Counter-offers in the Formation of Binding Contracts-What You Should Know

counter-offer

I am occasionally contacted by employees who have attempted to negotiate a contract of employment but difficulties have arisen and they want to sue for breach of contract.

The first thing that needs to be addressed, however, is whether a binding, enforceable contract has been entered into between the employee and the employer with whom he is negotiating.

It is not always crystal clear.

Let’s take a look at how binding contracts come into existence, shall we?

In order to form a binding contract you need three things:

  1. Agreement
  2. Consideration
  3. Intention to form legal relations

In assessing whether agreement has been reached between the parties the role of counter-offers is an important one..

Offer

For agreement to be reached an offer must be made and the offer should be clear and unambiguous as to the terms on which the offeror is willing to contract.

If statements are made in negotiations but are not intended to conclude in a contract these statements are called ‘an invitation to treat’.

Acceptance

Acceptance is a final and unequivocal expression of agreement to the terms offered.If the offeree intentds acceptance of the offer he must communicate this acceptance to the offeror.

Counter-offers

Counter-offers can muddy the waters, however, because if the response by the offeree is not a clear and unconditional acceptance of the offer the response may be considered a counter-offer which in turn may be accepted or ignored by the offeror.

If an offer is met with a counter-offer this has the effect of rejecting the original offer. And if the counter-offer is refused the initial offer cannot now be accepted.

Conclusion

You need to be careful in any negotiations you enter into, whether in negotiating a contract of employment or any other contract, and be clear as to whether you are making a counter-offer or merely seeking further information or clarification about the terms of the offer.

You can learn more about contract law in Ireland here.

Probation in the Irish Workplace-the Essentials

Most employees are put ‘on probation’ in a new employment before their position is confirmed.

Most employment contracts will state that the position will only be confirmed on satisfactory completion of the probationary period.

A typical clause in an employment contract will read ‘Subject to satisfactory completion of the probationary period specified below, you will be employed on a full time permanent basis until your employment is terminated by either party giving to the other the notice period specified in the notice clause’, or words to that effect.

Employee suitability

During the probationary period the employee’s suitability for the role will be assessed and it also allows the employee become integrated into the organisation and learn the ethos of the employer’s business.

The duration of a probationary period can range from 3 months to 11 months but should not exceed 12 months, regardless.

Also, even if a probationary period is for 6 months there will almost certainly be a provision in the contract for the extension of the period up to the maximum 11/12 months.

Review meetings

Regular review meetings should be held during probation and feedback given to the employee as to how she is doing with a final meeting just before the end of the probationary period. If the employee is underperforming, she should be advised of this as soon as possible.

At the end of the probationary period the employee should be told whether they have passed, failed, or the period is to be extended.

If the final decision is termination the likelihood is the contract will provide for only 1 week’s notice from the employer during the probation period. The employee may have the right to appeal this decision but the full panoply of policies and procedures-such as disciplinary and/or grievance and/or dignity at work-will not be open to the probationary employee.

However, there will be some method by which a formal grievance or complaint may be made by the employee and there will be a disciplinary procedure, albeit a truncated or amended version of the full procedure.

Probation dismissal

As an employee who is dismissed on or at the end of probation he will not have the necessary 12 months’ service to avail of the reliefs provided by the Unfair Dismissals Act 1977.

There are some limited remedies open to the employee, however, which do not require 12 months’ service. Such claims would be founded on a discriminatory ground or perhaps for having made a protected disclosure.

Further reading

Options open to probationary employees

Advice for employees on probation

The 5 Day Statement of Core Terms When Commencing Employment

Are you an employer?

Did you know that since 4th March 2019 you are obliged to give a statement of ‘core terms’ to the employee within 5 days of her commencing employment?

This is known as the ‘5 day statement’ and is pursuant to section 7 of the Employment (Miscellaneous Provisions) Act 2018 and the Terms of Employment (Information) act ,1994 and 2001.

The statement must contain the following particulars:

  • The names of the employer and employee
  • The address of the employer
  • The duration of the contract
  • The rate or method of calculation of pay/remuneration and the pay reference period for the purposes of the National Minimum Wage Act 2000
  • The number of hours the employee will be expected to work per normal day and per week
  • Any applicable employment regulation order or sectoral employment order

You can download a template statement from the Workplace Relations Commission website here.

New Employment Law Provisions in 2019: Zero Hours Contracts, Banded Hours Contracts, Criminal Penalties for Employers

zero hours contracts

The Employment (Miscellaneous Provisions) Bill, 2017, when passed into law in Ireland-expected to commence in March 2019-will bring about some significant changes for Irish employers and employees. In fact, it makes certain breaches of the act a criminal offence: if the employer incorrectly designates an employee as ‘self-employed’, for example.

