Cases
Western Excavating v Sharp
[1978] QB 761, [1978] ICR 221, [1977] EWCA Civ 2
Lord Denning MR
‘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 further performance. If he does so then he terminates the contract by reason of the employer’s conduct. He is constructively dismissed. The employee is entitled in those circumstances to leave at the instant without giving any notice at all or, alternatively, he may give notice and say he is leaving at the end of the notice. But the conduct must in either case be sufficiently serious to entitle him to leave at once. Moreover, he must make up his mind soon after the conduct of which he complains: for, if he continues for any length of time without leaving, he will lose his right to treat himself as discharged. He will be regarded as having elected to affirm the contract.’
A resignation by an employee is a repudiation of the contract of employment, a fundamental breach.
Liz Allen v. Independent Newspapers (Ireland) Ltd
UD 641/2000
The issue for the Tribunal is whether Ms Allen was dismissed by construction under the definition of dismissal under section 1(b) of the Unfair Dismissal Act 1977 , which provides as follows:
… the termination by the employee of his contract of employment with his employer, whether prior notice of 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 would have been reasonable for the employee, to terminate the contract of employment without giving prior notice of termination to the employer.
Having regard to the aforementioned definition and to the evidence and submissions the Tribunal deems the proper test in this case is whether it was reasonable for Ms Allen to terminate her contract of employment.
Having given careful consideration to the evidence adduced and the submissions made on behalf of the parties and having regard to the various findings and conclusions arrived at by this Tribunal, as already outlined in this determination, it is the unanimous view of the Tribunal that it was reasonable in all the circumstances for the claimant to terminate her contract of employment.
Mr Connaughton BL, on behalf of the respondent, has submitted, inter alia , that it was incumbent on the claimant before resigning to utilise the NUJ grievance procedures. The objective of utilising the NUJ grievance procedure would have been to bring the claimant’s grievances to the attention of the respondent. The Tribunal is however satisfied that at various stages throughout her employment and more particularly in September 2000 Ms Allen brought her complaints to senior management level within the respondent newspaper. We also note Mr Moore’s evidence in cross-examination that an employee’s grievance could be processed by either going to the union or directly to management.
Mr Connaughton also submits that the claimant cannot rely on any matter prior to June 29, 2000 as grounds for resigning her employment on the basis that the claimant, in her own evidence, expressed herself happy with the outcome of June 29, 2000 meeting at which she had outlined her grievances.
The Tribunal rejects this argument and does so having regard to the various findings and conclusions arrived at by the Tribunal as set out in this determination. The Tribunal considers it reasonable for the claimant to have taken into consideration the manner in which her various complaints were dealt with from 1999 through to 2000 in arriving at her conclusion that she had essentially lost faith in what was being offered by way of investigation by the respondent in September 2000. She was entitled to do so because we accept that she had cause for complaint after June 2000. The Tribunal therefore finds the claimant’s conclusion that she could have no confidence in the respondent to either properly or effectively address her grievances was a reasonable conclusion in all the circumstances. Moreover, the claimant did not act unreasonably in taking into consideration the likely effect on her health and well-being were she to remain in the work environment. In assessing the reasonableness of her decision in this regard the Tribunal accepts that the effect on her health and well-being was a concern she had prior to her resignation, a concern that had been communicated to the respondent in September 1999.
Accordingly, the Tribunal unanimously finds the claimant to have been constructively dismissed and as no evidence has been offered to rebut the presumption of unfairness the Tribunal determines the claimant was unfairly dismissed for the purposes of the Unfair Dismissals Act 1977 to 1993. We do not find that the claimant contributed in any way to her dismissal.
B v F International Limited
(UD/70/2007)
“Respondent’s Case:
The claimant was dismissed due to her refusal to accept changes in her sales territory and the structure of sales commission. The claimant had been notified and consulted prior to the change, and although she wasn’t happy with the changes, the company considered that the changes should be made.
The respondent company is a furniture wholesaler, which supplies retailers throughout Ireland. The claimant commenced her employment as a field sales representative in December 2001. The position involved selling and providing customer service to retailers in a given territory. Sales representatives are expected to make monthly calls to customers in their territory to make sales, take back returns, increase the number of the company’s products on display and establish new accounts. The claimant’s contract of employment stipulated that the sales area she covered and the sales commission structure were subject to change to suit the needs of the business.
Determination:
The Tribunal does not refute the employer’s entitlement to re-structure nor is the employer obliged to consult with staff on the detail. However, the Applicant raised a very real fear that her income would drop. She indicated the reduction in her remuneration would arise with the loss of her three lucrative counties, together with the new commission structure.
The Applicant did not have a good working relationship with the Director of Operations. He did nothing to foster good relations and was utterly unprofessional in his dealings with her. As the
Applicant was on the road so much, her relationship with the said Director was not of great import.
However with the introduction of the new commission and sales areas it was essential that the Director of Operations be available to discuss these changes on a one to one basis and in a positive atmosphere.
Describing the Applicant as the “weakest link”, telling her she was “dishonest” and calling her in for spurious meetings did nothing to alleviate the Applicant’s concerns.
In the circumstances it was hardly surprising that the Applicant had to go on sick leave.
Crucially, the Applicant asked to invoke the grievance procedure to review the structural changes and to discuss a raise in salary where there might be a drop in commission. The company failed to follow its own grievance procedure. In its subsequent dealings with the Applicant the company failed to act reasonably.
It is only on the rarest of occasions that the Tribunal will come across a situation where an employer has so blatantly infringed the rights and integrity of an employee. The Tribunal finds this to be such an occasion.
The Applicant was forced into a situation wherein she had no alternative other than to hand in her resignation. The Respondent’s behaviour gave rise to this situation and a situation of
constructive dismissal arises. Accordingly the Tribunal awards the Appellant the sum of € 35,000 under the UnfairDismissals Acts, 1977 to 2001.
Employer v Employee
UD1967/2011
“Determination:
The claims under the Minimum Notice and Terms of Employment Acts, 1973 to 2005, and the Organisation of Working Time Act, 1997, were withdrawn at the outset of the hearing.
The claimant is alleging she was constructively dismissed from her employment with the respondent company. Section 1 of the Unfair Dismissal Act defines constructive dismissal as:
“…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 the 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” The burden of proof, which is a very high one, lies with the claimant. She must show that her resignation was not voluntary. The legal test to be applied is “an and or test”. Firstly, the Tribunal must look at the contract of employment and establish whether or not there has been a significant breach going to the root of the contract. If the Tribunal is not satisfied that there has been a significant breach of the contract it can examine the conduct of both the employee and employer together with all the circumstances surrounding the termination to establish whetheror not the decision of the employee to termination the contract was a reasonable one.
The claimant made her claim for constructive dismissal under the following heading:
Unilateral alteration of her contractual terms (cut of her working week from five days to three days.)
The claimant commenced work at the respondent crèche in 2006. She worked there without issue until June 2011. On the 9th June the Manager called a staff meeting to discuss the respondent’s financial situation together with normal business matters. The claimant stated that the Manager informed the staff that she intended to introduce a 10% pay cut. The claimant was given a letter of consent to sign. The respondent stated that she asked her staff to consider a 10% pay cut and that it was in no way being forced upon them. The letter dated, 7th June, 2011 states “We have decided that a salary reduction is absolutely necessary at this time. We regret to inform you your monthly basic salary will be reduced by 10% which will take effect and be deducted from your next pay date….” Based on the wording of that letter the Tribunal prefers the claimant’s evidence and find that the staff members were not given a choice at the meeting of the 9th June. The respondent also stated that the pay cut was only a temporary measure. The claimant stated that that was never put to her. The letter of the 7th June is silent on that matter. The Tribunal prefers the claimant’s evidence but find that nothing turns on the matter one way or the other.
The claimant refused to sign the letter of consent and informed the Manager that she would not be doing so on the 10th June, 2011. The following Monday the claimant’s shifts were changed for the first time in five years. On Friday the 17th June, the claimant was informed that she would not be required to work on Monday or Tuesday of the following week. That amounted to a 40% reduction in her wages. The claimant’s contract of employment states “Your normal working week will be 5 days, Monday to Friday”. For the previous five years that claimant had worked Monday to Friday. The claimant was concerned that she did not have those instructions from the manager in writing so she attended for work on Monday morning. When she arrived at her workplace she asked for meeting with the Manager so that she could have her instructions in writing. She asked why the Manager had altered the terms of her contract. She was told that it was because some of the children were on holidays. The claimant became very distressed due to the Manager’s treatment of her. When she left she went to her GP and following that meeting was certified unfit for work. The claimant furnished the respondent with sick certificates on a weekly basis until 28th September, 2011. She lodged her claim on the 6th October, 2011.
The legal test the claimant must satisfy is an onerous one. Firstly, the claimant must show that there has been a significant breach going to the root of the contract, which said breach prevented the claimant from carrying out her contractual duties. It is very clear from the evidence that the claimant was singled out following her refusal to sign the letter of consent. The respondent’s counsel even put it to her that because she had refused to give her consent she had placed herself in a better position that those who had signed it and therefore the respondent had to treat her differently and find another way to make the cuts. Following her refusal to sign the consent the respondent attempted to unilaterally alter the terms of her contract by reducing her working days from five to three and thus reducing her remuneration by 40%. That is a breach of her contract. It is a breach that goes to the root of her contract. It is a breach which prevented her from carrying out her contractual duties.
The Tribunal find that the claimant was constructively dismissed and according her claim under the Unfair Dismissals Act, 1977 to 2007 succeeds. “
OG v GT Company Limited
UD2314/2010
“The claimant was employed as a mechanic by the respondent company from October 2006. On 11 May 2010 he went on sick leave and did not return to work. He resigned by letter dated 8 September 2010.
Determination:
The claimant is alleging he was constructively dismissed from his employment with the respondent company. Section 1 of the Unfair Dismissal Act defines constructive dismissal as:
“the termination by the employee of his contract of employment with this employer whether prior notice of the termination was or was not given to the employer in the 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.” The burden of proof, which is a very high one, lies with the claimant. He must show that his resignation was not voluntary. The legal test to be applied is “an and or test”. Firstly, the Tribunal must look at the contract of employment and establish whether or not there has been a significant breach going to the root of the contract. If the Tribunal is not satisfied that there has been a significant breach of the contract it can examine the conduct of both the employee and employer together with all the circumstances surrounding the termination to establish whether or not the decision of the employee to termination the contract was a reasonable one.
