Categories
Employment Injunctions

High Court Orders 6 Months’ Salary Payment In Probation Dismissal Case

The High Court has issued a decision in a case involving a dismissal from the employment during probation that should be a warning for employers.

Background

Donal O’Donovan, the chief financial officer (CFO), was dismissed in January 2020 by Over-C Technology, his employer, and confirmed this decision 10 days later.

Mr O’Donovan issued High Court proceedings seeking an injunction preventing his termination and a number of declarations including that his dismissal was unlawful and invalid, that he remained an employee, damages for breach of contract, breach of duty, and breach of his contractual right to fair procedures.

Mr O’Donovan’s contract of employment, which commenced in July 2019, contained a 6 month probationary period and a notice period of 1 month during the first year of employment, 3 months thereafter.

Mr O’Donovan was given a staff handbook but there was little in it concerning disciplinary procedures.

Mr O’Donovan was on holidays in December 2019-January 2020 and when he returned in January the CEO, Mr Elliot, terminated his employment with immediate effect and advised he would receive 1 month’s pay in lieu of notice.

The termination letter which was sent to Mr O’Donovan claimed his performance as CFO had failed to meet the necessary standard and he had mislead the board about projected sales figures, failed to prepare adequately for the board meeting, failed to answer a question about the cash position of the company.

Mr O’Donovan appealed this decision which was to be heard by a director of the employer.

However, he raised concerns about procedural aspects of the proposed appeal hearing including that the time appointed for the appeal was not suitable for him or his legal representative.

The director responded by saying that “I note you do not now wish to proceed with the appeal today. I now confirm your dismissal stands”.

Mr O’Donovan’s solicitor wrote to the employer claiming the dismissal was unlawful and in breach of his contract of employment. The employer’s position was that he had been dismissed during the probationary period and it was lawful and valid.

Application for injunction

The request for an injunction was based on the argument that his termination was carried out in breach of contract and in breach of his constitutional right to fair procedures.

Test for an employment injunction

The High Court pointed out that the general principles which apply are the Campus Oil principles (Campus Oil v Minister for Industry (No. 2) [1983] 1 IR 88). Put simply those principles are that the applicant must establish that:

 (1) there is a serious question to be tried on the applicant’s entitlement to a permanent injunction;

(2) the balance of convenience favours the grant of interlocutory relief, which requires, but is not limited to, a consideration of whether damages would be an adequate and effective remedy for an applicant who fails to obtain interlocutory relief but later succeeds in the action at trial and, if not, whether the applicant’s undertaking to pay damages would be an adequate and effective remedy for a respondent against whom interlocutory injunctive relief is granted but whose defence to the action succeeds at trial.

The Campus Oil principles hold that the applicant must establish a strong case, likely to succeed at the hearing of the action, not just that a serious question is to be tried.

The High Court then looked at whether Mr O’Donovan had, based on the evidence and arguments, established a strong case that he was dismissed for misconduct. The High Court decided

I am not satisfied that Mr O’Donovan has established a strong case, likely to succeed at the trial of the action, that he was dismissed, wrongly and in breach of his entitlement to fair procedures, for ‘misconduct’.

However, the High Court held that he had established a strong case that his dismissal was not properly carried out in accordance the terms of this contract by reason of the failure of the employer to draw his attention to the alleged performance issues which led to his dismissal.

The court recognised that the traditional common law position is that a contract can be terminated by the employer on reasonable notice whether for good or bad reason. However, a misconduct dismissal does give rise to an obligation to conduct the process in accordance with the principles of natural justice.

The High Court found that he had established a strong case that: (1) the stated reason for his dismissal was his sub-standard or unsatisfactory performance during his probationary period; (2) a fair procedures obligation in the conduct of the relevant performance assessment arises under the terms of his contract of employment; and (3) there was a breach of that obligation in this case.

The decision

The High Court decided:

In my judgment, Mr O’Donovan has established a strong case that he had an implied contractual right to fair procedures in the assessment of his performance during his probationary period, which right was breached in the manner and circumstances of both the decision on 7 January to summarily dismiss him for sub-standard performance and the decision on 17 January to deem his appeal against that decision to have been withdrawn.

67. I am satisfied that the balance of convenience or, differently put, the least risk of injustice favours the making of a Fennelly order in the following terms:

(1) That the defendants are restrained from repudiating Mr O’Donovan’s contract of employment pending the trial of the action on the following specific terms:

(i) That Mr O’Donovan is to be paid his salary for a period of six months from the end of January 2020 (and any applicable bonus and other benefit arising during that period), on the provision by him of an undertaking to carry out any of the duties of CFO that the defendants may require of him.

(ii) That the defendants are not required to assign any of the duties of CFO to Mr O’Donovan at any time pending the trial of the action but, insofar as they do beyond the period of six months from the end of January 2020 and pending  the trial of the action, must pay his salary (and any applicable bonus and other benefit) accordingly.

