Categories
Partnership Law

Partnership Law in Ireland-What You Should Know

Partnership.

You start out with such good intentions.

But when it goes wrong, it can be catastrophic.

That’s why the need for a written partnership agreement in any partnership is crucial.

Because if you do not have one, then the Partnership act 1890 will govern your relations with your partner.

Partnerships are an important part of business life in Ireland for a number of reasons including taxation, accounting, and disclosure advantages over limited companies.

1) any time 2 or more people come together to carry on business and do not form a company the law assumes they are in partnership.They are then subject to partnership law which dates back to the Partnership Act of 1890.

2) Professionals such as doctors,lawyers,dentists,vets,accountants are not allowed to form companies.

3) There are advantages over forming a company from the point of view of tax, accounting and disclosure requirements.

Unlike a company a partnership is not a separate legal identity which means that partners have unlimited liability, unlike directors or shareholders in companies.

And partnerships do not have to go through any registration process to be formed.

The downside is that each partner is liable for the losses of his co-partner in carrying on the partnership business, even where the other partner has defrauded clients of the business.

Definition of Partnership

Partnership Act 1890 defines a partnership and essentially states that where 2 or more people carry on business with a common view of profit, then a partnership exists.

A written partnership agreement is not necessary.

And where 2 or more companies come together to carry on business to make a profit then unless they have set up a special purpose joint venture company a partnership will be deemed to exist.

However it is important to note that Co-ownership of property alone does not mean that a partnership exists; there must be a sharing of any profits between partners.

Generally the maximum number of partners allowed is 20;however there are exceptions made for solicitors and accountants.

Types of Partnership

There are 2 types of partnership:

  1. an informal partnership (partnership at will) and 
  2. formal partnership (fixed term partnership).

Why is it important to have a written partnership agreement?

Because if there is not either an implied or express agreement the partnership will be considered in the eyes of the law a partnership at will and will be governed by an act from 1890….which in most cases is wholly inappropriate for modern business.

For example without a written partnership agreement the 1890 Partnership act will mean that

1) there is no right to expel a partner

2) any partner may dissolve the partnership

3) if a partner dies, the firm will automatically dissolve

4 ) there is no power to resign under the Partnership act, although a partner can retire by dissolving the partnership.

These are pretty crucial reasons for partners to set down their agreement and understanding in a written partnership agreement.

Business Name of Partnership

If the partnership is carried on under a name which does not consist of the surnames of the partners, then the partnership must register a business name and publish the names of the partners on the firm’s stationery.

In the event of a dispute, this may be very important as it may indicate when somebody became or ceased to be a partner.

Partners rights under the 1890 act

1) every partner may take part in the management of the business so if this in not desired then a written agreement should reflect the wishes of the partners.

2) a simple majority of partners is all that is required to make a decision.Again if this is not desired then a written agreement is a must.

However this is tempered by the requirements that

a) all the partners must exercise their powers for the benefit of the partnership as a whole

b) to change the partnership business there must be unanimity

c) no partner may be introduced without the consent of all the partners

d) a partner may not be expelled by a majority.

Majority Rule in a Partnership

There are 2 restrictions on the capacity of partners to bind the whole partnership by a majority vote:

  1. partners have a fiduciary duty to each other and must exercise their rights for the benefit of the partnership as a whole
  2. sections 24 and 25 of the Partnership Act, 1890 limit the powers of partners to use majority rule.

Section 24 (8) requires unanimity for a change in the partnership business;

section 24 (7) provides that no partner may be introduced without the consent of all the partners

section 25 prohibits the expulsion of a partner by a majority of the partners unless all partners have expressly agree to such a power being conferred. However there is no right to expel under the default agreement situation.

Fiduciary Duty of Partners

A partner has a fiduciary duty to co-partners under common law.

However, the Partnership Act, 1890 also provides as follows:

  • section 28 provides that partners are bound to render through accounts and full information of all things affecting the partnership..
  • section 29 provides that a partner must account to the partnership for any profits made from partnership property
  • section 30 provides that “If a partner, without the consent of the other partners, carries on any business of the same nature as, and competing with that of the firm, he must account for and pay over to the firm all profits made by him in that business.”

