It has been the experience of this office, of a number of Irish employers adopting performance improvement plans (PIP) and whilst employees are in the currency of performance improvement plans making termination offers to the employees. The WRC has helpfully clarified that such circumstances can be grounds for a constructive dismissal claim in a case skilfully advanced by Mr Conor McCrave of Setanta Solicitors.
Danica Gutierrez -v- Cafico Corporate Services Limited
https://www.workplacerelations.ie/en/cases/2024/october/adj-00050330.html
In a recent decision in the WRC Adjudication officer Eileen Campbell set out the law on Constructive Dismissal and held that where an employee had attended a meeting after a PIP had been activated and offered a redundancy that was held to be behaviour that went to the heart of the contract such as it was reasonable for the employee to treat the contract as repudiated to entitle them to a claim for constructive dismissal. The relevant extract is below followed by the larger extract of the full case.
I find that it was reasonable for the Complainant to terminate her employment because of the Respondent’s conduct in and around its decision to offer her an exit package three working days after she has been placed on a PIP in an action taken by the Respondent which any reasonable person would consider to be so serious or significant that it goes to the root of the contract of employment between the employer and employee. I find the Complainant has met and the Respondent has breached the contract test. For completeness I find the Complainant has met and the Respondent has breached the reasonableness test also
CA-00061841-001 complaint pursuant to section 8 of the Unfair Dismissals Act, 1997
In conducting my investigation and in reaching my decision, I have reviewed all relevant submissions and supporting documentation presented to me by the parties. I have carefully considered the oral evidence adduced at hearing. I have carefully considered the caselaw to which I have been directed by the parties. I deemed it necessary to make my own inquiries into the complaint during hearing to establish and understand the facts and to seek clarification on certain matters.
I have two versions of events before me that are entirely at odds in most respects having regard to what was said at the meeting that took place on 3 October 2023 attended by the Complainant, ROR and ML.
The fact that the meeting did take place is the singular fact that is not in dispute.
Notwithstanding, I am obliged to draw my conclusions from the facts as presented to me and by the application of the law to those said facts whilst taking into account all other relevant factors and surrounding circumstances. The role of the Adjudication Officer is to decide the case before him/her, resolving conflicts in evidence according to the direct evidence presented at hearing. Where the evidence of the parties differs greatly and cannot be reconciled findings are made on the balance of probabilities. In my decision-making role I am constrained both by statute and by precedent.
The Relevant Law:
Constructive dismissal is included in the definition of “dismissal” at section 1(b) of the Acts, 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,”
There are therefore two situations envisaged in which a resignation may be considered a constructive dismissal; where the employer’s conduct amounts to breach of contract or repudiation of the contract (the “contract test”) or is such in relation to the employee that it was reasonable for the employee to resign (the “reasonableness test”).
The Contract Test
The accepted statement of this test is by Lord Denning MR in Western Excavating v Sharp [1978] ICR 221 as follows:
“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 discharged from any further performance. If he does so, then he terminates the contract by reason of the employer’s conduct. … [T]he conduct must … be sufficiently serious to entitle him to leave at once …”
The Reasonableness Test
Constructive dismissal may arise where the employer’s conduct was such that it was reasonable for the employee to terminate his or her employment. Lord Denning MR addresses this concept in the same case as follows:
“It is that the employer must act reasonably in his treatment of his employees. If he conducts himself or his affairs so unreasonably that the employee cannot fairly be expected to put up with it any longer, the employee is justified in leaving.”
It is well-established in this context that there is a reciprocal duty on an employee to act reasonably in terms of affording an employer the opportunity to address any issues. This is clearly set out in Reid v.Oracle EMEA Ltd [UD1350/2014] where the EAT stated:
“It is incumbent on any employee to utilise and exhaust all internal remedies made available to him or her unless he can show that the said remedies are unfair.” [emphasis added]
In this regard, the Employment Appeals Tribunal in Conway v Ulster Bank Ltd (UD474/1981) held that a complainant had not acted reasonably in resigning “without first having substantially utilised the grievance procedure to attempt to remedy her complaints.
In Mary Kirrane v Barncarroll Area Development Co Ltd[UDD1635] the Labour Court held that the person complaining of constructive dismissal must also access available grievance procedures to deal with the circumstances which led him/her to resign. [emphasis added]
In Berber v. Dunnes Stores[2009] 20 ELR, the Supreme Court held as follows:
“There is implied in a contract of employment a mutual obligation that the employer and the employee will not without reasonable and proper cause conduct themselves in a manner likely to destroy or seriously damage the relationship of confidence and trust between them. The term is implied by law and is incident to all contracts of employment unless expressly excluded. The term imposes reciprocal duties on the employer and the employee.”