(iii) That the defendants may choose to put Mr O’Donovan on leave of absence rather than assign any duties to him, but that is without any prejudice to their obligation at (i) above.

(iv) That the defendants are released from their undertaking not to replace Mr O’Donovan by the appointment of a new CFO and may do so as they see fit.

68. I have fixed the period during which the defendants must pay Mr O’Donovan’s salary as one of six months, rather than the entire period pending trial, because, in light of Mr O’Donovan’s acknowledgment that the relationship of mutual trust and confidence between the parties has irretrievably broken down, his claim is, in reality, one for a fair termination process rather than for reinstatement in the role of CFO. It is also significant that, as Carroll J noted in Orr v Zomax Ltd [2004] IEHC 47, (Unreported, High Court, 25 March 2004) (at para. 58), on appeal to the Supreme Court in Fennelly, payment of salary was limited to six months.

Takeaway for employers

Employers need to be careful about affording fair procedures to the employee, even if he/she is on probation. Failure to do so may be a breach of the contract of employment as that contract may contain an implied right to fair procedures in having the employee’s performance assessed, which was the case in Mr O’Donovan’s case.

The employer’s failure in this case to accommodate Mr O’Donovan’s appeal was one of the factors for which the High Court had regard.

Read the full decision here.

Categories
The Employment Contract

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

Categories
Employment Claims Employment Law Procedures and Policies

My Single Best Tip for Employers

small employer ireland

The first time I met Séamus he was a worried man. Séamus is a small employer, with just a handful of employees.

But he had to let one of them go recently because he just wasn’t working out. His attitude was disastrous and Séamus could not see how their relationship could be a happy one.

In fact, he could only see it ending badly.

And that’s exactly what happened on a wet Monday morning a few weeks before Séamus came to see me.

 

Are you an employer?

Are you concerned about the possibility of facing an costly claim for unfair dismissal?

Recently, I wrote an article, “My Single Best Tip for Employees”.

In this piece, I want to give you, as an employer, my best tip to protect yourself in relation to unfair dismissal claims, and how to ensure you are not stuck with an employee who is just not right for your organisation.

Let’s take a look, shall we?

My tip for employers is almost the exact opposite of my tip for employees.

Let me explain.

My tip for employees was to try to ensure that he got 12 months’ continuous employment under his belt, if at all possible. This was to ensure the employee could avail of the remedies provided by unfair dismissal legislation in Ireland, particularly the Unfair Dismissals act, 1977.

My tip for you as employer is to ensure this does not happen, unless you are absolutely satisfied that you are happy with the employee and they are right for your business.

The best way to do this is by a robust, comprehensive probation period clause in the contract of employment.

This clause should make a number of provisions, and I would recommend the following:

  1. The probation period would be for an initial 6 months, but you would have the right to extend it to 11 months, if needed. This gives you a full 11 months to ascertain whether the employee is right for you or not.
  2. The full rigours of the disciplinary procedure will not apply during the probation period; I would still recommend fair procedures and natural justice if you are going to terminate, but you would provide that the full disciplinary procedure need not be afforded during probation.
  3. The notice period during the probation period would be one week; if you do not spell this out you run the risk that whatever notice period stipulated in the contract will apply-this could be one month or three months and it would be strongly arguable, in the absence of the one week provision, that the employee is entitled to one or three months’ notice. Even if you did not require the employee to work the notice period, you would still be on the hook for payment of wages in lieu of notice.

It is widely accepted that an employee can be dismissed during the probation period. In fact, the purpose of the probation period is to allow the employer see if the employee is “the right fit” for the organisation.

It is critical, therefore, that you have as much time as possible to make that decision, but thtat you make it before the employee has 12 months’ continuous service and the protection of the Unfair Dismissals Act, 1977.

Bonus Tip #1 for Employers

If you are going to terminate an unsuitable employee don’t leave it too late-remember that the termination date is the date when notice expires, not when it is given.

If, for example, you have an employee working for 50 weeks and you give her a months’ notice of termination she will have the necessary period of continuous employment to bring an unfair dismissal claim.

Bonus Tip #2 for Employers

I would recommend that you always go through some form of fair procedure before terminating, even if the employee is on probation.

If the employee has over 12 months’ service you need to afford the full rigours of your disciplinary procedure before terminating the employment.

Categories
Employment Claims

Advice for Employees on Probation

employment-probation

She was dismissed while on probation.

She’s contacted me, and she’s not taking it lying down.

She wants to take legal action.

I come across these cases very regularly.

It happens all the time.

And in the vast majority of cases it is almost certain that there is little or nothing that can be done.

Let me explain.

Let’s start by winding the clock back and let me give you some advice about being on probation.