However this does not prevent a former partner from competing with the former partnership.

Written Partnership agreement

It is pretty clear that having a written partnership agreement is crucial to the smooth running of the partnership and to ensure that the wishes of the partners at the outset are carried out.

The Partnership act 1890 does not prevent a former partner from competing with the firm after he leaves and for this reason it is common for modern partnership agreements to have a non compete agreement, generally for a maximum of 2 years.

Financial rights of partners

The default position from the 1890 act is that all partners are entitled to share equally in the profits and capital of the partnership and must contribute equally to the losses.

This means that even if a partner does not contribute capital in the same proportions as the other partners he is still entitled to share in the profits equally.

The 1890 Act also deals with interest on capital, interest on loans, remuneration of partners, and drawings.

Remuneration of Partners

The Partnership act 1890 states that no partner is entitled to remuneration for acting in the partnership business.Clearly a written agreement is a necessity and should also set out the provisions for the drawings of partners.

Partnership Property

It is very important to decide at the outset which is partnership property and which belongs to individual partners. It is important to note that the 1890 act presumes that property used in the partnership is partnership property and that property bought with partnership funds is partnership property.

So it should be clarified from the start who owns what, and what is partnership property and what is not.

Liability of partners to third parties

Partners are liable for the debts and obligations of the partnership without limitation.

And where a creditor can not get money due to him from the partnership he is entitled to get his money from the partners personally.Generally a partner acting within the scope of his authority binds the whole partnership legally.

However he must act as a partner and it must be within the ordinary course of business of the partnership.

If a partner can wiggle his way out of binding his firm to an outsider then he himself will be made personally liable.

A partner can bind the partnership arising from his authority which may be

  • express authority
  • implied authority
  • ostensible authority.

However, the act must be done by a partner as partner of the partnership within the ordinary course of business of the partnership. If a partner was acting outside the partnership in a different capacity, she would not bind the firm.

Actions Between Partners

Rows and disputes between partners are, unfortunately, quite common.

Any litigation between partners will be strongly influenced by 2 factors:

  1. courts are reluctant to allow partners to sue other partners on foot of a single partnership obligation. Instead they tend to prefer that all partnership obligations be determined as part of a general settlement of accounts on the dissolution of the partnership;
  2. courts are reluctant to compel an unwilling partner to be a partner of another. Accordingly the specific performance of partnerships are only granted reluctantly and not too often.

Dissolution of Partnership

Dissolution of a partnership can occur by
1)  automatically eg on the death or bankruptcy of a partner

2 ) by notice (section 26 or 32 (c)  ie any partner can just dissolve the partnership by giving notice in the absence of any express or implied contrary agreement. The notice will take effect from the date set out in the notice, but this date cannot be before the date of receipt of the notice.

Once the partnership is dissolved, any partner can demand the sale of partnership assets in order to discharge the liabilities of the firm.

3)  illegality-partnerships formed to carry out an illegal activity or an activity contrary to public policy are automatically dissolved

4) by expiration-either at the end of the partnership term or on the completion of a specific undertaking for which the partnership was formed

5) dissolution by the court-section 35 provides statutory grounds for dissolution by a court including where

  • a partner is of unsound mind
  • a partner becomes permanently incapable of performing his part of the partnership contract
  • a partner’s behaviour is prejudicially affecting the partnership business
  • a partner is in breach of the partnership agreement
  • where the partnership can only be carried on at a loss
  • where it is just and equitable to dissolve the partnership.

Dissolution of Partnership by Court as a Remedy in a Dispute

The court can dissolve a partnership under section 35 of the Partnership Act, 1890 where it decides that

a)  a partner has carried on in a way that is damaging to the business

b)  where a partner commits a breach of the agreement consistently

c) whenever the court decides that is just and reasonable to dissolve it.

Courts can also appoint a receiver/manager to preserve partnership assets where it decides it is appropriate to do so.

Types of Partnership Dissolution

There are two types of dissolution of partnership:

  1. A general dissolution and
  2. A technical dissolution.

General Dissolution of Partnership

This occurs where the partnership is ended and the business is wound up and the partnership assets are sold. Section 39 of the Partnership Act, 1890 allows a partner to force the general dissolution of the firm.