(This bill became law on 4th March, 2019: Employment (Miscellaneous Provisions) act 2018.)

Purpose of the bill

The main thrust of this new law is to deal with ‘precarious work’, zero hours contracts, and uncertain working conditions for employees in industries which would have relied on a great deal of flexibility in the employment contract; service industries such as retail, hospitality, and tourism for example.

Most employers in these industries have made ample use of flexible working arrangements to meet the needs of their business, especially long working hours and seasonable peaks and troughs in trade and the demand for staff.

Main elements

The significant elements of this bill are

  1. The employer must give a written statement of 5 core terms of employment within 5 days of starting employment.

    These 5 terms are
    a) the full name of employer and employee
    b) the address of the employer
    c) the expected duration of the employment contract
    d) the method of calculating or rate of pay
    e) the expected normal working day and week

    Failure to provide this statement can lead to the criminal prosecution of the employer.

  2. Banded hours provisions

    The employee has a statutory entitlement to a banded hours contract where their contractual working hours over the previous 12 months do not reflect their actual working hours. If the employee requests such a contract he must be given the banded hours contract unless

    i) the employee’s claim is not supported by evidence
    ii) there have been significant adverse changes to the employer’s business in the previous 12 months
    iii) the hours worked in the previous 12 months were brought about by a temporary situation which no longer exists

    There are 8 different bands as follows:
    Band              From                     To
    A                     3 hours                 6 hours
    B                     6 hours                 11 hours
    C                     11 hours              16 hours
    D                     16 hours              21 hours
    E                      21 hours              26 hours
    F                      26 hours              31 hours
    G                     31 hours              36 hours
    H                     36 hours and over           

    Once an employee is placed on a particular band she is entitled to work an average of those hours for the following 12 months.

  3. Designation of employees

    An employer can be held criminally liable if she incorrectly designates and employee as ‘self employed’. Imprisonment of up to 12 months and fines of up to €5,000 are the maximum penalties.
    The employer has a defence, however, if he can show that he exercised due diligence and took all reasonable precautions when arriving at the designation.
  4. Prohibition of zero hours contracts

    Zero hours contracts will be prohibited unless used in specific exceptional circumstances of genuine casual employment and where they are essential for the needs of the business in the short term or in emergency situations.

  5. Continuity of employment

    Employees who are given a series of fixed term contracts will be deemed as being on layoff and will accumulate ‘continuous service’ for the purpose of protections from various employment law statutes.

  6. New minimum payment

    There will be a new minimum payment entitlement for employees who are not called into work on any given week. The employee will be entitled 25% of their weekly contracted hours.

  7. Strong penalties for employers

    The bill provides strong sanctions against employers for penalising employees who seek to enforce their rights under this bill and also strong penalties for not implementing the provisions of this bill.

New minimum wage rates from 4th March, 2019

Rates on or after 4 March 2019

Min hourly rate% of min wage
Minimum wage9.80100
Aged under 186.8670
Aged 187.8480
Aged 198.8290


Since 4 March 2019 trainee rates are abolished.

You can learn more about the Employment (Miscellaneous Provisions) Bill 2017 here.

Here is the Employment (Miscellaneous Provisions) Act 2018.

Technical Breaches of the Law and the De Minimis Rule-the Labour Court’s Approach

the labour court

What happens if there is a technical breach of the law by an employer but the employee has not suffered any prejudice or detriment?

Do you know what the “de minimis rule” is? It might be a good idea to be aware of it.

Let me explain.

An employer must give an employee a written statement of certain terms and conditions of employment within 2 months of starting the employment. This is normally referred to as a written contract.

The relevant legislation-the Terms of Employment (Information) act 1994-sets out the various things that need to be included in this statement. There are some further matters that must be included pursuant to the Terms of Employment (Additional Information) Order 1998 (SI 49/1998).

Between the 1994 Act and the statutory instrument from 1998 there is approximately 20 matters that must be covered.

What happens however if there is a technical breach of the obligation? By this I mean an employer does indeed give a written statement but omits a small number of things that he should have included, or there is some other technical breach of the obligation.

What happens if a minor, trivial, technical breach does not lead to any prejudice or disadvantage to the employee?

A recent Labour Court case dealt with such a claim in Component Distributors (CD Ireland) Ltd and Brigid (Beatrice) Burns.