The claimant made his claim for constructive dismissal under three separate headings:
– Excessive workload,
– Exclusion,
– Being subjected bullying, harassment and aggressive behaviour.
It is important to note from the outset that the claimant suffered from a syndrome known as Asperger Syndrome (A.S.) which falls into the category of autism spectrum disorders. From the evidence it was clear that the claimant was extremely intelligent and talented when it came to anything mechanical. However, for the normal day to day challenges life brings he relied heavily on his parents. The claimant’s father spoke to the employer at length prior to the claimant commencing his position with the respondent company. The purpose of the conversation was to inform or educate the employer in relation to A.S. and the challenges that that brings. The claimant commenced his employment in October, 2006 and worked without issue for a period of three years.
In March, 2009 the claimant suffered a personal injury at work when he was struck on the head by a tyre. He was certified unfit to work the next day but despite the certificate he attended for work as he was anxious to finish a car he was working on. There was a second incident when a tyre exploded in the vicinity of the claimant which caused his hearing some short term temporary distress. The claimant did not raise a formal grievance with the respondent company in relation to either of these incidents nor did he bring a personal injury claim.
There were several incidents where the claimant felt that inappropriate language was being directed towards him and on several occasions he felt that his employer personally belittled him by calling him, for example, “fucking stupid”. The employer stated in evidence that on occasion inappropriate language was used and that he did give out the claimant when things
were not being done. He stated that there were times that he just had to be the boss and he did not make exceptions for the claimant when his orders were not being followed. He explained to the claimant that on occasion he had to “be the boss” and that it was not personal. The employer should not be expected to make exceptions for the claimant when it came to matters of business. However, knowing how sensitive the claimant was to reprimand the employer could have taken a more gentle approach.
The claimant felt that he was being excluded. He gave an example that when his work colleagues would go for lunch nobody would call him and he would be left alone to work through his lunch. It is important to note that time means nothing to the claimant and a lunch hour could come and go without the claimant noticing. He would have to be called for his lunch otherwise he would not have known that it was lunch time. There probably were times when the employer or his employees neglected to call the claimant for his lunch but the Tribunal finds that there was no malice involved. The employer stated that he worked one on one with the claimant on most days and that he gave him as much of his attention as he could and if anyone was being excluded it was his other staff members.
When it came to including the claimant in staff activities, the employer made exceptions for the claimant. He did so due to the fact that he thought highly of him and knowing about A.S. One example of that was the Christmas party. The respondent’s staff planned a night out at the dogs. The claimant stated that he had no desire to go to the dogs as they did not interest him, so the employer organised a meal at a local Italian restaurant that the claimant liked. The employer, his staff, the claimant and his father attended for the lunch. The Tribunal note that the claimant’s father paid for the meal.
The claimant stated that he felt that the employer kept increasing his work load to the point that it was impossible for him to complete the work in any given day. When the work was not completed he stated that the employer reprimanded him and sometimes did so in a personal way and in front of other staff members. The employer stated that the claimant was so passionate about his work that sometimes he would get lost in it trying to solve problems that were outside his remit. He said that he found this frustrating and that he did have to reprimand the claimant from time to time. He also admitted that his choice of language could at times be colourful. The employer is within his rights to reprimand the claimant for not following orders, however, he should not have been reprimanded in public or in front of other staff members. To do so runs the risk of humiliating the claimant.
The claimant left his employment in May, 2010 and did not return due to stress, which both his parents and his GP say was work related. The employer stated that he did not know that the claimant was suffering from work related stress until the second sick certificate came in. The claimant stated that there was no contact with the employer after that. The employer stated that he did try to contact the claimant’s father on several occasions.
It is crucial in a constructive dismissal case that the claimant informs the employer fully of the complaints being made against him and that the employer be given an opportunity to resolve the issues. In this unusual case, the claimant’s parents had a duty to inform the employer why the claimant was suffering from stress and should have informed him that the claimant felt he was being subject to behaviour that amounted to bullying, harassment and exclusion. Their failure to do so left the employer powerless to rectify the situation.
Unfortunately the burden for the claimant is an extremely high one and the law makes no allowances, rightly or wrongly, for claimants who suffer from A.S. The claimant must show that there has been a significant breach going to the root of the contract, which said breach would prevent the claimant from carrying out his contractual duties. The Tribunal can find no evidence that there was such a breach of the claimant’s contract.
The Tribunal has examined the conduct of both the employee and employer together with all the circumstances surrounding the termination. Having done so cannot establish that theclaimant’s decision to termination the contract was a reasonable one.
The Tribunal has an enormous amount of respect and admiration for the claimant and what he has achieved but is bound by the law and therefore finds that the claim under the Unfair Dismissal Acts, 1977 to 2007, must fail. “
Kwik-Fit (GB) Ltd v Linehan
[1991] UKEAT 250_91_2410, [1992] ICR 183
Wood J
‘As we have said the industrial members take the view that the way in which this industrial tribunal have expressed themselves puts too high a burden upon employers. If words of resignation are unambiguous then prima facie an employer is entitled to treat them as such, but in the field of employment personalities constitute an important consideration. Words may be spoken or actions expressed in temper or in the heat of the moment or under extreme pressure (‘being jostled into a decision’) and indeed the intellectual make-up of an employee may be relevant: (and he gives a citation). These we refer to as `special circumstances’. Where `special circumstances’ arise it may be unreasonable for an employer to assume a resignation and to accept it forthwith. A reasonable period of time should be allowed to lapse and if circumstances arise during that period which put the employer on notice that that further inquiry is desirable to see whether the resignation was really intended and can properly be assumed, then such inquiry is ignored at the employer’s risk. He runs the risk that ultimately evidence may be forthcoming which indicates that in the `special circumstances’ the intention to resign was not the correct interpretation when the facts are judged objectively’.
Woods v WM Cae Services (Peterborough) Limited
[1981] IRLR 347
Browne-Wilkinson P
‘In our view it is clearly established that there is implied in a contract of employment a term that the employers will not, without reasonable and proper cause, conduct themselves in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee: Courtaulds Northern Textiles Ltd v. Andrew [1979] IRLR 84. To constitute a breach of this implied term, it is not necessary to show that the employer intended any repudiation of the contract: the Tribunals’ function is to look at the employer’s conduct as a whole and determine whether it is such that its effect, judged reasonably and sensibly, is such that the employee cannot be expected to put up with it: see BAC Ltd v. Austin [1978] IRLR 332 and Post Office v. Roberts [1980] IRLR 347. . . We regard this implied term as one of great importance in good industrial relations. Quite apart from the inherent desirability of requiring both employer and employee to behave in the way required by such a term, there is a more technical reason for its importance. The statutory right of an employee who ceases to be employed to complain that he has been unfairly dismissed is wholly dependent on his showing that he has been ‘dismissed’. In the ordinary case, where an employer in fact dismisses the employee (ie cases falling within s.55(2)(a) and (b)) this normally presents no difficulty. The difficulty arises in cases of constructive dismissal falling within s.55(2)(c) where the employee has resigned due to the behaviour of the employer. As is well known, there used to be conflicting decisions as to whether, in order to constitute constructive dismissal, the conduct of the employer had to amount to a repudiation of the contract at common law or whether it was sufficient if the employer’s conduct was, in lay terms, so unreasonable that an employee could not be expected to put up with it. In Western Excavating (ECC) Ltd v. Sharp (supra) this conflict was resolved in favour of the view that the conduct of the employer had to amount to repudiation of the contract at common law. Accordingly, in cases of constructive dismissal, an employee has no remedy even if his employer has behaved unfairly, unless it can be shown that the employer’s conduct amounts to a fundamental breach of the contract. . . . Any breach of that implied term is a fundamental breach amounting to a repudiation since it necessarily goes to the root of the contract: see Courtaulds Northern Textiles Ltd v. Andrew (supra) at paragraph 11.’”
Nottinghamshire County Council v Meikle
[2004] EWCA Civ 859 [2004] IRLR 703
Lord Justice Keene:
“Constructive Dismissal:
The tribunal’s reasoning on this issue requires to be set out in full. The first two of the three crucial paragraphs in the Extended Reasons summarise counsel’s submissions, with paragraph 100 setting out the tribunal’s conclusions.
“98. [Counsel for the applicant] submitted that there was a course of conduct amounting to a fundamental breach of contract. He relied in particular on the decision to suspend the applicant, and the failure to address her concerns. The failure to respond adequately and/or positively to the letters from her representatives dated 8 and 31 March and 15 May 2000 and the first respondent’s actions amounted to the “last straw”.
99. [Counsel for NCC] submitted that the applicant did not maintain that she had lost trust and confidence in the first respondent. In any event there was no breach.
100. The Tribunal found that the applicant resigned because of the first respondent’s failure to agree to terms which her solicitors stated had to be met before she would return to work. These were set out in their letter dated 15 May 2000. That failure did not constitute a breach of contract. Even when it considered the course of events from 1993 the Tribunal did not decide that the first respondent’s actions were such that the applicant was entitled to resign from her employment without notice. In reaching that conclusion the Tribunal rejected [her counsel]’s submission that the implied term may be broken even if subjectively the employee’s trust and confidence was not undermined in fact. Almost immediately after her resignation the applicant successfully applied to re-enter the first respondent’s employment. In her originating application she asked for re-engagement. These matters demonstrated that the relationship of trust and confidence still subsisted. It was her relationship with the second respondent [Head Teacher] which had broken down. He was not her employer. She did not resign as a result of the first respondent’s conduct. It could not, therefore, be said that she had been constructively dismissed under the provisions of sections 95(1)(c) of the 1996 Act. Accordingly, the Tribunal decided to dismiss the complaint.”
……..In any event, the EAT held, NCC had itself been in fundamental breach because of the accumulation of acts by it, a series of actions over a period of time. They placed particular emphasis on the unjustified suspension of Mrs Meikle, as well as NCC’s continuing failure to deal with the two outstanding areas of discrimination. The latter, said the EAT, were sufficient to amount to the “last straw” and to find otherwise was perverse. Consequently the EAT concluded that Mrs Meikle had been constructively dismissed, and therefore wrongfully dismissed as well.