Technical Dissolution of Partnership

A technical dissolution will occur where there is a change in partners, either by a partner leaving or a new partner joining the firm. The death or bankruptcy of a partner will also lead to a technical dissolution.

It will become a general dissolution if the remaining partners decide to sell the assets of the partnership and wind up the business.

No right to expel a partner

Under the Partnership act 1890 there is no right to expel a partner,no matter how negligent or unprofessional he is, so this is another important reason to have a written partnership agreement drawn up.

Consequences of dissolution of Partnership

Where a firm goes into general dissolution the assets of the partnership will be sold to pay the debts of the partnership.

It is important to be aware that if there is insufficient funds to pay creditors then in the absence of an agreement to the contrary each partner will have to contribute equally to those losses…..regardless of the contributions of capital by each partner at the outset.

In order for a partner to protect himself after dissolution he must give notice to all existing customers to avoid any liability after the dissolution.

It is vital that a former partner notifies customers of the partnership that he is no longer a partner or he could be held liable under the Partnership act 1890 for any obligations incurred by the partnership after his departure.

Any partnership agreement must provide for the share of the departing partner to be purchased by the continuing partners and must provide for what will occur on the death of a partner.

As you can see there are many, many good reasons to have a written partnership agreement drafted if you are going into a partnership.

If you do not then the Partnership Act 1890 will govern your relationship with your partners and as you can see it is completely inappropriate for modern commercial activity.

(NOTE: there are 2 other types of partnership recognised by Irish law which have not been considered here-a limited partnership and the investment limited partnership.)

You should consult a solicitor or other suitably qualified professional to have your partnership agreement drafted and which will provide for all of the issues outlined above.

Learn more about small business in Ireland.

Categories
Intellectual Property

Passing Off,Counterfeit Goods, and Confidential Information-Are You a Victim of These Economic Torts?

counterfeit-goods

Passing off, counterfeit goods, and distributing confidential information can all cost the small business owner significant amounts of money.

These are economic torts (civil wrongs). But what exactly is involved and what can be done if you are a victim?

Passing off generally involves the making of a misrepresentation and the meaning or definition of passing off is as follows-

What is passing off?

There are 5 characteristics of passing off:

  1. A misrepresentation
  2. Made by a trader in the course of trade
  3. To prospective customers
  4. Which is calculated to injure the business or goodwill of another trader
  5. Which causes actual damage to a business or goodwill of the trader

1. Misrepresentation

There must be a false representation by the defendant so that an association with the plaintiff is made in the minds of the public.

2. Made by a trader in the course of trade

The misrepresentation must be made in the course of trade. What is considered to be a trader as far as the law of passing off is concerned is very wide-it has been held to include the BBC for example.

Anyone who makes an income from the provision of goods/services is a trader.

3. To Prospective customers

For passing off to occur, the misrepresentation must be made to prospective customers.

Then the courts have held that they will decide whether the general public is likely to be deceived.

4. Business/Goodwill

It has been accepted that goodwill can be created in different ways and is not confined to simply trading within a jurisdiction.

5. Damage

The plaintiff must prove that the action of the defendant has or is likely to cause damage to the plaintiff in order to prove passing off.

Passing off is closely connected with counterfeit goods.

Counterfeit goods

A trade mark owner can register his trade mark with the Revenue Commissioners and customs officials can destroy goods, which have been abandoned without or before determining whether an intellectual property right has been infringed.

Each consignment of goods from outside the EU will be inspected to see whether the goods are genuine.

If they are found to be counterfeit, the customs authorities will destroy the consignment.

Infringement

Exceptions

A trade mark is not infringed by the use of a person of his own name or address, provided it is done honestly.

A trade mark will not be infringed by its use on goods which have been put on the market in the EU by the owner of the trade mark or with his consent. This is known as Exhaustion of Rights of a registered trade mark and stems from EU law.