In considering whether there has been a constructive dismissal I have to determine whether there has been a repudiatory breach of contract by the Respondent, or, if there has been no repudiatory breach, whether the Respondent engaged in conduct which made it reasonable for the Complainant to terminate her contract.
The type of conduct which can give rise to a constructive dismissal cannot be petty or minor but must be something serious or significant which goes to the root of the relationship between the employer and employee: Joyce v Brothers of Charity [2009 EAT] UD407/2008; [2009 EAT] ELR 328.
The proofs which the complainant must advance to prove her case are that the behaviour of the respondent and of which she complains corresponds with the requirements laid out in one or both of the two tests and was behaviour which left her with no option other than resignation.
The question I have to consider in the within case is whether the effect of the interactions between the employee and employer at the meeting on 3 October 2023 crossed a threshold so as to damage the relationship to such an extent that it was reasonable for the Complainant to resign.
The Relevant Facts
I must consider whether there has been a repudiatory breach of the contract of employment. The Complainant advances a number of reasons to ground her claim of constructive dismissal. I note the Complainant seeks to rely on the Respondent’s actions, namely the explicit threat of termination of employment, failure to investigate or provide the alleged client complaint, breach of fair procedures with respect to the PIP and the conduct of the meeting of 3 October 2023 all of which are cited as being in breach of the contract test.
I do not accept the Complainant’s reliance on the failure of the Respondent to investigate the client complaint to ground her complaint. I am perplexed as to the manner in which this matter became the pivotal focus of the numerous legal exchanges between the parties. It is an unfortunate reality of such commercial arrangements that a client may simply insist that a certain individual no longer handle their business and they are perfectly entitled to do so if they are not satisfied with the level of service they receive.
Furthermore, I note that when RE offered to provide evidence of the complaint from the client to the Complainant she said she did not want to hear it.
It was not made clear to me why the Complainant envisaged there would be an investigation into a client complaint in the first instance particularly as she submitted in evidence that she had worked at a senior level in many Irish companies for 9 years and I would have thought at such a senior level she would have had an understanding of the fundamental importance of customer service and of the expeditious nature of the actions required by a company to address and to rectify deficiencies in same.
Notwithstanding, I am of the view that the pursuit of customer appeasement does not occur in a vacuum and it cannot be advanced without consideration of the employee.
I do not accept the Complainant’s reliance on a breach of fair procedures in respect of the PIP to ground this element of her complaint. I am of the view there was a great deal of confusion in respect of the PIP and in some way the PIP appeared to have morphed into a disciplinary procedure in the Complainant’s understanding or lack thereof.
It was clarified at hearing that these are two completely different procedures. The Complainant adduced in evidence that performance issues had never been addressed with her and I note this was not a view shared by the Respondent. I note the Complainant did accept that performance deficits had in fact been raised with her under cross-examination when a number of specific examples of same were put to her.
I am of the view there was further confusion on the part of the Complainant on the difference between performance review and performance improvement.
I note the Labour Court in Luke Glogoski v Boots [UDD 187] held as follows:
”However, in the Court’s view it is for an employer to determine its own standards in terms of what it considers are priority tasks, duties and processes, the importance it attaches to particular tasks, duties and processes and the performance objectives that it sets, subject to those standards being consistently applied and not being unachievable.”
Applying Glogoski to the facts of this case I accept the Respondent was entitled to put their requirements to the Complainant. It is noteworthy that for the most part areas requiring improvement focus on the Complainant’s responsiveness or lack thereof which is borne out by the evidence adduced by the Complainant herself when she submitted at hearing that she sent in her medical certs “eventually” and when she stated she did not make a call to the Respondent that she had committed to when the Respondent had contacted her.
I am of the view a PIP is a business driven and a business led initiative. It is not standard practice that the full panoply of fair procedures afforded in the context of a disciplinary procedure apply in regard to the conduct of a PIP. I am satisfied it would be extremely rare if not unprecedented that an employee would he provided with the right of accompaniment to a PIP meeting.
A PIP meeting is between an employee and his/her line manager and it would be most unusual that any employee and in particular an employee at such a senior level as the Complainant would be comfortable discussing perceived performance deficits in the presence of a work colleague. I am of the view prior notice of the PIP meeting should have been provided to the Complainant so that she herself could have prepared in advance but I am unable to find that failure to do so constitutes a repudiatory breach of contract or behaviour such that it was reasonable for the Complainant to terminate her employment.
It is not in dispute between the parties that a meeting took place on 3 October 2023. It is not in dispute the Complainant was offered 2 months’ salary and an ex-gratia payment of €5000 to exit the company. The terms ‘voluntary severance’ and ‘voluntary redundancy’ were used interchangeably. For the purposes of this investigation the terminology used is irrelevant. In fact nothing turns on it.