That analysis is now challenged by NCC. On its behalf, Mr Cavanagh QC, puts at the forefront of his case the submission that the EAT misconstrued paragraph 100 of the tribunal’s decision. It is argued that the tribunal found that the reason for Mrs Meikle’s resignation was NCC’s failure to agree to the four new requirements added in the second letter dated 15 May 2000 from her solicitors. That was a finding of fact, and a finding which was not perverse. The tribunal was entitled to conclude that that failure to accept those four requirements was not a breach of the implied duty of trust and confidence. Yet it is well established that, in order for there to be a constructive dismissal, the employee must leave in response to the fundamental breach of contract by the employer: Western Excavating (ECC) Limited –v- Sharp [1978] QB 761; [1978] IRLR 27. Consequently Mrs Meikle did not leave her employment in response to any breach of that term.
Mr Cavanagh emphasises that this is an argument about causation. It is not enough that the employer is in breach of the implied term of trust and confidence and that the employee resigns: the two events must be causally linked. It is accepted by NCC that, in the later part of paragraph 100, the tribunal went on to apply the wrong test when asking whether that implied term had been broken. Mr Cavanagh acknowledges that the test is an objective one, as appears from the House of Lords decision in Malik and Mahmund, and that the tribunal went wrong in saying that the term cannot be broken unless the employee’s trust and confidence has in fact been undermined. But it is contended that that does not matter, if the tribunal was right in the opening part of that paragraph to find that Mrs Meikle resigned in response to something which was not a breach of contract. That crucial paragraph should be seen as having two parts to it and the first is not vitiated by the error in the second part.
I entirely accept that it is a question of fact why Mrs Meikle resigned. Moreover, it is not in issue that, for a constructive dismissal to arise, the employee must resign in response to a fundamental breach of contract. That is demonstrated not only by Western Excavating (ECC) Limited –v- Sharp but also by Lewis –v- Motorworld Garages Limited [1986] ICR 157, where Glidewell LJ spoke of the employee having to show that he left “as the result of a breach of contract by his employer” (page 169).
……..It has been held by the EAT in Jones –v- Sirl and Son (Furnishers) Limited [1997] IRLR 493 that in constructive dismissal cases the repudiatory breach by the employer need not be the sole cause of the employee’s resignation. The EAT there pointed out that there may well be concurrent causes operating on the mind of an employee whose employer has committed fundamental breaches of contract and that the employee may leave because of both those breaches and another factor, such as the availability of another job. It suggested that the test to be applied was whether the breach or breaches were the “effective cause” of the resignation. I see the attractions of that approach, but there are dangers in getting drawn too far into questions about the employee’s motives. It must be remembered that we are dealing here with a contractual relationship, and constructive dismissal is a form of termination of contract by a repudiation by one party which is accepted by the other: see the Western Excavating case. The proper approach, therefore, once a repudiation of the contract by the employer has been established, is to ask whether the employee has accepted that repudiation by treating the contract of employment as at an end. It must be in response to the repudiation, but the fact that the employee also objected to the other actions or inactions of the employer, not amounting to a breach of contract, would not vitiate the acceptance of the repudiation. It follows that, in the present case, it was enough that the employee resigned in response, at least in part, to fundamental breaches of contract by NCC.
It was not really argued before us that the persistent failure of NCC to carry out those reasonable adjustments did not amount to a fundamental breach. The tribunal found that they amounted to unlawful discrimination and, given the duration of them and the finding that, even at the time of her resignation, there would have been little improvement in cover if Mrs Meikle had returned to work, it seems to me to be clear that NCC was in breach of its obligation to maintain the trust and confidence of its employee. There are many cases where similar or lesser failures in respect of discrimination have been held to breach that implied term, such as Bracebridge Engineering Limited –v- Darby [1990] IRLR 3, where the EAT held that the failure by an employer to treat an allegation of sexual harassment seriously was a breach of that implied term, which entitled the employee to treat the contract as having been repudiated.
Consequently the tribunal erred in law in concluding that NCC’s failure to agree to the conditions set out by Mrs Meikle’s solicitors did not constitute a breach of contract. Their failure was not merely a breach but sufficiently fundamental as to amount to repudiation of the contract. Moreover, the tribunal found that the relationship between Mrs Meikle and the Headteacher, Mr Lamb, had broken down and implicitly that she had resigned, in part, because of that. I accept that not every piece of adverse conduct on the part of one employee towards another will cause a breach of the implied term of trust and confidence between employer and the second of those employees. But Mr Lamb was the Headteacher at the school in which Mrs Meikle had taught since 1985. She had been experiencing problems about the enlargement of materials at the school since 1993, and neither Mr Lamb nor NCC had dealt adequately with those problems, any more than they had dealt with the problem of free time and cover. It would be remarkable indeed if Mr Lamb’s failure did not amount to a breach by NCC of its duty of maintaining trust and confidence on Mrs Meikle’s part.
But even if the tribunal had been right that the matters which led to her resignation were not in themselves a breach of contract, that would not have been the end of the story. Such a finding would not have necessarily produced the conclusion that there was no constructive dismissal. In cases where a course of conduct or a series of events leads to a breach of the implied term, the final event which brings about the employee’s resignation need not itself amount to a breach of contract. That was so held in Wood –v- W.M. Car Services (Peterborough) Limited [1981] I.C.R. 666, a decision which was approved by this court in Lewis –v- Motorworld Garages Limited, where Glidewell LJ said at page 169:
“(3) The breach of this implied obligation of trust and confidence may consist of a series of actions on the part of the employer which cumulatively amount to a breach of the term, though each individual incident may not do so. In particular in such a case the last action of the employer which leads to the employee leaving need not itself be a breach of contract; the question is, does the cumulative series of acts taken together amount to a breach of the implied term? (See Woods v. W. M. Car Services (Peterborough) Ltd [1981] I.C.R. 666.) This is the “last straw” situation.”
This is the very reason why the tribunal here went on to consider whether the course of events from 1993 onwards amounted to such a breach. In the light of its earlier view that the trigger for the resignation was not a breach of contract, it had to consider that issue.
However, it patently erred when it did so. It rejected the “last straw” argument because it applied the subjective test of asking whether the employee’s trust and confidence had in fact been undermined. Even if that had been the appropriate approach, the conclusion that Mrs Meikle’s trust and confidence remained despite her relationship with the Head teacher having broken down is an unsustainable one. But the test itself is wrong in law. As Lord Nicholls said in Malik and Mahmud (page 35 E):
“Proof of a subjective loss of confidence in the employer is not an essential element of the breach.”
As I have already noted, the appellant does not now seek to argue to the contrary. It follows that the tribunal fell into error when it considered, as it had to, the “last straw” argument, and the EAT was right in so concluding.
It is contended by the appellant that, having reached that conclusion, the EAT should have remitted the case to the tribunal below for it to reconsider the issue of constructive dismissal and wrongful dismissal. Mr Cavanagh argues that the situation in which Mrs Meikle found herself was improving by May 2000. It cannot be said that the only conclusion which could be reached on the primary facts was that she had been dismissed rather than that she had resigned.
I disagree. Once it is clear that the NCC was in fundamental breach, as it patently was, the only question is whether Mrs Meikle resigned in response to the conduct which constituted that breach. I have concluded already that that was the finding of the tribunal. In those circumstances there could be only one outcome, namely that she had been constructively dismissed. The EAT was entitled therefore to substitute such a finding.”
Sovereign House Security Services Ltd v Savage
[1989] IRLR 115
CA May LJ
‘In my opinion, generally speaking, where unambiguous words of resignation are used by an employee to the employer direct or by an intermediary, and are so understood by the employer, the proper conclusion of fact is that the employee has in truth resigned. In my view Tribunals should not be astute to find otherwise.’ But he then continues: ‘However, in some cases there may be something in the context of the exchange between the employer and the employee or, in the circumstances of the employee him or herself, to entitle the Tribunal of fact to conclude that notwithstanding the appearances there was no real resignation despite what it might appear to be at first sight.’ and
‘There was that evidence from those two witnesses on which in my judgment it was possible for the Industrial Tribunal, were they so minded, having seen and assessed the witnesses giving evidence in the witness-box, to conclude that the words actually used by the employee to Scoggie were used in the heat of the moment and should not have been accepted at full face value by the employers. There was thus, in my opinion, evidence entitling the Industrial Tribunal to make the findings which they did in paragraph 7 of their decision, which was, as I think, just as much one of fact as their findings of fact set out in paragraph 4 of the decision, that ‘the applicant was not tendering his resignation to Mr Scroggie’.’
Horkulak v Cantor Fitzgerald International
[2003] EWHC 1918
Mr Justice Newman :
“The Legal Framework for the consideration of the case
Liability
In order for the claimant to succeed in a claim for wrongful dismissal he must establish:
(1) A breach of contract by the defendant.
(2) That the breach was sufficiently serious to have justified the claimant resigning, or at least be the last in a series of events which justified his leaving.
(3) That he left his employment with the defendant in response to that breach and not for some other unconnected reason.
Western Excavating v Sharp [1978] QB 761 at 769A-C (Lord Denning MR). The defendant does not contend that the claimant elected to affirm the contract.
Implied term of trust and confidence
The leading authority on the implied term of trust and confidence is now the decision of the House of Lords in Mahmud & Malik v BCCI [2000] AC 20. See the speech of Lord Steyn at 45 c-D:
“The applicants do not rely on a term implied in fact. They do not therefore rely on an individualised term to be implied from the particular provisions of their employment contracts considered against their specific contextual setting. Instead they rely on standardised term implied by law, that is, on a term which is said to be an incident of all contracts of employment: Scally v Southern Health and Social Services Board [1992] 1 AC 294, 307B. Such implied terms operate as default rules.”
Lord Steyn adopted the definition of this term set out in Woods v W M Car Services (Peterborough) Ltd [1981] ICR 666 and approved by the Court of Appeal in Lewis v Motorworld Garages Ltd (1986) ICR 157 and also by Sir Nicholas Browne-Wilkinson VC in Imperial Group Pension Trust Ltd v Imperial Tobacco Ltd [1991] WLR 589, that an employer shall not:
“without reasonable and proper cause, conduct itself in a manner calculated and likely to destroy or seriously damage the relationship of confidence and trust between employer and employee.”
Lord Steyn further set out that (p45H-46D):
“….The major importance of the implied duty of trust and confidence lies in its impact on the obligations of the employer…..And the implied obligation as formulated is apt to cover the great diversity of situations in which a balance has to be struck between an employer’s interest in managing his business as he sees fit and the employee’s interest in not being unfairly and improperly exploited.