The Complainant, Ms Burns, had brought a claim to the Workplace Relations Commission alleging breach of the Terms of Employment (Information) act 1994. The breaches were minor and the Adjudicator awarded her €200.

She appealed this decision to the Labour Court.

The alleged breaches of the employer’s obligations were

1. The full name of the employer was not set out in the contract insofar as the contract omitted “CD” and “(Ireland)”

2. The statement did not set out the employee’s breaks

3. The employer’s annual leave year did not run in tandem with the leave year referred to in the Organisation of Working Time Act 1997

The Labour Court and the De Minimis Rule

The Labour Court referred to a case called Patrick Hall v Irish Water TED161 in which it set out its approach to be adopted where a technical breach of this Act which had no practical consequences occurred. It then adopted and applied the reasoning set out in that case and it is worth taking a look at here.

In Patrick Hall v Irish Water TED161 the Labour Court commented:

As appears from the above, these complaints are wholly devoid of any substantive merit. The State has already incurred the costs associated with providing the Complainant with a hearing of these complaints at first instance and it is now obliged to incur the cost in time and expense of providing him with a full appeal before a division of the Court. That takes no account of the cost incurred by the Respondent in defending this case, both at first instance and now on appeal. The combined associated costs of processing and hearing these complaints is grossly disproportionate to any value that could have accrued to the Complainant if the technical infringements of which he complains had not occurred.

Moreover, the letter of offer furnished to the Complainant dated 25th July 2014 invited him to contact a named person if he wished to discuss or seek clarification on any of the terms proffered. The Complainant signed the statement without demur and returned it to the Respondent. Neither then or at any subsequent time did he request further or better particulars on any matter pertaining to his employment. The Court has no doubt that had he sought further information on any matter pertaining to his employment, including the matters which form the subject of his present complaints, it would have been provided by the Respondent.

In the circumstances of this case that represents an unacceptable squandering of public resources. It is a manifest absurdity to suggest, as the Complainant does, that these contraventions, if such they are, could or should be met with an award of monetary compensation. That is particularly so in circumstances in which the matters now complained of could easily have been rectified by a simple request to the Respondent to provide any further information that the Complainant considered necessary.

De Minimis rule

It is an established principle of the common law that a Court should not squander its resources in dealing with claims that are without substance because the contraventions complained of had no practical consequence for the plaintiff. This principle is encapsulated in the Latin maxim de minimis non curat lex (the law does not concern itself with trifles). The classic statement of where this principle should be applied is contained in the judgment of Henchy J. in the Supreme Court’s decision in Monaghan UDC v Alf-a-Bet Publications Ltd. [1980] I.L.R.M. 64, at page 69. Henchy J articulated a generally applicable test in the following terms: –

“In such circumstances, what the Legislature has, either immediately in the Act or immediately in the regulations, nominated as being obligatory may not be depreciated to the level of a mere direction except on the application of the de minimis rule. In other words, what the Legislature has prescribed, or allowed to be prescribed, in such circumstances as necessary should be treated by the courts as nothing short of necessary, and any deviation from the requirements must, before it can be overlooked, be shown, by the person seeking to have it excused, to be so trivial, or so technical, or so peripheral, or otherwise so insubstantial that, on the principle that it is the spirit rather than the letter of the law that matters, the prescribed obligation has been substantially, and therefore adequately, complied with.”

The Labour Court went further:

The Court is satisfied that, in the circumstances of this case, any deviations that may have occurred from what the strict letter of s. 3 of the Act, or from what the statutory instrument at issue prescribes, are so trivial, technical, peripheral or otherwise so insubstantial as to come within the de minimis rule. There can be no doubt that the Respondent provided the Complainant with all the information that he required in relation to the essential elements of the terms and conditions attaching to his particular employment. What is complained of is a failure to provide information on matters that had no practical significance in the context of the employment that he was offered and accepted.

In this case, Component Distributors (CD Ireland) Ltd and Brigid (Beatrice) Burns, the Labour Court determined as follows:

Determination

The within appeal is upheld in part as set out above. In its decision in Irish Water the Court held that where mere technical breaches of section 3 of the 1994 Act occur, “the dictates of fairness or equity could not justify an award of compensation”. The Court follows that reasoning in its approach to this claim.

The Court determines that the amount of compensation which is just and equitable in all the circumstances is nil. The Recommendation of the Adjudication Officer is varied accordingly.

You will note that even though the Labour Court agreed that there were breaches of the relevant act those breaches were so trivial, technical, peripheral or otherwise so insubstantial as to come within the de minimis rule.

And the Labour Court held that the technical breaches did not justify any compensation and reduced the employee’s award from €200 to nil.