The first thing to understand is that an employer can dismiss you when you are on probation for good, bad, or no reason.

That’s right-if you don’t fit the organisation, if for whatever reason your employer decides to terminate your employment he is almost certainly entitled to do so.

And he doesn’t have to give you any reason.

In fact, the employer may be well advised not to give a reason, in case he leaves a hostage to fortune.

It’s vital to recognise, though, that the purpose of the probation period is to allow the employer see whether you are right for the organisation, or not.

And until you have 12 months service acquired you do not have the statutory protection offered by the various unfair dismissal legislation, Unfair Dismissal Acts, 1977-2005.

This means, therefore, that you cannot bring a claim for unfair dismissal, or constructive dismissal. You are, simply, “statute barred”.

That does not mean that there is no protection for an employee who does not have 12 months’ service. However, it does mean that the avenues to bring any type of claim are significantly reduced.

I have written before about the options open to an employee who is dismissed whilst on probation. At first reading that article may give you a lot of comfort if you are an employee on probation or if you have been dismissed whilst on probation.

But the reality is that you are far better off avoiding the situation.

For example, you can bring a claim under the Industrial Relations Act, 1969 but if the employer objects to an adjudicator hearing the claim or does not agree to be bound by the recommendation of the Labour Court then you will run into quicksand.

You can obtain a recommendation that is legally unenforceable.

My advice is simple: do your utmost to obtain 12 months’ service.

Issues During Your Probation

If you want to raise grievances or issues whilst on probation be crystal clear that you will run the risk of the employer deciding, before you have 12 months service under your belt, that you “do not fit in” or are not right for the organisation.

So, any misgivings you have about your line manager or how the company does its business generally or workplace policies/procedures or its attitude to global warming or the fact that you cannot take holidays at a particular time or the fact that the employer does not operate a sick pay scheme or provide a pension might be more effectively ventilated once you are in the job over 12 months.

I am not saying you cannot raise issues when you are on probation or have less than 12 months’ service; I am saying, though, that you do need to be aware of the possible consequences.

Don’t Win a Battle But Lose the War

Make sure you don’t win a battle but lose the war.

Because if you come to me then, after being terminated on probation, the likelihood is, unless there are particular specific circumstances giving rise to a claim on a discriminatory ground, I will probably have to tell you that I cannot help you and all you can do is chalk it down to experience.

 

Categories
Unfair Dismissal

Unfair Dismissal During the Probationary Period-the Options Open to the Employee

probation-employment-contract

Many employers believe, wrongly, that they can easily dismiss an employee once they are still within the probationary period.

This is mistaken.

Even employees on probation are entitled to natural justice and fundamentally fair procedures.

While the employee may not have the necessary service (12 months) to avail of the protection of the Unfair Dismissals Acts 1977-2007, a claim can be made under the Industrial Relations Act, 1969 (as amended) for unfair dismissal.

There is no service requirement under this act.

Industrial Relations Act, 1969

You can refer a complaint to the Workplace Relations Service under section 13 of the Industrial Relations Act, 1969. However, if one party to the dispute objects in writing to the investigation the adjudicator cannot investigate:

if a party to the dispute notifies the commissioner in writing that he objects to the dispute being investigated by a rights commissioner.(Section 13 Industrial Relations Act, 1969)

Also, you can refer a dispute to the Labour Court under section 20(1) or 20(2) of the Industrial Relations Act, 1969. However, the Labour Court’s recommendation is not legally enforceable unless both parties have agreed prior to the hearing to be bound by the outcome. Then either party could sue the other party on foot of the undertaking for breach of contract.

Section 13(9) of the Industrial Relations Act, 1969 allows for an appeal from a decision of the Rights Commissioner where a party has referred a dispute under section 13. This occurred in the case below:

In IRISH POSTMASTERS UNION- AND -A WORKER the Labour Court awarded the appellant €30,000 and overturned the decision of the Rights Commissioner’s decision that the employer was not in breach of contract when terminating employment while the probationary period was still in place.

The finding of the Labour Court in this case is instructive and the principal finding was that the employer’s decision not to

adhere to either its own disciplinary procedures or be bound by the provisions of the Code of Practice on Grievance and Disciplinary Procedures S.I. No 146 0f 2000 because he was on probation, was misconceived.

Here is the full decision of the Labour Court:

DECISION :

The matter before the Court concerns an appeal of a Rights Commissioner’s Recommendation, which found against the Worker’s claim that his Employer unfairly dismissed him.

The Appellant submitted that the dismissal which occurred during his probationary period was unfair and was conducted without due regard for fair procedures. He held that he was not given a right to reply, he was denied the right to be represented and he was not afforded the opportunity of an appeal against the termination decision.