“The evolution of the implied term of trust and confidence is a fact. It has not yet been endorsed by Your Lordships’ House. It has proved a workable principle in practice. It has not been the subject of any adverse criticism in any decided cases and it has been welcomed in academic writings. I regard the emergence of the implied obligation of mutual trust and confidence as a sound development.”
Lord Nicholls described the implied obligations as (p35A-B):
“….no more than one particular aspect of the portmanteau, general obligation not to engage in conduct likely to undermine the trust and confidence required if the employment relationship is to continue in the manner the employment contract implicitly envisages.
“…The conduct must, of course, impinge on the relationship in the sense that, looked at objectively, it is likely to destroy or seriously damage the degree of trust and confidence the employee is reasonably entitled to have in his employer” (p35C-D).
The term was further considered by the House of Lords in Johnson v Unisys [2003] 1 AC 518 in the context of the termination of an employment relationship. In Johnson Lord Hoffman also had regard to the evolution of the implied term of trust and confidence. He stated (at 539A-D):
“At common law the contract of employment was regarded by the courts as a contract like any other….But over the last 30 years or so, the nature of the contract of employment has been transformed. It has been recognised that a person’s employment is usually one of the most important things in his or her life. It gives not only a livelihood but an occupation, an identity and a sense of self-esteem. The law has changed to recognise this social reality. Most of the changes have been made by Parliament. The Employment Rights Act 1996 consolidates numerous statutes which have conferred rights upon employees. European Community law has made a substantial contribution. And the common law has adapted itself to the new attitudes, proceeding sometimes by analogy with statutory rights.
“The contribution of the common law to the employment revolution has been by the evolution of implied terms in the contract of employment. The most far reaching is the implied term of trust and confidence.”
The test as to whether there has been a breach of the implied term of trust and confidence is an objective one. As Lord Steyn put in Mahmud & Malik (p 47G-H):
“The motives of the employer cannot be determinative or even relevant, in judging the employees’ claims for damages for breach of the implied obligation. If conduct objectively considered is likely to cause serious damage to the relationship between employer and employee a breach of the implied obligation may arise.”
Furthermore, an employer can breach the implied term of trust and confidence by one act alone or by a series of acts which cumulatively amount to a repudiatory breach of contract, even if the last even in that series is not actually a breach of contract at all: see Lewis v Motorworld Garages Ltd [1986] ICR 157 in which Glidewell LJ stated:
“This breach of this implied obligation of trust and confidence may consist of a series of action on the part of the employer which cumulatively amount to a breach of the term, though each individual incident may not do so. In particular in such a case the last action of the employer which leads to the employee leaving need not itself be a breach of contract; the question is, does the cumulative series of acts taken together amount to a breach of the implied term? (see Woods v W M Car Services (Peterborough Ltd” [1981] ICR 666. This is the ‘last straw’ doctrine.”
Where the repudiatory breach alleged is of the trust and confidence term:
“The misconduct of the employer amounting to breach must be serious indeed since it amounts to constructive dismissal and as such entitles the employee to leave immediately without any notice on discovering it. The test is whether the employer’s conduct is such that the employee cannot reasonably be expected to tolerate it a moment longer after he has discovered it and can walk out of his job without prior notice”. BCC1 v Ali (No 2) [2000] ICR 1354, 1376H.”
There is no question of a contractual term that an employer must behave “reasonably” (or “not unreasonably”): that is a matter for the employment tribunal. Moreover, an employer may engage in conduct which is “out of order” without thereby repudiating the contract, although repeated behaviour of that kind may be a different matter. Cantor Fitzgerald v Bird [2002] IRLR 867, SS28.
The test to be applied is not subjective. The employee’s actual perception is not material. The test is an objective one; that is whether viewed objectively, the employer’s conduct so impacted on the employee that the employee could properly conclude that the employer was repudiating the contract. Brown v Merchant Ferries [1998] IRLR 682, NICA.
A number of points having particular relevance to the facts of this case can be extracted from a detailed consideration of the speeches in the House of Lords in Mahmud and Johnson v Unisys.
i) The notion of an employment contract giving rise to a “master and servant” relationship is now obsolete. (Lord Steyn, Mahmud. 45H – 46A)
ii) The obligation of mutual trust and confidence has emerged from the general duty of co-operation between contracting parties. (See Professor Brodie: (1996) 25 ILJ 121)
iii) The relationship remains defined by the respective role and responsibilities of the employer and the employee. The employer has the right to exercise authority and to instruct and direct, namely to “manage his business as he sees fit” and the employee has a duty to comply with reasonable instructions and directions. The responsibility for the running of the business and the methods of achieving the legitimate aims of the business ultimately lie with the employer.
iv) Given that the respective roles are, at their elemental level, as in (iii) above, the movement away from a master and servant relationship requires particular attention to the element of co-operation which underpins the character of the contract of employment. An employee’s participation in the business cannot simply be regarded as the work of a servant for the benefit of the employer, but has to be recognised as “….one of the most important things in his or her life. It gives not only a livelihood but an occupation, an identity and a sense of self-esteem.” (Lord Hoffmann Johnson v Unisys 539 B-C)
v) In a master and servant relationship, the benefit for the servant was to be paid a wage. The “co-operation” required of an employer, to which a contract of employment gives rise in modern times, cannot be met simply by remuneration, nor, in my judgment, can the level of it affect the principle which is now in play. I reject as fallacious the proposition, which has surfaced in argument from time to time, that where very substantial sums are paid by an employer, he acquires a right to treat employees according to a different standard of conduct from that which might otherwise be required.
vi) In the instant case the thrust of some of the argument has been to the effect that huge salaries are paid in broking houses because employees may be subjected to stress, anxiety and summary treatment. As the expression goes, “if you can’t stand the heat of the kitchen, get out”. Obviously the court must recognise and pay regard to the character and nature of the business in question. But due regard will not exclude the application of the law as it has developed, for as Lord Steyn observed in Johnson v Unisys Ltd (paragraph 19 532 B-F):
“….stress-related psychiatric and psychological problems of employees…..[have] greatly increased”
“These considerations are testimony to the need for implied terms in contracts of employment protecting employees from harsh and unacceptable employment practices.”
“Inevitably, the incidence of psychiatric injury due to excessive stress has increased. The need for protection of employees through their contractual rights, express and implied by law, is markedly greater than in the past”.
vii) The particular role and status of an employee will define the character and degree of co-operation to which the contract of employment gives rise. For example a senior manager is likely to perform some of the employer’s functions and will be seen by employees to be doing so, whilst also being subject to a more senior manager who is his employer.
viii) A senior manager can co-operate in a business at a high level of involvement. In the performance of his contract he needs to cultivate and maintain the confidence of those employees over whom he exercises managerial control and he needs the support and co-operation of his “employer”, more senior management, to carry out his duties in this regard and generally. Since he has managerial duties, his judgment having been invoked cannot properly be subjected to instant and dismissive conclusions which accord no respect to his viewpoint. Co-operation at this level takes on characteristics akin to partnership. In this connection the so called “blood oath” agreement is not without relevance.”
O’C v Homecare Medical Supplies
SUBJECT:
1. Appeal of Adjudication Officer’s Decision No; ADJ-00001951.
BACKGROUND:
2. The Worker appealed the Decision of the Adjudication Officer to the Labour Court in accordance with Section 9(1) of the Unfair Dismissals Acts 1977 to 2015 on 17 February 2017. A Labour Court hearing took place on 21 September 2017. The following is the Determination of the Court:
DETERMINATION:
This is an appeal against the Decision of an Adjudication Officer under the Unfair Dismissals Acts 1977 – 2015 (the Acts) in a claim made by Ms Pauline O’Connell against her former employer, Homecare Medical Supplies, where she alleged that she was constructively dismissed. By decision dated 19thJanuary 2017, the Adjudication Officer held that the complaint was not well founded.
For ease of reference the parties are given the same designation as they had at first instance. Hence Ms Pauline O’Connell will be referred to as “the Complainant” and Homecare Medical Supplies will be referred to as “the Respondent”.
The Complainant referred her case to the Workplace Relations Commission on 17thFebruary 2016. The appeal came before the Court on 21stSeptember 2017.
Background
The Respondent is a family owned business established in 1988, supplying products and services to the Healthcare market in Ireland including Nursing Homes, Hospitals, Community Care and Retail. It is an unlimited company and operates a chain of ten medical supply retail stores located throughout Ireland. It is understood that some of these branches are franchised. It is headquartered in Ballyhaunis, Co. Mayo.
The Complainant was initially employed by the Respondent as a Retail Assistant on 17thOctober 2010 at its branch in Terryland Retail Park, Galway, and was later promoted to the position of Retail Supervisor at that branch on 18thNovember 2013. She was paid €12.00 per hour and typically worked a 32-hour week, mostly four days per week. She resigned her position on 13thJanuary 2016.
Summary of the Complainant’s Position
Mr Shane MacSweeney, Solicitor, MacSweeney & Company Solicitors, on behalf of the Complainant, submitted that the Complainant was constructively dismissed from her employment as a Retail Supervisor at the Respondent’s Terryland branch, arising from her demotion following an open competition for the new role of store Team Leader. Mr MacSweeney contends that there was no material difference between the Supervisor role and the Team Leader role and that the competition was an exercise in implementing a pre-ordained outcome to swap the roles of the Complainant and her former sub-ordinate who was appointed to the Team Leader position.
Mr MacSweeney submits that the Complainant attempted to raise concerns about the situation prior to the competition but this was to no avail. He submitted that a further grievance after the outcome of the competition could not possibly unwind a competition that had concluded with an outcome. He further submitted that the process had been designed solely to ensure that the Complainant and her subordinate swapped roles. He said that in such circumstances a grievance procedure could not be relied upon to strip a fellow employee of an appointment.
Mr MacSweeney provided an extensive written submission to the Court and referred to a number of authorities in support of his position.
Evidence of the Complainant
The evidence of the Complainant, Ms Pauline O’Connell, can be summarised as follows:
She commenced employment at the Respondent’s Terryland store as a Retail Assistant in 2010. Her duties involved serving customers, maintaining the shop, dealing with deliveries.