I note the words spoken at aforesaid meeting after the proposal was put to the Complainant that she exit from the company are in dispute. The Respondent submits the Complainant was given until that evening to accept or reject and if she rejected she would go back on the PIP. The Complainant submits she was given until lunch time to make a decision.
The Complainant provided three different accounts of the words that were spoken after the offer was made to her. I note the Complainant instructed her solicitor that she was told by ROR “that even if she refused to take the redundancy package that it would only be a matter of time and that she would be exited regardless.”
The Complainant’s WRC complaint form provides the “employee has advanced commentary from the Chief Executive Officer that she would be exited through an artificial process that did not respect employment law.”
The Complainant submits in direct evidence that when asked what would happen if she did not accept the offer she submits she was told “you will be made redundant eventually anyway.”
It is irrelevant for the purposes of this investigation whether I prefer the evidence of the Respondent or the evidence of the Complainant in respect of the words that were spoken in this meeting after the exit terms were put to the Complainant. I am of the view it is not necessary for me to resolve the inconsistencies in the Complainant’s account nor is it necessary for me to resolve the conflict in evidence between the parties.
What is not in dispute and on which there is neither conflict nor inconsistency is the fact the Complainant was offered two months’ notice and €5000 to exit the company. This is the plain undisputed fact.
In terms of my careful consideration of this matter it is difficult to escape the conclusion the aforesaid undisputed fact is the defining moment where the employment relationship between the Complainant and the Respondent was unequivocally and unambiguously damaged by the undisputed action of the Respondent.
On the evidence before me I am satisfied that the Respondent’s conduct in terms of the subject matter in the first instance and in terms of the timing of the meeting on 3 October in the second instance is and of itself such as to justify the Complainant’s termination of her employment. I find the Complainant has satisfied the contract test in terms of the former instance and the reasonableness test in terms of the latter instance.
I find an employer blindsiding an employee by inviting her to a meeting at short notice, unaccompanied, and offering two months’ pay and €5000 to exit the company to be an action that goes to the very root of the relationship between an employer and employee and utterly undermines the implied term of trust and confidence.
Furthermore, for completeness, I find the summoning of the Complainant by the Respondent to the meeting on Monday 3 October, which is three working days after she has been placed on a PIP on 26 September, to be the embodiment of unreasonable behaviour on the part of the Respondent.
I note the Complainant did not raise a grievance. However, I also note the Respondent’s very comprehensive employee handbook that seemed to cover every eventuality did not contain a grievance procedure. The Complainant’s contract makes no reference to a grievance procedure.
I am satisfied the Complainant’s failure to raise a grievance cannot be found to be fatal to her complaint in circumstances where there were no“internal remedies made available to her.”
I note Statutory Codes of Practice specifically S.I. 146 of 2000 provide that employers should have grievance policies available to their employees. It is well established that an employee has a contractual, constitutional, and statutory entitlement to fair procedures. S.I. No. 146/2000 – Industrial Relations Act 1990 (Code of Practice on Grievance and Disciplinary Procedures) (Declaration) Order 2000, provides that employers should have written procedures for dealing with grievance issues and disciplinary issues reflecting the varying circumstances and outlines the principles of fair procedures for employers and employees generally.
I find the omission of a grievance procedure from the comprehensive suite of policies and procedures in the employee handbook exhibited by the Respondent to be a striking omission. In such circumstances it is not unreasonable that the Complainant was unable to initiate a grievance procedure where she did not have access to one as such a procedure did not in fact exist.
I find that it was reasonable for the Complainant to terminate her employment because of the Respondent’s conduct in and around its decision to offer her an exit package three working days after she has been placed on a PIP in an action taken by the Respondent which any reasonable person would consider to be so serious or significant that it goes to the root of the contract of employment between the employer and employee. I find the Complainant has met and the Respondent has breached the contract test. For completeness I find the Complainant has met and the Respondent has breached the reasonableness test also.
On the evidence before me, I find that the Complainant was unfairly dismissed within the meaning of the Acts. In terms of remedy in accordance with the provisions of section 7(1) of the Act I am obliged to determine which of the three forms of redress open to me is most appropriate having regard to the circumstances of this case.
In the circumstances, and in light of the fundamental breakdown of the relationship between the parties, I have decided that reinstatement or re-engagement of the Complainant are not practical options in this case. Instead, I take the view that compensation is the appropriate redress in this case.
In awarding compensation, I am obliged to award a “just and equitable” amount of compensation in the full circumstances of the case.