In its defence the Employer submitted that the Appellant was treated in accordance with his contract of employment, which provided for an ongoing review of his performance and included a clause, which stated, “Either party may terminate employment during the probation or at the end of the probation period.”

The Employer submitted that while there were no disciplinary issues with the Appellant, concerns did emerge about his overall suitability for the position and it was decided to extend his probation. When he objected to such an extension, it was decided to terminate his employment, and pay him three months salary in lieu of notice, as per his contract of employment.

The Court has carefully considered the written and oral submissions of both parties. It is clear to the Court that the rationale behind the termination of employment was the Employer’s error in appointing the Appellant to the position in the first place and it consequently sought to extricate itself from that contract.

In all the circumstances of this case, the Court finds that the Employer’s decision not to adhere to either its own disciplinary procedures or be bound by the provisions of the Code of Practice on Grievance and Disciplinary Procedures S.I. No 146 0f 2000 because he was on probation, was misconceived.

Consequently, the Court finds that the dismissal of the Appellant was unfair. The Court finds in favour of the appeal and overturns the Rights Commissioner’s Recommendation.

The Court recommends that the Appellant should be compensated by the payment of €30,000 in full and final settlement of the claim before the Court. For the avoidance of any doubt this recommended payment is in addition to the three months pay in lieu of notice already paid.

The Court so decides.

Signed on behalf of the Labour Court

Caroline Jenkinson

27th January, 2011     ______________________

DN       Deputy Chairman

It is advisable therefore for the employer to adhere to its disciplinary policy or, if this does not apply during the probationary period, a probationary policy should be in place and which should broadly follow the principles of fair procedure set out in the Code of Practice on Grievance and Disciplinary Procedures and the rules of Natural Justice.

Furthermore, section 20(1) of the Industrial Relations Act, 1969 provides for investigation of the dispute at the request of the worker(s), provided he agrees to accept the recommendation:

20.(1) Where the workers concerned in a trade dispute or their trade union or trade unions request or requests the Court to investigate the dispute and undertake or undertakes before the investigation to accept the recommendation of the Court under section 68 of the Principal Act in relation thereto then, notwithstanding anything contained in the Principal Act or in this Act, the Court shall investigate the dispute and shall make a recommendation under the said section 68 in relation thereto.

Extending the Probationary Period and Termination of the Employment

To extend the probationary period of an employee there must first be provision for an extension, either in the contract of employment itself or in the staff handbook.

Probationary review meetings should be held during the probationary period with the employee being given feedback as to how they are performing and any areas requiring improvement.

At the end of the probationary period there should be a final probationary review which will assess the employee’s performance and suitability. The employee will then either be confirmed in the employment or dismissed or have the probationary period extended.

The outcome of this review should be communicated to the employee in writing and if the probation is to be extended the employer should make clear what improvements are necessary. The probation period should only be extended to allow the employee to improve in whatever areas he/she is deficient.

The employee should be advised in writing of the need to extend the probation period, the required improvement areas and the review dates to monitor performance.

If the employee is to be terminated he/she should be invited to a disciplinary hearing and given the opportunity to make representations on his/her behalf. The employer should not take a decision to terminate until he has considered these representations.

The decision to terminate and the reasons should be given to the employee in writing.

Dismissed During Probation?

So, if you are unfairly dismissed during your probation there are 4 options which may be open to you, depending on the circumstances:

  1. A claim for unfair dismissal under the Industrial Relations Act, 1969 (as amended)
  2. A civil Court action for breach of contract/wrongful dismissal
  3. A claim to the Equality Tribunal under the Employment Equality Acts 1998-2004
  4. a claim under the Protected Disclosures Act, 2014

Unlike with the Unfair Dismissals Acts, there is no service requirement for any of these 3 options.

For this reason, the probationary clause in the employment contract needs to be properly drafted to provide for a shorter period of notice for termination during probation and the use of a probationary policy if the full disciplinary policy is not to be employed during probation.

Regardless of how it is drafted, natural justice and fair procedures must be afforded to the employee in extending the probationary period or terminating at the end of it.

Word of warning for employees

A decision in your favour from the Labour Court has moral authority, but is unenforceable if the employer simply chooses to ignore it. In the case above involving a trade union, it would have been very difficult for the union to ignore a recommendation from the Labour Court.

And if you refer a dispute under section 13 to the Workplace Relations Commission the adjudicator cannot investigate if the employer objects in writing.

That’s not the case with smaller employers, or employers who simply don’t care about adverse publicity, or any other actions you might take to have your decision recognised and enforced.

From an employee’s perspective, and with a view to future employment, it may well be worthwhile to have official recognition that he was unfairly dismissed-even if he was never to obtain a cent in compensation.

This will depend on the circumstances of each case, and a decision for the employee to think carefully about.

You may also be interested in reading advice for employees on probation.