In 2013 she secured a promotion to the position of Retail Supervisor. She had never been promoted previously in her career and she was very happy about it and was personally very proud. She had a level of authority and all matters and issues in connection with the shop were directed to her. She reported to the Retail Manager and she was responsible for the two Retail Assistants (Ms G and Ms S) assigned to the shop. She was never reprimanded in any way and received positive feedback on her performance in the role. The performance appraisal she had with the Respondent’s HR Manager and the Retail Manager was also very positive.
On 20thMay 2015 she received a general ‘all-staff’ email advertising a recruitment competition for the position of ‘Retail Team Leader’ for all of the Respondent’s retail outlets. This was the first time that the Complainant learned of the Respondent’s plan to institute a new Team Leader role at store level.
She was very concerned about the email as she believed, upon reviewing the job specification attached to the email, that the duties outlined for the Team Leader role were substantially the same as her Supervisor role (job content details for both roles were exhibited to the Court). She received telephone calls from colleagues in other shops who asked her was that not her job being advertised.
She contacted the HR Manager, Ms Lesley-Ann Walsh, on the same day to express her concerns. She states that the HR Manager told her she was not the supervisor of the shop and that the Retail Manager effectively handles the supervisory duties. She was told that all the staff who work in the shop were equal. She pointed out to the HR Manager that she had a contract of employment as a Supervisor and in response she was told that the contract was not passed by quality control and was“not worth the paper it was written on”.
She was very upset at the comments of the HR Manager and she sent an email to the Managing Director, Mr Peter McGuinness, on 21stMay 2015. She arranged to meet the MD at a hotel on the following day, 22ndMay 2015.
She states that at the meeting the MD told her that she was the Supervisor and that she took comfort from that. She says that he was very complimentary of her and told her that she was the best at her job. She says he discussed the Team Leader role with her and told her she should apply for the role, that nothing would change and that she was the most senior and experienced person for the job.
She said that she felt that she had been persuaded to apply for the role by the MD and on that basis she was happy to apply. She understood that the Team Leader role would require her to work an extra 3.5 hours per week and that she would have to do reports and spreadsheets. She had no problem with that and expressed same to the MD.
She said that she was interviewed for the role in July by the HR Manager and Mary McGuinness, who was a co-founder of the business and the wife of the MD. She was aware that the two Retail Assistants that she supervised in the shop had applied and were also interviewed.
Following the interviews, the MD came to the shop and told her that she was unsuccessful in the competition and that her sub-ordinate in the shop, Ms G, had been successful and would be appointed as Team Leader for the Galway shop. She said she was very shocked and upset and believed that her job and her status had been taken away from her. The MD told her he was sorry that she didn’t get the role and he said that he was going to increase her rate of pay by €1.00 per hour.
She told the Court that she was in shock at the outcome of the competition when she was unsuccessful and her former Retail Assistant with far less experience in the company was successful. She said they were literally swapping roles and she foresaw that tensions would arise. She said that this was a source of great anxiety and stress for her.
She said that she felt sure she would be successful and other colleagues told her that they felt the same way. When she saw the score sheets for the interviews much later after she had resigned (which were exhibited to the Court) she was also shocked that she came last out of the three candidates and thought that the scores didn’t make sense. She could not understand how she could have received the lowest possible score for ‘Work Experience’, and the lowest of the three candidates for the role, given her experience as supervisor of the shop.
When Ms G took up the role the Complainant could see that Ms G’s duties were identical to the supervisor duties which she previously performed. She said that reports and spreadsheets were not as it turned out part of the job. The only difference was that Ms G did the staff rota for the two people (the Complainant and Ms G – the other Retail Assistant had departed from the company) in the shop.
She said that nobody had a discussion with her about the changes to her duties after the Team Leader role was instituted. She found it very difficult that matters and issues that would have previously been referred to her as the supervisor were now dealt with by Ms G. She recalled one particular matter that she raised with the MD regarding a shoe product and she was told that it was nothing to do with her, that Ms G was responsible. She felt that she went from hero to zero in a matter of weeks and there was nobody in the company that she could turn to.
After two to three weeks working with Ms G as a Team Leader she felt that Ms G’s demeanour towards her changed. She states that Ms G made off-the-cuff remarks that were not helpful to her and were derogatory, that she talked down to her, that she told her that she was in charge, that she told her to shut up, that she told her that she was wrecking her head. She exampled one occasion in which she says that Ms G told her that when she was writing on paper that she should write between the lines.
The Complainant states that she also had concerns about Ms G’s handling of the role, with particular regard to stock issues and a lack of grasp on the systems operating in the shop. The Complainant says that Ms G had only been working in the company for seven months so she could identify these issues by virtue of her experience.
She informed the MD of her concerns and she was told by him to use the formal processes if she wished to make a complaint. A couple of days later she was contacted by the HR Manager who provided details of the formal grievance procedure.
She subsequently submitted a grievance letter on 20thNovember 2015 relating to the Team Leader’s conduct. Two meetings took place to deal with the grievance. At the second meeting on 26thNovember 2015 the MD and the HR Manager held the meeting with the Complainant and Ms G to settle matters.
The Complainant states that she had gone to see her GP on the day before the second meeting and he prescribed anti-depressants and sleeping tablets. She said that the GP said that she needed to take herself out of a toxic environment. He gave her a medical cert excusing her from work due to work related stress.
At the meeting on 26thNovember 2015 she signed a document prepared by the company which set out the outcome of the grievance. She went out sick after that meeting and never returned to the company.
Under cross-examination, the Complainant agreed that there was no reference to demotion in her grievance. She stated that she didn’t lodge a grievance about the outcome of the competition because she felt nothing was going to change. The deed was done. She said that she felt that the grievance she lodged was connected to her demotion. She said that in her view it was all linked.
She said that she felt she could not approach the HR Manager after what she had said about her Supervisor role and contract earlier in May when the Team Leader role was advertised. She said that she didn’t ask to see the score sheets at that time as she was not getting advice at that stage and didn’t realise she could request them. She added that she was not aware at that time that a scoring system was being used.
She agreed that she had applied for the Team Leader job and added that she did this because she was encouraged to by the MD.
She agreed that she congratulated Ms G on her appointment. She says she did this to save face and felt she had no choice as it was not Ms G’s fault that she (the Complainant) was not successful.
She agreed that the MD had awarded her a pay increase which she accepted but she said that a pay increase did nothing for the fact that her status had been taken from her.
She said that she signed the grievance document on 26thNovember 2015 because she was upset and was not in a fit state. She states that she was crying hysterically at the meeting on 26thNovember 2015 and she was just told to go back to work and forget about it.
She says that in the period that she was out sick from 26thNovember 2015 up to the date of her resignation on 13thJanuary 2016 she did not receive any contact at all from anyone in the company. She says that, by GP referral, she began to see a Clinical Psychologist around the time of her resignation. She was seeing the Psychologist from that time up until approximately six months ago, March/April 2017.
She said that she resigned because she felt that she could not go back. The company had sided with Ms G, there was no place for her, and she was cast aside.
Summary of the Respondent’s Position
Mr Ronnie Lawless, Ibec, on behalf of the Respondent, disputed the allegation of unfair dismissal and stated that the Complainant having formally raised a grievance, which was addressed by management, failed to avail of the appeal process, and resigned due to an issue which was not raised in that grievance process. Mr Lawless placed heavy reliance on the Complainant’s failure to exhaust all available internal procedures prior to her resignation and pointed the Court to a number of authorities on that point.
Mr Lawless also provided an extensive written submission to the Court and referred to various authorities in support of his position.
Evidence of the Managing Director for the Respondent
The evidence of the Managing Director, Mr Peter McGuinness, can be summarised as follows:
The MD told the Court that he started the company in 1988 with his wife and his brother. The company is headquartered in Ballyhaunis, Co. Mayo and consists of retail shops nationwide. Some shops are managed directly by the Respondent and some are franchised out.
The business grew year on year and obtained a significant HSE contract resulting in increased staffing levels in the period 2009-2012. That contract was terminated in 2013 and the company exited from it in 2014. Significant losses were sustained in that two year period.
The company was forced to look at restructuring and engaged with its stakeholders in this regard. Consultants were engaged and a full review of the business was conducted.
A review of the retail business was completed in December 2014 and implemented in 2015. The review resulted in the positions above store level of Retail Manager and Retail Support Manager being made redundant.
This meant that certain management duties previously within those roles needed to be devolved down to store level. The decision was made to appoint a new structure for all the shops, described as“a new young management team”,and this led to the creation of the Team Leader roles with clearer management responsibilities.
With regard to the Complainant, the MD stated that she was working four days per week in the Galway shop and that this was less than ideal.
The MD says that he was contacted by the Complainant after the Team Leader roles were advertised and he met her the following day in a hotel in Galway. He told the Court that he put a note to file subsequent to the meeting and the note, in the form of an email to the HR Manager dated 22ndMay 2015, was exhibited to the Court.
The MD says that at the meeting he acknowledged that the Complainant was doing a lot of the tasks set out in the new Team Leader role description. He said that he explained the Team Leader role to her and told her that the focus was not just on tasks but needed to be on management and strategy also. He said that he discussed with her that retail was under threat from online sales and that changes had to be made.
He states that he did not cajole or persuade her to apply for the job. He was there to explain the situation to her. He said that he didn’t guarantee anything to her; he didn’t say that there would be no change. He states that he didn’t on that occasion point her towards the grievance procedure if she was unhappy with the situation regarding the creation of the Team Leader role. He states that at the close of the meeting she said that she would happily apply for the role.
He states that he wasn’t involved in the interview process but was entirely aware of the significance of the outcome for the Complainant. He says that he had high regard for the Complainant and met with her to inform her of the outcome.
He says that he told her that he had high regard for her customer service skills, which were excellent. He said he told her that he was sorry that she was upset. He says that he talked to her about her strengths and areas where she might need to improve. He told her he was giving her a pay increase.
He says that she did not raise any issues with the outcome and she commented that the five days a week and additional reporting and management functions would not have really suited her anyway.
The MD stated that when he was contacted by the Complainant regarding her complaints about Ms G’s conduct towards her he told her there was a formal process she should use.
When they received the formal grievance letter he says that he and the HR Manager met with the Complainant and Ms G and gave a fair hearing to all sides.
He believed that reconciliation had been achieved at the grievance meeting on 26thNovember 2015 and all parties signed the document. He said that the Complainant produced a sick cert at the very end of the meeting on 26thNovember 2015. He states that he believed that the cert should have been submitted earlier.