The Relevant Law
Section 7 of the Unfair Dismissals Act which, in relevant part, states that:
(1) Where an employee is dismissed and the dismissal is an unfair dismissal, the employee shall be entitled to redress consisting of whichever of the following the adjudication officer, considers appropriate having regard to all the circumstances:
(a) re-instatement by the employer of the employee in the position which he held immediately before his dismissal on the terms and conditions on which he was employed immediately before his dismissal together with a term that the re-instatement shall be deemed to have commenced on the day of the dismissal, or
(b) re-engagement by the employer of the employee either in the position which he held immediately before his dismissal or in a different position which would be reasonably suitable for him on such terms and conditions as are reasonable having regard to all the circumstances, or
(c) (i) if the employee incurred any financial loss attributable to the dismissal, payment to him by the employer of such compensation in respect of the loss (not exceeding in amount 104 weeks remuneration in respect of the employment from which he was dismissed calculated in accordance with regulations under section 17 of this Act) as is just and equitable having regard to all the circumstances,
(ii) if the employee incurred no such financial loss, payment to the employee by the employer of such compensation (if any, but not exceeding in amount 4 weeks remuneration in respect of the employment from which he was dismissed calculated as aforesaid) as is just and equitable having regard to all the circumstances,
(2) Without prejudice to the generality of subsection (1) of this section, in determining the amount of compensation payable under that subsection regard shall be had to—
- a) the extent (if any) to which the financial loss referred to in that subsection was attributable to an act, omission or conduct by or on behalf of the employer,
(b) the extent (if any) to which the financial loss referred to in that subsection was attributable to an act, omission or conduct by or on behalf of the employee,
(c) the measures (if any) adopted by the employee or, as the case may be, his failure to adopt measures, to mitigate the loss aforesaid,
(d) the extent (if any) of the compliance or failure to comply by the employer, in relation to the employee, with the procedure referred to in subsection (1) of section 14 of this Act or with the provisions of any code of practice relating to procedures regarding dismissal approved of by the Minister,
(e) the extent (if any) of the compliance or failure to comply by the employer, in relation to the employee, with the said section 14,
(f) the extent (if any) to which the conduct of the employee (whether by act or omission) contributed to the dismissal.
Section 7(3) of the Act further states that:
“financial loss”, in relation to the dismissal of an employee, includes any actual loss and any estimated prospective loss of income attributable to the dismissal and the value of any loss or diminution, attributable to the dismissal, of the rights of the employee under the Redundancy Payments Acts, 1967 to 1973, or in relation to superannuation”;
As is clear from the Act, section 7 (1) (c) (i) compensation is for “any financial loss attributable to the dismissal”. Financial loss is defined as including, actual loss, estimated prospective loss of income and loss or diminution of the rights of the employee under the Redundancy Payments Acts.
The Complainant’s submits her actual loss amounts to €48,548.55. The Complainant had not acquired a right to a redundancy payment as she was employed by the Respondent for less than two years. However, the benefit of one year qualification period for redundancy pay was lost due to her unfair dismissal. I am also bound to consider that the Complainant by her own admission submits she remained on medical certificate for a further month post resignation.
In calculating the level of compensation, I take into consideration the efforts of the Complainant to mitigate her losses as I am required to do by section 7(2)(c) of the Act. In considering the amount of redress to award I must bear in mind the lack of effort by the Complainant to mitigate her loss in the instant case and in particular her lack of effort at securing employment in her proven area of expertise in a market that has no scarcity of such positions as evidenced by the number of vacancies advertised on any given day in a trend in the Complainant’s particular profession that has continued unabated for some time.
I find the Complainant has failed to produce credible evidence to me that she has made sufficiently rigorous efforts attempts to mitigate her loss when I apply that which is set out hereunder.
The decision of Coad v Eurobase [UD1138/2013] outlines the duty to mitigate loss under the Act where the Tribunal noted:
“In calculating the level of compensation, the Tribunal took into consideration the efforts of the claimant to mitigate his losses and finds that these efforts do not meet the standard as set out by the Tribunal is Sheehan v Continental Administration Co. Ltd. (UD858/1999) that a claimant who finds himself out of work should employ a reasonable amount of time each weekday in seeking work. “It is not enough to inform agencies that you are available for work nor merely to post an application to various companies seeking work…the time that a claimant finds on his hands is not his own, unless he chooses it to be, but rather to be profitably employed in seeking to mitigate his loss.”
Taking all of the factors set out above into account, I award redress of €17,917.50 as just and equitable compensation for the unfair dismissal. As this is compensation for loss of remuneration arising from the Complainant’s unfair dismissal it is subject to taxation in the normal way.
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