Remedies

Courts have the power to grant an injunction and/or the destruction of goods and damages. The District court has the power to request the Garda Siochana to seize goods and ultimately to have them destroyed once satisfied that an infringement has taken place.

Domain Names

A domain name will not necessarily become a trade mark and it is advisable for the owner of a domain name to also register it as a trade mark.

Confidential Information

Information such as know how, secret formulae, processes, customer lists are clearly of huge importance to businesses.

The protection of this information can be best protected by a confidentiality agreement with an employee from an employer’s perspective. This can be more effective than registering patents as this involves putting information into the public domain.

Once it is established that an obligation of confidentiality then the person to whom it is given has the duty to act in good faith and only use the information for the purpose for which it was intended.

Generally the law imposes a duty of confidentiality in 2 situations

  • The protection of trade secrets/confidential information in non-employment cases
  • The protection of trade secrets in the course of employment

Once a contract of employment has ended and the employee has left his position he is still under a duty of confidentiality.

It has traditionally been held that in an employment situation will lead to 3 types of information

  • Public information-not protected
  • Skill and experience which is not protected although it could be the subject of a restriction of trade clause in the employment
  • Trade secrets-protected and can only be used for the benefit of that employer

Remedies

Breach of confidential information will lead to an injunction or legal action seeking damages or an account of profits or all 3.

Learn more about small business law in Ireland.

Categories
Property Law

The Private Residential Tenancies Board-PRTB

residential-tenancies-board

What is the tenancy registration system?

It is a requirement on all landlords to register details of their tenancies within one month of their commencement on form PRTB1 available from PRTB.

 

The information on the register will be used to provide aggregate data on the private rented sector. Personal details such as the tenant name, landlord name, rent, etc. will not be made public. (See also residential letting agreements in Ireland-an overview)

Tenancy Registration Fees

Fee Payable

€90 Per tenancy being registered on time i.e. within 1 month after the commencement of the tenancy.

€375 for multiple tenancies in the one building being registered at the same time and all on time (i.e. within one month of the commencement of the respective tenancies) by the one landlord (please staple the multiple forms together).

€180 (Late Fee)

In all circumstances where the tenancy is being registered more than 1 month after the commencement of the tenancy, an additional fee of €90 is payable for these late registrations (i.e. the total fee is €180 per tenancy). There are no exceptions to the late fee and the composite fee is not available to late registrations of multiple tenancies within the one building.

No Fee

Where 2 payments in respect of the dwelling have been made to the Private Residential Tenancies Board in the previous 12 months.

No Fee

* The Residential Tenancies Act 2004 does not allow for any exemptions from the requirement to pay the late fee in any case. As such the PRTB has no power to waive the late fee in any case regardless of the circumstances or the reasons for the delay.

Why does the form ask for the PPS numbers and other details?

The PPSN is the State identification number for dealings with public sector bodies. It will act as the unique tenant and landlord identification number on the registration record. Most of the other details are required as a record of the tenancy in case disputes arise or so as to gather aggregated data on the sector. Certain contact details are also requested. This is necessary as the registration application must be made within one month of the commencement of the tenancy and, if later, the landlord will have to pay a double fee (currently €180).

What dwellings are exempt from the tenancy registration system?

  • Business premises, even where partly residential
  • A dwelling to which Part II of the Housing (Private Rented Dwellings) Act 1982 applies (i.e. formerly rent controlled dwelling occupied by the “original tenant” or his/her spouse) or to which Part II of the Landlord and Tenant (Amendment) Act 1980 applies (i.e. long occupation equity lease tenancies)
  • A dwelling let by a local authority or voluntary housing body
  • A dwelling occupied under a shared ownership lease
  • A holiday let
  • A dwelling in which the landlord is also resident
  • A dwelling in which the spouse, parent or child of the landlord is resident and there is no written lease or tenancy agreement
  • A dwelling that is occupied rent free

If a dwelling is available for renting but has not yet been let, there is no requirement to register.

Will the PRTB provide confirmation of exemption from the tenancy registration system ?

No, the PRTB will not routinely provide for individuals confirmation of exemptions from the tenancy registration system.

What happens if I don’t register?