He said he received her letter of resignation in January 2016 which he responded to (both the letter of resignation and the MD’s response were opened up to the Court). He said he was sorry to see her go.
In cross-examination, the MD agreed that there was a lot of cross-over between the Retail Assistant, Retail Supervisor and Team Leader roles. He agreed that he didn’t envisage having both the Supervisor role and the Team Leader role and he ultimately agreed that the introduction of the Team Leader role placed the Complainant’s seniority and status in jeopardy.
In that regard he agreed that the situation whereby the Complainant’s first knowledge of the Team Leader role was by way of the ‘all-staff’ email advertising the role could have been handled better. He said that he understood how she would have been concerned to receive it.
He stated that he was surprised at the outcome of the competition as he had expected that the Complainant would come out on top. He was asked if that was the case did he seek feedback from the panel to understand what had happened to which he replied that he didn’t.
The MD agreed that if the supervisor duties were removed from the Complainant and given to the Team Leader, which is what occurred, the Supervisor would effectively revert to a Retail Assistant. It was put to the MD that in those circumstances the Complainant was demoted. The MD stated that he did not regard it as a demotion as she received a pay increase and her title did not change, but he stated that he could see how the Complainant saw it as a demotion.
The MD agreed that the Complainant was the only Supervisor across all the stores who applied for the Team Leader role and did not get it.
It was put to the MD that he should have foreseen difficulties arising when the outcome of the competition was the Complainant and her former sub-ordinate effectively swapping roles. He said that when he informed the Complainant of the outcome of the competition and took account of her reaction he did not foresee difficulties.
In response to questions from the Court, the MD confirmed that he did not make any contact with the Complainant in the seven weeks that she was out sick. He said he make a judgement not to as she had submitted a cert which indicated ‘work related stress’. He said that he was aware that nobody else in the company was in contact with her either. He confirmed that he did not consider sending her for examination by a company nominated medical practitioner.
In reference to the interview scoring documentation opened to the Court, it was put to the MD that on the score sheets the option described as ‘A good applicant, but I do not recommend’ was ticked in all three cases. The MD was unable to offer an explanation as to how Ms G had been appointed when all three candidates were apparently not recommended.
With regard to her resignation, the MD stated that he did not seek to meet with the Complainant when he received the letter. He said that in hindsight that he should have but he didn’t, probably due to his anger at some of the statements she had made in her letter.
The Law
Section 1 of the Unfair Dismissals Act, 1977, defines constructive dismissal as follows:-
“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”
Section 6(1) of the Act states:-
6.—(1) Subject to the provisions of this section, the dismissal of an employee shall be deemed, for the purposes of this Act, to be an unfair dismissal unless, having regard to all the circumstances, there were substantial grounds justifying the dismissal.
Discussion & Decision
As the Complainant is alleging constructive dismissal, the fact of dismissal is in dispute and the onus of proof rests with the Complainant to establish facts to prove that the actions of the Respondent were such as to justify her terminating her employment.
Section 1 of the Act envisages two circumstances in which a resignation may be considered a constructive dismissal. This arises where the employer’s conduct amounts to a repudiatory breach of the contract of employment and in such circumstances the employee would be “entitled” to resign his position, often referred to as the “contract test”. This requires that an employer be“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 further performance”as held inWestern Excavating (ECC) Ltd v Sharp[1978] IRL 332.
Secondly, there is an additional reasonableness test which may be relied upon as either an alternative to the contract test or in combination with that test. This test asks whether the employer conducted his or her affairs in relation to the employee so unreasonably that the employee cannot fairly be expected to put up with it any longer, if so she is justified in leaving.
The question for the Court to decide is whether, because of the conduct of the Respondent, the Complainant was or would have been entitled, or it was or would have been reasonable for her, to terminate the contract of employment.
There was a sharp difference in the evidence tendered by the Complainant and that of the MD on many of the material points in issue in this case. In evaluating the evidence the Court finds the Complainant’s evidence credible and consistent. The evidence tendered by the MD was somewhat inconsistent, hesitant and less forthright. Overall the Court found the Complainant’s recollection of the material events more reliable.
Therefore, having regard to the evidence, the Court is satisfied that the material facts are as follows:-
The Complainant was demoted from her position of Retail Supervisor following the institution by the Respondent of the role of Team Leader.
Despite the obvious potential impact on the Complainant were she to be unsuccessful in the competition for the Team Leader role, no consultation or engagement of any sort with her was undertaken prior to the ‘all-staff’ email advertising the Team Leader role. This was unsatisfactory in circumstances where she was the only one of three staff in the shop whose status could be adversely affected by the institution of the new role.
The comments of the HR manager during the telephone conversation on 20thMay 2015 when the Complainant’s seniority status and contract were called in to question by the HR Manager were suggestive of an attitude by the company towards the Complainant that was disrespectful and dismissive of her and indifferent towards her. The Court is satisfied that this attitude by the Company was also evident in the subsequent developments and events leading to the resignation.
In constructive dismissal cases, the Court must examine the conduct of both parties. In normal circumstances a complainant who seeks to invoke the reasonableness test in furtherance of such a claim must also act reasonably by providing the employer with an opportunity to address whatever grievance they may have. They must demonstrate that they have pursued their grievance through the procedures laid down in the contract of employment before taking the step to resign:Conway v Ulster Bank LimitedUDA474/1981.
The actions of the MD at the hotel meeting in May 2015 when the Complainant attempted to raise her concerns flattered her into believing that she would be successful in the competition and effectively discouraged her from pursuing a grievance in connection with her possible demotion. The MD did not point her towards the grievance procedure should she have wished to dispute the potential impact of the Team Leader role on her employment status. It seemed that the Respondent did not wish the Complainant to raise a grievance at that time in relation to the advertised competition for the Team Leader roles. This is in contrast to the MD’s response to the complaint raised by the Complainant about the Team Leader’s conduct in the role in November 2015. At that time in November the MD’s reaction was to point her towards the grievance procedure. Overall, the MD’s actions substantially inhibited the Complainant in raising a grievance in May 2015.
In any event, the Court is satisfied that the grievance ultimately raised by the Complainant in November 2015, one which she was encouraged to raise by the MD in contrast to his approach to her concerns raised at the hotel meeting in May 2015, was linked to the concerns she first attempted to raise with the MD at the hotel meeting and was in effect a grievance about the loss of her supervisor position.
Ms G was appointed to the role despite the fact that the documentary evidence opened to the Court indicated that none of the candidates were suitable to be appointed. This must raise significant questions as to integrity of the selection process deployed.
Tensions which arose when the Complainant’s and Ms G’s roles were reversed were foreseeable by the Respondent. No supportive or preventative measures were put in place by the company. Neither was there any discussion with the Complainant about what the arrangements were to bevis-�-viswhat her duties and responsibilities were, as a supervisor, versus those of the new Team Leader.
No contact was made with the Complainant by the Respondent during her sick leave absence over a seven week period, when she was certified as suffering from “work related stress”. The Respondent gave no consideration to having the Complainant examined by a company nominated medical practitioner. General employment practice in such situations is for an employer to arrange for their employee to be examined by a company nominated medical practitioner. The Respondent’s inaction in this regard was indicative of its overall intent and was further evidence of the disengagement by the Respondent from the employment relationship with the Complainant, a process which, in the Court’s view, commenced when the Respondent set about instituting the Team Leader role in the manner that it did from 20thMay 2015.
The Complainant’s resignation, which raised serious complaints and issues for the Respondent, was immediately accepted by the MD in circumstances where the Complainant was out sick. No offer to meet to resolve matters was advanced and, notwithstanding that the Complainant was out sick in the care of her GP, no opportunity was provided to her to delay her decision and reflect on the situation.
In light of the forgoing, the Court is satisfied that, having regard to the actions and inactions of the employer in this case, the Complainant was entitled to terminate her employment and it was reasonable for her to do so in the circumstances of this case. Accordingly, the Complainant was constructively dismissed from her employment with the Respondent. There being no substantial grounds justifying the dismissal, the Court accordingly finds that such dismissal amounts to an unfair dismissal within the meaning of the Acts.
In reaching its decision the Court has taken account of all written and verbal submission of the parties, including the written legal submissions received from both representatives following the hearing and has had full regard to the evidence adduced in the course of the appeal.
Redress
At the hearing, the Court requested a written legal submission from Mr MacSweeney regarding the question of whether or not a complainant who was unavailable for work due to illness, and who attributes the cause of the illness to the conduct of the employer, could be compensated for the period of unavailability as a period of loss under the Acts. A written submission in this regard was received from Mr MacSweeney dated 4thOctober 2017. A replying submission was received from Mr Lawless dated 19thOctober 2017.
Section 7 of the Unfair Dismissals Act 1977, as amended, sets out the provisions dealing with redress, which in summary provides that the Court decides on appropriate redress, having regard to all the circumstances, as between: reinstatement; re-engagement; compensation.
In this case the Court is satisfied that neither of the job-back remedies are appropriate, and the appropriate form of redress, having regard to all the circumstances, is that of compensation.
Regarding compensation, the Act provides that compensation for financial loss (which is defined as including any actual loss and any estimated future loss) attributable to the dismissal, as is just and equitable having regard to all the circumstances, of up to a maximum of 104 weeks remuneration, may be ordered by the Court.
In determining the amount of compensation, the Court is required to have regard to the following: the extent to which any financial loss is attributable to any act, omission or conduct by either the employer or the employee; the measures adopted by the employee to mitigate the financial loss; the extent to which the employer has complied with disciplinary procedures in relation to the dismissal; and the extent to which the conduct of the employee was attributable to the dismissal.
With regard to financial loss, Mr MacSweeney submitted that the Complainant has been unavailable for work due to illness since her dismissal. It was further submitted that the conduct of the Respondent which led to the Complainant’s constructive dismissal also led to her illness. Mr MacSweeney submitted to the Court a medical report dated 14thJune 2016 from Professor Gary Donohoe, Clinical Psychologist & Neuropsychologist, which report, he submits, supports his contention before the Court.
Relying on the case ofAllen v Independent Newspapers (Ireland) Limited[2002] ELR 84, it is Mr MacSweeney’s contention that in the circumstances of that case the Employment Appeals Tribunal found that the Tribunal’s discretion in determining financial loss was wide enough to encompasses a situation where if the employee’s illness led to her financial loss and the employer’s conduct had been a contributory cause of the illness then,ipso facto, the employee’s financial loss is attributable to the employer’s conduct.
