Blackrock College v Mary Browne [2013] I.E.H.C. 607 Ms Browne argued that the Board of Management Blackrock College should have proceeded by way of judicial review, not by way of a statutory appeal against the decision of the Labour Court.

The High Court held that the Board of Management Blackrock College was correct in going by way of statutory appeal as it argued that the Labour Court erred in law in reaching its decision and there was a particular statutory appeal provided for on the statute books for this type of circumstance.

The High Court has held that the default position is clear: a party must pursue a statutory appeal rather than a judicial review as the Oireachtas set up such a procedure and put it on the statute books for those dissatisfied with an initial decision. See Koczan v Financial Services Ombudsman [2010] I.E.H.C 407.

The High Court in Koczan v Financial Services Ombudsman [2010] I.E.H.C 407 gave some guidance as to when a judicial review might be appropriate:

  • A total lack of subject matter jurisdiction
  • The integrity or basic fairness of the decision making process
  • Cases touching on the constitutionality of legislation or validity of statutory instruments, where the legal issue cannot properly be raised by way of appeal

These cases must be regarded as exceptions, however, rather than the rule.

Judicial Review

Where a lower court falls into error in respect of jurisdiction, or acted outside its jurisdiction, or failed to exercise its jurisdiction (eg Mythen case above), bringing a judicial review is the way to proceed. Also where a lower court have permitted unfair procedures.

Otherwise, there is a fair degree of curial deference and respect shown by the High Court to the Labour Court and a presumption that it will act within jurisdiction.

Statutory Appeal

The High Court has a limited role in dealing with a statutory appeal from a decision of the Labour Court. The appeal must be based on a point of law or an unsustainable finding of fact, as stated in An Post v Monaghan [2013] I.E.H.C. 404

The High Court cannot weigh strengths or weaknesses of arguments put forward or the Labour Court’s decision thereon.

Order 84C of the Rules of the Superior Courts sets out the rules for a statutory appeal to the High Court which is done by way of an Originating Notice of Motion. There is a time limit of 21 days from the notification of the deciding body’s decision, unless this is extended for ‘good and sufficient reason’ and no injustice is done to any other person.

Where the High Court finds that a lower body has fallen into an error of law-either on its application of the law to the facts or its analysis of the facts-it will send the case back to the lower body to be reheard.

How the High Court Deals with Statutory Appeals and Judicial Reviews

The approach of the High Court is set out in the Henry Denny & Sons (Ireland) Limited v Minister for Social Welfare [1998] 1 IR 34 and is to the effect that the Superior Courts should be slow to interfere with the decisions of expert administrative tribunals, unless ‘conclusions are based upon an identifiable error of law or an unsustainable finding of fact by a tribunal’.

Thus, the circumstances where the Superior Courts will interfere are where there is

  1. An identifiable error of law
  2. No relevant material to support a finding of fact
  3. An irrational or illogical finding of fact
  4. An absence of fair procedures and constitutional justice in how the lower tribunal carried out its hearing

Costs

The Supreme Court, in Burke v Miley, Miley and Devils Glen Equestrian Centre Limited [1990] 1 IR 343, held that the Employment Appeals Tribunal should have immunity from costs orders except in cases where there was evidence of mala fides.

However, in employment cases the likelihood is that the two parties in the original dispute will be involved in the judicial review in which case either party can be held liable for costs, depending on the Judge.

In statutory appeal cases costs are more likely to be awarded to one or other of the parties, at the discretion of the Judge.

Categories
Employment Claims Employment Injunctions

Injunctions and the Contract of Employment in Ireland-What You Need to Know

 

employment injunction

What is an injunction? It is a Court order restraining a person from carrying out a specific act or requiring him to perform such an act.

 

In employment law the use of an injunction where there is a threatened or actual dismissal has increased in the last few decades. And its use is not confined to only dismissal situations.

They have also been sought in relation to sick pay, pickets, advertising positions, ending suspensions etc.

However the increasing use of the employment related injunction must be viewed against the backdrop that Courts are very reluctant to order specific performance of a contract of personal service.

Prohibitory or Mandatory?

The most common form of injunction sought is a prohibitory injunction seeking to restrain the employer from doing a specific act.

An interim or interlocutory injunction is generally sought on an ex parte basis to preserve the status quo in a dispute until the action can be tried in Court (interlocutory) or until a further order can be made by the Court prior to the hearing (interim). It is generally applied for where the matter is particularly urgent.

Principles governing the granting of an injunction

The principles were summarised in Campus Oil v Minister for Industry and Energy [1983] and are

  1. That there is a fair or bona fide issue to be tried-in other words the claim must not be frivolous or vexatious;
  2. If there is a bona fide issue to be tried the Court must then consider whether damages would be an adequate remedy or not. If so the Plaintiff will be required to give an undertaking as to damages, that is, in the event of the injunction being refused the Plaintiff will pay damages to the person injuncted;
  3. That the balance of convenience favours the granting of the injunction rather than its refusal.

As stated above, Courts will refuse to order the specific performance of a contract of employment. Because it would be impossible to supervise and because damages should be an adequate remedy. However there are exceptions but there must be mutual trust and confidence between employer and employee.

When will Courts grant an injunction in an employment law case?

Over the last 30-40 years the Courts have affirmed the traditional position that damages are an adequate remedy in cases of purported wrongful dismissal. However case law has shown that injunctions may potentially be granted in the following 6 situations:

1. where the dismissal is in breach of contract eg the absence of the contractual notice period or the absence of a contractual disciplinary process;

2. where the dismissal is ultra vires;

3. where the dismissal is in breach of fair procedures;

4. where the purported grounds for dismissal are absent eg alleged redundancy;

5. where the dismissal is in breach of a constitutional right;

6. non dismissal injunctions eg preventing the advertising of a position pending the trial of the action.

Wrongful dismissal at common law and statutory unfair dismissal

(3) Where proceedings for damages at common law for wrongful dismissal are initiated by or on behalf of an employee, the employee shall not be entitled to redress under this Act in respect of the dismissal to which the proceedings relate.(Section 15 Unfair Dismissals Act, 1977)

The employee must therefore choose between suing for damages at common law or claiming relief under unfair dismissals legislation. So the employee when seeking an injunction or declaration will not include a claim for damages for breach of contract in order to keep open the door to the unfair dismissals legislation.

Generally, injunctions are sought be employees on an ex parte basis, that is without notice to the other side. However where the application is unsuccessful the consequences for the employee can be serious on two significant grounds:

1. Court costs and

2. the fact that the employee’s application would have been predicated on the subsistence of the employment relationship-clearly this makes it difficult to then claim unfair dismissal at the Employment Appeals Tribunal.

If you are considering seeking a Court injunction in an employment matter, make sure to obtain professional legal advice first.