Until such time as a tenancy has been entered onto the PRTB’s register of tenancies, the PRTB is precluded from dealing with any dispute relating to the tenancy that may be referred to it by the landlord. The registration requirement applies only to ongoing tenancies so it is important that the registration process be completed as quickly as possible in case any difficulties arise in relation to the tenancy.

What is the PRTB doing about unregistered landlords?

The steps being taken by the PRTB to pursue compliance with the registration requirement are in accordance with the provisions of the Residential Tenancies Act 2004 and, in particular, sections 144 and 145.

They include the issue of notices to landlords and/or occupiers of the dwellings in question, and the prosecution of offenders for non-compliance with the registration requirement. Details of these notices are set out below.

Landlord 1st Notice – section 144(2)

Where the landlord’s address is available to the PRTB, a notice is served on the landlord stating that in the PRTB’s opinion there is a tenancy in the dwelling in question that requires to be registered and that an application for registration must be made. The notice requests the landlord to furnish within 14 days the reasons why the landlord may consider that they do not have to register.

Landlord 2nd Notice – section 144(3)

Where the landlord fails to respond to the 1st notice, within the 14 day period or a response was received within the 14 day period which did not result in the PRTB changing their opinion on the registration requirement applying, a notice is served on the landlord stating that the landlord is required to register within 14 days and failure to register within this timeframe will result in the landlord being guilty of an offence under the Residential Tenancies Act 2004.

Occupier’s Notice – section 145(4)

Where the landlord’s name or address is not supplied, a notice is served on the occupiers requiring them to supply within 14 days any information in their possession that could lead to the PRTB ascertaining the identity of the landlord or of his/her address. That notice also states that failure to respond within the 14 days will result in the occupier being guilty of an offence under the Residential Tenancies Act.

What happens if a landlord or occupier does not comply with the PRTB’s notices about not registering?

If the landlords and occupiers fail to comply with the provisions of the Residential Tenancies Act 2004 as outlined above, the PRTB will exercise the power open to it under the Act in relation to prosecutions.

However this process may take time as in order to maximise success and effective enforcement, it is essential that the information available to the PRTB is accurate and that the PRTB operates in accordance with the appropriate procedures. This is because the successful conviction of the landlord or tenants of criminal offences under sections 144 or 145 respectively requires a high standard of proof and a correct name and address is vital to this process.

Are landlords eligible for tax relief on interest paid on borrowing to purchase investment properties?

Landlords should be aware that the Finance Acts have been amended to explicitly provide that compliance with the registration provisions contained in the Residential Tenancies Act registration provisions is a condition of eligibility for mortgage interest relief on residential properties. It is a matter for individuals to satisfy themselves that they are in compliance with the Residential Tenancies Act.

The PRTB will not routinely provide letters confirming exemption from the Act. The PRTB propose to supply the Revenue Commissioners with information on unregistered tenancies of which it becomes aware so that, as well as facing criminal prosecution, the landlords in question will lose any mortgage interest relief relating to the dwelling.

What do I do if my tenant leaves my rented property?

If your tenant(s) leaves the rented property then it is deemed to be the end of the tenancy. You will need to register with the PRTB the new tenancy within one month of the new tenants moving in.

If at least one of the tenants remain in the rented property and the other tenants are replaced by new tenants, then this would be considered an update of the tenancy details.

If there is a change of rent you are required to notify the PRTB and when doing so, you are required to advise of any other change of the tenancy details that have arisen in the interim – no fee is payable when providing an update of tenancy details. The tenancy registration form, which is downloadable from this website, can be used for this purpose also.

I lease my property to a management company who in turn rent out the property to individual tenants; I have no relationship with the tenants of the management company. Do I need to register?

In the above scenario there are two actual tenancies and they both need to be registered. Under the RTA, the landlord is legally obliged to register the tenancy where the dwelling is leased to the management company and the management company is legally obliged to register the tenancy with the individual tenant(s). Each tenancy will then have a unique RT number assigned to it.

The above applies in all arrangements where the dwelling is sublet and is ultimately a residential dwelling other than for those dwellings excluded in Article 3 of the RTA (a list of excluded dwellings)

What happens if I change the Rent?