On that basis, Mr MacSweeney seeks compensation by reference to a period of 20 months loss to cover the period mid-January 2016 to Mid-September 2017.
The Court notes that in its conclusions and prognosis section, Professor Donohoe’s report states that the Complainant:
“….has experienced significant distress in the context of her work related difficulties. This has resulted in clinically significant symptoms of anxiety and depression in recent months. In the absence of mental health related problems prior to these difficulties, my opinion is that Pauline’s current difficulties arise as a direct result of the circumstances in which she left her job. Given that Pauline’s mental health was good prior to her current episode, and the family support she enjoys, I expect her to make a steady recovery in the coming months with further therapeutic input in the form of antidepressant medicant and psychological therapy”
The Court further notes that the Respondent did not provide medical evidence to the Court. Neither did the Respondent put forward an alternative explanation for the Complainant’s illness. Mr Lawless, in his replying submission to the Court following the hearing, argues that Professor Donohoe’s report was sighted by the Respondent for the first time at the hearing before the Court. He submits that the Complainant, at the time of her resignation, brought up for the first time that her ‘work related stress’ was related to her failure to secure the Team Leader role. He further submits that the Respondent was therefore denied an opportunity to have its own medical assessment of the Complainant conducted. In this regard the Court notes that Mr McGuinness’s evidence was that he did not consider sending the Complainant for examination by a company nominated medical practitioner at any stage throughout the seven weeks of her absence, notwithstanding that he was aware that she had been certified by her GP as suffering from ‘work related stress’. Mr McGuinness further stated in evidence that his response to the Complainant’s resignation, which put him on clear notice of serious issues regarding the Complainant, was to simply accept the resignation. The Court is satisfied that the Respondent had ample opportunity to investigate the Complainant’s medical status but it chose not to do so in any way either at the time she went out ill or at the time of the resignation or at any other time.
Mr Lawless, in his submission, also seeks to distinguish the instant case from theAllen v Independent Newspaperscase.Mr Lawless makes the point that in theAllencase, as distinct from the instant case, the employer had the opportunity to assess the extent of the complainant’s complaints and medical situation. For the reasons already outlined above, the Court disagrees with Mr Lawless in this regard.
Accordingly, on the basis of the findings already made as to what led the Complainant to resign her employment with the Respondent and on the basis of the medical evidence submitted, the Court is satisfied that the Complainant’s illness was caused by the factors which led to her constructive dismissal. Effectively her illness was caused by events which led to her dismissal and these events caused her financial loss.
Having regard to the foregoing, including the date of the medical report before the Court, the prognosis for recovery and the period up to which the Complainant was seeing Professor Donohoe, the Court measures the period of financial loss in this case as a period of fifteen months from the date of resignation on 13thJanuary 2016 to mid-April 2017. Based on a weekly rate of pay of €390.00, the Court measures the total compensation amount at €25,350.00.
Determination
The Complainant was unfairly dismissed by the Respondent. The Court orders the Respondent to pay to the Complainant compensation in the amount of €25,350.00.
The appeal, therefore, succeeds and the Adjudication Officer’s decision is overturned accordingly.
The Court so Determines.
Signed on behalf of the Labour Court
Caroline Jenkinson
31 October 2017.______________________
MNDeputy Chairman
Petkus & ors -v- Complete Highway Care Limited
[2017] IEHC 12
High Court Record
White Michael J.
1. This is a statutory appeal pursuant to the provisions of the Payment of Wages Act 1991, and O. 84C of the Rules of the Superior Courts.
2. By order of this Court of 19th October, 2015, time was extended to allow the applicants to appeal by way of statutory appeal.
3. A motion was issued on 27th October, 2015, originally returnable for 23rd November, 2015. The motion was grounded on the affidavit of Kieran O’Brien, Solicitor, together with exhibits. A director of the respondent company, Barry Ennis, swore an affidavit on 12th January, 2016, together with exhibits and Mr. O’Brien swore a further affidavit on 5th July, 2016. The matter was heard before this Court on 6th July, 2016, in Kilkenny and judgment was reserved.
4. The applicants seek to set aside the determination of the Employment Appeals Tribunal of 13th January, 2015, on the following legal grounds:-
(a) the Employment Appeals Tribunal fell into an error of law in its analysis and application of the evidence to the relevant law;
(b) that the Employment Appeals Tribunal fell into an error of law in making unsustainable findings of fact and/or findings of fact for which there was no supporting evidence;
(c) that the Employment Appeals Tribunal fell into an error of law in failing to appropriate differentiate between a reduction and a deduction;
(d) that the Employment Appeals Tribunal fell into an error of law in finding that the respondent’s 10% adjustment to the appellants’ pay was a reduction;
(e) that the Employment Appeals Tribunal fell into an error of law in finding that the respondent’s 10% adjustment to the appellants’ pay was a reduction and that the Act does not apply to a reduction;
(f) that the Employment Appeals Tribunal fell into an error of law in failing to find that the respondent’s 10% adjustment to the appellants’ pay was not a deduction;
(g) that the Employment Appeals Tribunal fell into an error of law in failing to find that the respondent’s 10% adjustment to the appellants’ pay was not a deduction and consequently finding that the Act did not apply;
(h) that the Employment Appeals Tribunal fell into an error of law in failing to consider the entirety of the circumstances of the matter and failed to properly consider or apply the correct interpretation and intention of legislation protecting the payment of wages of workers under the Act and the Constitution; and
(i) that the Employment Appeals Tribunal fell into an error in law in setting aside that decisions of the Rights Commissioners and each of the appellants’ cases.
History of the Dispute
5. The appellants were all employees of the respondent at the relevant time. The employees allege that the respondent unlawfully deducted 10% from their wages and withdrew a bonus. The employer claimed that due to very difficult economic trading conditions for the respondent that a reduction in wages took place. This commenced in 2009 and that the bonuses were dispensed with in 2010. The appellants made a claim to the Rights Commissioner Service of the Labour Relations Commission covering a period from March 2011 to September 2011.
6. The Rights Commissioner by decision of 30th April, 2013, decided that there was a breach of s. 5 of the Payment of Wages Act 1991, in that the 10% deduction in their pay was illegal.
7. The Rights Commissioner found that there was no illegal deduction with regard to the bonus and this portion of the claim failed.
8. The respondent appealed to the Employment Appeals Tribunal and the Tribunal in its decision of 13th January, 2005, stated:-
“The Tribunal recognises the inherent difficulty in differentiating a reduction from a deduction. A deduction or reduction of 10%, as in this case, has different implication on the respondent’s statutory liabilities. A deduction of 10% would not alter the respondent’s statutory liabilities i.e. PRSI, USC, PAYE. However, a reduction does alter their statutory liabilities. It is clear from the payslips exhibited, the respondent’s statutory liabilities were altered and, therefore, the Tribunal can only conclude that the 10% adjustment was a reduction. The Act does not apply to a reduction. On that basis, the Tribunal upsets the decisions of the Rights Commissioner under the Payment of Wages Act 1991, cancel the awards made to the respondents.”
9. The High Court judgment in McKenzie & Anor v. Minister for Finance & Ors (Edwards J., 30th November, 2010) [2010] IEHC 461, was relied on by the respondent at the Rights Commissioner hearing. The Rights Commissioner, in his decision, took the view that this case concerned expenses and, therefore, it did not refer to wages properly payable as defined in the Payment of Wages Act and thus, did not rely on that judgment.
10. In the relevant contract of employment governing the relationship between the appellants and the respondent, there is no specific reference to the right to deduct wages except at para. 20 where it states “changes to terms of employment, the company reserves the right to make reasonable changes to any of your terms and conditions of employment set out in this contract description and should this occur you will be notified in advance in writing of the nature and date of the change subject to consultation.”
The Law
11. Section 5 of the Payment of Wages Act 1991, states:-
“(1) An employer shall not make a deduction from the wages of an employee (or receive any payment from an employee) unless—
(a) the deduction (or payment) is required or authorised to be made by virtue of any statute or any instrument made under statute,
(b) the deduction (or payment) is required or authorised to be made by virtue of a term of the employee’s contract of employment included in the contract before, and in force at the time of, the deduction or payment, or
(c) in the case of a deduction, the employee has given his prior consent in writing to it.
(2) An employer shall not make a deduction from the wages of an employee in respect of—
(a) any act or omission of the employee, or
(b) any goods or services supplied to or provided for the employee by the employer the supply or provision of which is necessary to the employment,
unless—
(i) the deduction is required or authorised to be made by virtue of a term (whether express or implied and, if express, whether oral or in writing) of the contract of employment made between the employer and the employee, and
(ii) the deduction is of an amount that is fair and reasonable having regard to all the circumstances (including the amount of the wages of the employee), and
(iii) before the time of the act or omission or the provision of the goods or services, the employee has been furnished with—
(I) in case the term referred to in subparagraph (i) is in writing, a copy thereof,
(II) I n any other case, notice in writing of the existence and effect of the term,
and
(iv) in case the deduction is in respect of an act or omission of the employee, the employee has been furnished, at least one week before the making of the deduction, with particulars in writing of the act or omission and the amount of the deduction, and
(v) in case the deduction is in respect of compensation for loss or damage sustained by the employer as a result of an act or omission of the employee, the deduction is of an amount not exceeding the amount of the loss or the cost of the damage, and
(vi) in case the deduction is in respect of goods or services supplied or provided as aforesaid, the deduction is of an amount not exceeding the cost to the employer of the goods or services, and
(vii) the deduction or, if the total amount payable to the employer by the employee in respect of the act or omission or the goods or services is to be so paid by means of more than one deduction from the wages of the employee, the first such deduction is made not later than 6 months after the act or omission becomes known to the employer or, as the case may be, after the provision of the goods or services.
(3)
(a) An employer shall not receive a payment from an employee in respect of a matter referred to in subsection (2) unless, if the payment were a deduction, it would comply with that subsection.
(b) Where an employer receives a payment in accordance with paragraph (a) he shall forthwith give a receipt for the payment to the employee.
(4) A term of a contract of employment or other agreement whereby goods or services are supplied to or provided for an employee by an employer in consideration of the making of a deduction by the employer from the wages of the employee or the making of a payment to the employer by the employee shall not be enforceable by the employer unless the supply or provision and the deduction or payment complies with subsection (2).