The landlord must inform the Board of a change in the rent payable in respect of a dwelling within one month of the change occurring.

What happens if one of the tenants moves out and is replaced by a new tenant?

Landlords should at the same time notify the Board of any other change to the registered tenancy details e.g. a replacement tenant. No fee is payable for informing the Board of these changes.

What is duration of the registration?

Once a tenancy is registered it remains a registered tenancy for as long as the tenancy remains in existence. Once the tenancy is terminated, any new tenancy created in respect of the dwelling must be registered with the Board.

Why am I being asked to Re-register my tenancy?

Under the provisions of Part 4 of the Act if the tenancy has not previously been terminated it will be deemed to be terminated when it has lasted 4 years and a new tenancy will then commence between the parties. This new tenancy must be registered with the Board and the registration fee paid.

What do I do if the dwelling ceases to be let?

If the dwelling ceases to be let, the Board should be notified so that the record can be removed from the register – no refund of the registration fee is payable in such circumstances.

Enforcement of registration requirements

The registration of a tenancy is a legal requirement on the landlord. Landlords failing to register a tenancy may be guilty of an offence and upon conviction shall be liable for a fine of up to €3,000 and/or up to 6 months in prison, along with a daily fine of €250 for a continuing offence.

What is the published register?

The Board maintains a published register, which is available for public inspection at the Board’s office. However, the published register will not contain any information that could lead to the disclosure of the identity of the landlord or tenant(s) or the rent payable.

Categories
Debt Problems | Bankruptcy

The Small Claims Court in Ireland-What You Need to Know

small-claims-court

Have you a civil claim against a person or business for less than €2,000?

The Small Claims court procedure in Ireland is an alternative method of commencing and dealing with a civil proceeding in respect of a small claim and is provided for under the District Court (Small Claims Procedure) Rules, 1997 & 1999, which were amended by the District Court (Small Claims) Rules, 2009 (SI 519 of 2009).

The Small Claims court procedure is a service provided by District Court offices in Ireland and is designed to handle consumer claims cheaply without involving a solicitor.

However you need to weigh up the pros and cons of carrying out the procedure yourself or engaging the services of a solicitor.

To be eligible to use the small claims procedure, you, the “consumer” must have bought the goods or services (or the service) for private use from someone selling them in the course of business.

The small claims procedure is now available for use by one business person against another since Jan. 2010.

The value of the claim cannot exceed €2,000.

You should bring your small claim in the District Court area where:

  • the respondent lives or carries on business, OR
  • the contract was made, OR
  • in the case of damage to property, where the damage took place.

The District Court Clerk, called the Small Claims Registrar, processes small claims.

Where possible, the registrar will negotiate a settlement without the need for a court hearing. If the matter cannot be settled the registrar will bring your claim before the District Court.

Type of small claims dealt with

(a) a claim for goods or services bought for private use from someone selling them in the course of a business (consumer claims)

(b) a claim for minor damage to property (but excluding personal injuries)

(c) a claim for the non-return of a rent deposit for certain kinds of rented properties. For example, a holiday home or a room / flat in a premises where the owner also lives provided that a claim does not exceed €2,000.

Small claims in respect of other matters relating to rented accommodation must be brought to: Private Residential Tenancies Board.

Excluded from the small claims procedure are claims arising from:

(a) a hire-purchase agreement

(b) a breach of a leasing agreement

(c) debts

In making a small claim you must be sure of the name and address of the person or company against whom you want to make a claim. These details must be accurate in order to enable the Sheriff to execute the Court Order (Decree).

When a Respondent is a company, rather than an individual, it is important to ascertain the correct title of the company. This may be obtained from the Companies Registration Office www.cro.ie

How to Make a small claim

Contact the District Court Office in the area where:

  • the respondent lives or carries on business,

OR

  • the contract was made,

OR

  • in the case of damage to property, where the damage took place.

The Small Claims Registrar will provide you with the application form or you can download the application form from www.courts.ie

The fee for making a small claim is €25.

The completed application form together with the fee of €25 should be lodged with the Small Claims Registrar.

A copy of the completed application form will be sent by the Registrar to the person/party against whom you are making a claim, called the Respondent.

The original application form will be kept in the Registrar’s office.

If your small claim is disputed

If the Small Claims Registrar receives a notice from the Respondent disputing your claim or making a counterclaim against you, the Registrar will contact you and let you have a copy of the Respondent’s answer.

The Registrar may interview and negotiate with both parties to try to reach an agreement.

If your small claim is not disputed

If the Respondent admits your small claim he/she is required to notify the Registrar’s office by returning a Notice of Acceptance of Liability form. If the Respondent does not reply, the claim will be automatically treated as undisputed.

The District Court will then make an order in your favour (without you having to attend court) for the amount claimed, and direct that it be paid within a short specific period of time.

A counterclaim

A counterclaim is a claim made against you by the Respondent.

Failure to resolve a small claim

If the Small Claims Registrar is unable to bring about a settlement he/she will bring the case to the District Court for a hearing, if requested to do so and the Small Claims Registrar may call both parties to his/her office where a private and informal meeting will be held.

The Small Claims Registrar will probably ask you and the Respondent to outline the facts.

He/she may question both parties in an effort to clarify the issues.

If an agreement cannot be reached the Small Claims Registrar may there and then fix a date, time and location for a hearing of the claim before a judge of the District Court.

The date and time of the hearing and the address of the courthouse will be sent to both parties by post.

The District Court hearing

You must attend the District Court hearing.

On the court day remember to bring with you documentary evidence supporting your claim, e.g. letters, receipts, invoices.

The case will be heard in public as part of a normal sitting of the District Court.

Evidence must be given under oath or affirmation and the Respondent can question you on matters relating to your claim (called cross-examination).

The judge may require the Small Claims Registrar to assist the court at the hearing.

When your case is called the Court Registrar will call you to the witness box to give evidence.

The Respondent will also be given an opportunity to give evidence.

Each witness can be subject to cross examination by the opposing party or their legal representatives.

Engaging a solicitor for your small claim

You may engage a solicitor at your own cost and many people do so to ensure silly mistakes don’t compromise your claim.

Engaging a witness

You can bring a witness, but if expenses are incurred you will have to pay those yourself.

If you think it necessary, in your own interest, to have an expert’s report you will have to pay for this. Expert reports and witness expenses must be paid for by you.

Likewise, if the Respondent calls experts or witnesses he/she will be liable for their costs, if any.

If a witness does not agree to attend the small claims hearing

The Small Claims Registrar will, if you request and pay the small requisite fee, prepare and issue a witness summons on your behalf requiring a witness to attend the hearing.

The Small Claims Registrar will arrange service of the summons.

You will be obliged to pay for any financial loss incurred by the witness in attending court, if claimed

If the matter is decided in your favour

If the small claim is resolved in your favour, the Respondent will be notified of the court’s decision a few days after the hearing and will be allowed approximately 4 weeks to pay the amount awarded by the court.

Appealing the decision of the District Court

Both the Applicant and the Respondent have the right to appeal an order of the District Court to the Circuit Court.

Costs may be awarded by the Circuit Court but that is a matter for the individual Circuit Court judge to decide.

If the respondent does not pay

If the respondent does not pay, you can apply to the Small Claims Registrar to have the order of the court sent to you for execution by the sheriff.

There will be a fee payable to the sheriff, which will be refunded to you if the Sheriff succeeds in executing the court order (decree).

The execution of the court order is then a matter for the sheriff who will notify the claimant.

Information and assistance on enforcement procedures are available from the Small Claims Registrar.

For various reasons the Sheriff may not always be successful in the execution of Court Orders.

Conclusion

The small claims procedure can be a very useful procedure. But the small claim must be less than €2,000 and you can not use it to pursue business debts.

The small claims court in Ireland is an effective method for resolving small claims without the need to employ a solicitor and the small claims procedure is pretty straightforward whilst the district court staff who deal with it are very helpful in the main and will answer your queries.

Note: the small claims procedure was changed in 2010 to allow businesses to pursue claims in certain circumstances. Read a summary from the Court’s website here.