(5) Nothing in this section applies to—
(a) a deduction made by an employer from the wages of an employee, or any payment received from an employee by an employer, where—
(i) the purpose of the deduction or payment is the reimbursement of the employer in respect of—
(I) any overpayment of wages, or
(II) any overpayment in respect of expenses incurred by the employee in carrying out his employment,
made (for any reason) by the employer to the employee, and
(ii) the amount of the deduction or payment does not exceed the amount of the overpayment,
or
(b) a deduction made by an employer from the wages of an employee, or any payment received from an employee by an employer, in consequence of any disciplinary proceedings if those proceedings were held by virtue of a statutory provision, or
(c) a deduction made by an employer from the wages of an employee in pursuance of a requirement imposed on the employer by virtue of any statutory provision to deduct and pay to a public authority, being a Minister of the Government, the Revenue Commissioners or a local authority for the purposes of the Local Government Act, 1941 , amounts determined by that authority as being due to it from the employee, if the deduction is made in accordance with the relevant determination of that authority, or
(d) a deduction made by an employer from the wages of an employee in pursuance of any arrangements—
(i) which are in accordance with a term of a contract made between the employer and the employee to whose inclusion in the contract the employee has given his prior consent in writing, or
(ii) to which the employee has otherwise given his prior consent in writing,
and under which the employer deducts and pays to a third person amounts, being amounts in relation to which he has received a notice in writing from that person stating that they are amounts due to him from the employee, if the deduction is made in accordance with the notice and the amount thereof is paid to the third person not later than the date on which it is required by the notice to be so paid, or
(e) a deduction made by an employer from the wages of an employee, or any payment received from an employee by his employer, where the employee has taken part in a strike or other industrial action and the deduction is made or the payment has been required by the employer on account of the employee’s having taken part in that strike or other industrial action, or
(f) a deduction made by an employer from the wages of an employee with his prior consent in writing, or any payment received from an employee by an employer, where the purpose of the deduction or payment is the satisfaction (whether wholly or in part) of an order of a court or tribunal requiring the payment of any amount by the employee to the employer, or
(g) a deduction made by an employer from the wages of an employee where the purpose of the deduction is the satisfaction (whether wholly or in part) of an order of a court or tribunal requiring the payment of any amount by the employer to the court or tribunal or a third party out of the wages of the employee.
(6) Where—
(a) the total amount of any wages that are paid on any occasion by an employer to an employee is less than the total amount of wages that is properly payable by him to the employee on that occasion (after making any deductions therefrom that fall to be made and are in accordance with this Act), or
(b) none of the wages that are properly payable to an employee by an employer on any occasion (after making any such deductions as aforesaid) are paid to the employee,
then, except in so far as the deficiency or non-payment is attributable to an error of computation, the amount of the deficiency or non-payment shall be treated as a deduction made by the employer from the wages of the employee on the occasion.”
12. The court accepts the well established principle in relation to an appeal on a point of law that the Superior Courts have repeatedly applied a consistent significant curial deference which is summarised by Hamilton C.J. in Henry Denning & Sons Ireland Limited v. Minister for Social Welfare [1998] 1 I.R. 34, stating:-
“That the courts should be slow to interfere with the decisions of expert administrative tribunals. Where conclusions are based upon an identifiable error of law or an unsustainable finding of fact by a tribunal such conclusions must be corrected. Otherwise it should be recognised that tribunals which have been given statutory tasks to perform and exercise their functions, as is now usually the case, with a high degree of expertise and provide coherent and balanced judgments on the evidence and arguments heard by them it should not be necessary for the courts to review their decisions by way of appeal or judicial review.”
13. In the same case, Keane J. citing with approval the comments of Carroll J. in the High Court, stated:-
“In an appeal on a question of law the court does not go into the merits of the decision. The primary facts are not in issue. Where there is a question of conclusions and inferences to be drawn from facts (a mixed question of fact and law) the court should confine itself to considering if they are conclusions and inferences which no reasonable person could draw or whether they are based on a wrong view of the law.”
14. In the same judgment, Keane J. cited the decision of Kenny J. in Mara (Inspector of Taxes) v. Hummingbird Limited [1982] 2 ILRM 421, when he stated:-
“If the conclusions from the primary facts are ones which no reasonable commissioner could draw, the court should set aside his findings on the ground that he must be assumed to have misdirected himself as to the law or made a mistake in reasoning. Finally, if his conclusions show that he has adopted a wrong view of the law, they should be set aside.”
15. There seems to have been some confusion about the relevance of the McKenzie judgment. At para. 5.8, of his judgment Edwards J. stated:-
“Finally, the Court agrees with the respondents’ submission that the Payment of Wages Act, 1991 has no application in the circumstances of this case. First, as has been pointed out, correctly in the Court’s view, the reduction in the PDF allowance is not a ‘deduction’ from wages payable. It is a reduction of the allowance payable. The Act has no application to reductions as distinct from ‘deductions’. Secondly, even if that were not so, any alleged breach of the Payment of Wages Act, 1991 is not a justiciable controversy before the High Court in circumstances where that Act sets up a specific enforcement mechanism to be availed of elsewhere in such circumstances.”
16. This judgment was considered in a further judgment of the President of the High Court in Earagail Eisc Teoranta v. Doherty & Ors [2015] IEHC 347, the then Kearns P. stated:-
“The Court is also satisfied that the decision in McKenzie is distinguishable from the facts of the present case in a number of respects. The Court accepts the submissions of the respondents that the remarks of Edwards J. in relation to ‘reduction v. deduction’ issue were obiter. Furthermore, McKenzie related to the reduction in an allowance payable in respect of motor travel and subsistence. The definition of ‘wages’ in the 1991 Act expressly excludes any payment in respect of expenses incurred by the employee in carrying out his employment and so the finding by Edwards J. that the ‘RDF Allowance’ did not come within the scope of a deduction under the Act relates to an entirely different situation to that the present case where employees salaries were reduced. I am satisfied therefore that the Tribunal was entitled to proceed to consider the complaints on the basis that the reduction to the employees wages in the present case may have constituted a deduction in breach of the 1991 Act.”
17. At the hearing before the Employment Appeals Tribunal, the appellants’ representatives SIPTU made a detailed supplementary submission on the effect of the McKenzie case and submitted that Case No. PW86-W87/211, Bessborough Centre Limited v. Long & Ors decision of 13th April, 2013, had been wrongly decided because of an incorrect interpretation of the McKenzie case.
18. This Court can see no reference in the papers placed before the Employment Appeals Tribunal of any argument in relation to statutory liabilities of PRSI, USC and PAYE which was a reason for the Tribunal’s differentiation between deduction and reduction.
19. The determination of the EAT is silent on the McKenzie case although the supplementary submissions of the appellants specifically address same. The decision of the Rights Commissioner’s was detailed and rejected it as a precedent.
20. The determination did not summarise the evidence adduced by the appellants and the respondent, and did not comprehensively and concisely deal with any issues as to fact, nor did not summarise the legal materials put forward by either party.
21. The entire decision of the Rights Commissioner was under appeal including the failure of the Rights Commissioner to find in favour of the appellants that a bonus was improperly withheld and came within the parameters of Section 5 of the Payment of Wages Act 1991. This was not addressed in the Tribunal decision.
22. The Tribunal did explain this differentiation between a reduction and a deduction. It seems to have followed the obiter comment of Edwards J in McKenzie, but did not set out any of the legal arguments on how it came to differentiate the legal arguments and make its decision.
23. Unfortunately, the McKenzie case has caused particular confusion to the determinations of Employment Appeals Tribunal and Rights Commissioners on the issue of Section 5 of the Payment of Wages Act 1991. This is clear from a number of decisions which have been furnished to the court as follows:-
(i) Bessborough Centre Limited v. Long, Case No. PW86-W87/2011, a decision of the Employment Appeals Tribunal on appeal from the Rights Commissioner decision. The Employment Appeals Tribunal determination is dated 11th April, 2013;
(ii) Santry Sports Injury Clinic and Padden and Ors Pw 251/255/2011 EAT 16th July 2013.
(iii) Hog Heaven Limited v. O’Gorman, Case No. PW774/2012, a determination of the EAT on 3rd March, 2014, on appeal from the Rights Commissioner;
(iv) Hamilton v. Earagail Eisc Teoranta, a decision a Rights Commissioner of 17th May, 2016. (r-15937-pw-15/SR.)
(v) InisBofin Community Services Programme Company Limited v. Burke, Case No. PWD1614, which is an appeal of an adjudication officer’s decision. This determination was issued on 18th May, 2016.
24. The EAT determination the subject of this statutory appeal in the opinion of this Court, falls a long way short of the standard this Court would expect in detailing the arguments that have been made and giving reasons, and explaining its decision.
25. I do not accept that the determination of the tribunal, that there was a reduction of wages as distinct from a deduction, is a pure question of fact. It is a mixed question of law and fact. The basis of the conclusion was that a reduction as distinct from a deduction altered the Respondents statutory liabilities. Because an Employer arbitrarily reduces the wages of an employee, without the consent of the employee, and alters the amount of PAYE, PRSI, and USC accordingly does not necessarily remove the reduction from the jurisdiction of the Payment of Wages act 1991, entitling the Employer to ignore it’s provisions.
26. It is not a matter for this Court to decide the substantive issue, but for the relevant decision making body set up under the Payment of Wages Act 1991 if a reduction is allowed at all pursuant to the provisions of s. 5 of the Payment of Wages Act 1991, without the consent of an employee. It is unfortunate that an obiter sentence in a judgment of this Court which did not relate to the payment of wages at all and which was put into practice by way of statutory instrument has caused such confusion.
27. The judgment of Kearns P. in Earagail Eisc Teoranta v. Doherty of 5th June, 2015, has clarified that issue. The McKenzie case is not precedent to allow a reduction of wages which does not offend s. 5 of the Payment of Wages Act 1991.
28. The court is satisfied that the appellants are entitled to succeed in relation to para. (h) of their notice of motion, that is that the Employment Appeals Tribunal fell into an error of law in failing to consider the entirety of the circumstances of the matter and failed to properly consider or apply the correct interpretation and intention of that legislation protecting the payment of wages of workers under the Act and the Constitution.
29. It is, therefore, appropriate to allow the appeal and remit the matter back to the Employment Appeals Tribunal for further determination.