Categories
Employment Law

Termination of Employment | Fair Dismissal | Unfair Dismissals | Dismissal Procedures-Some Essential Facts You Should Know

constructive-dismissa

Termination of employment issues have the potential to cause the employer a lot of money, and a lot of grief and heartache for the employee.

It is important for any small business to have a basic understanding of the procedures and the rights of employees and employers when it comes to terminating employment.

The most commonly litigated aspect of employment law is instances involving the termination of the employment contract itself.

Although disputes are not uncommon in the workplace, most will be resolved without the parties involved being compelled to terminate the employment contract.

However in some instances this may be the only reasonable avenue available to either or both parties.

Contracts of employment may be terminated in a number ways including: agreement, dismissal, repudiation and frustration. (Check out our other employment law in Ireland articles)

Termination of employment by Agreement

As is the case with all contracts, contracts of employment may be terminated with the consent of both parties.

In certain circumstances a term of the contract may be inserted to deal with the termination of the contract, by means of notice by either party. In this instance it is generally understood that a certain minimum time must have elapsed prior to the term being activated.

An alternative means by which the contract of employment may be brought to an end involves the payment of an agreed sum, made with the intention that the contract shall be terminated forthwith.

In certain circumstances where the interests of both parties are served by the immediate termination of the contract of employment, then no such monies may be necessary i.e. the employer is actively seeking to cut back on staff numbers and the employee has been offered more lucrative terms with another employer.

Termination of employment by Repudiation

A repudiation of the employment contract occurs where either party unilaterally fails to abide by the terms agreed, eg forced resignations, failure to pay remuneration, unilaterally changing the nature of the work..

In circumstances where an employee is the one alleged to have committed a repudiatory breach of the employment contract, for example by means of unambiguously leaving the job at issue, the contract is not deemed to be terminated and it is still at the discretion of the employer to retain the services of the employee.

The reasoning behind this principle is to avoid rewarding employees who seek to prematurely end their contracts deliberately.

Termination of employment by Dismissal

A dismissal for the purposes of employment law is legally defined as the unilateral termination of the contract of employment by the employer.

Where the employer fails to give adequate notice of the dismissal he/ she will be held to have repudiated on the fundamental conditions of any employment contract, payment for work completed.

In circumstances where an employee refuses to accept this repudiation, then he/she may elect to sue for damages for wrongful dismissal.

Note: there is a significant difference between wrongful dismissal and unfair dismissal.

Termination of employment by Frustration

One of the more recent innovations in the law of contract is the legal principal of frustration, whereby circumstances outside of the control of either party mean that the contract comes to an end and any further contractual obligations are set aside.

In the context of the contract of employment, the factors accepted are inclusive of but not limited to: the destruction of the workplace, illness on the part of the employee, employee’s imprisonment or liquidation of the business.

Notice of Termination

One of the terms of any contract of employment will generally be the length of notice required to lawfully terminate the contract. In the event that no such clause is deemed to exist then reasonable notice must be given (this will be determined by the individual circumstances of any contract).

(Read more about notice periods for termination of the contract of employment.)

However where an employee is being dismissed for a very serious breach of contract, there is no entitlement to any notice.

The process whereby an employer decides to immediately terminate an employment contract is legally regarded as a summary dismissal. This power may be exercised in circumstances where the contract of employment expressly stipulates or alternatively where the employee is guilty of serious misconduct.

The exact factors which constitute a serious misconduct may be cited in the contract or alternatively where this is not the case, the individual circumstances of the employment may be considered. However, some actions are so nefarious as to be instantly regarded as such including: deliberately destroying the employer’s valuable property, stealing from the employer, and gross insubordination.

In addition to the grounds previously specified an employee’s action representing to the employer that he possessed a certain skill or qualification, which was not in fact the case, would have seriously misrepresented the situation and this action would warrant summary dismissal.

However, inability to do a job may be regarded due to the employer’s inadequate training methods or to inefficient techniques for selecting employees.

Dismissal Procedures

In most cases the employment contract should specify or directly incorporate the manner in which dismissal procedures should be conducted.

Indeed statute compels all employers to issue new employees with a directive on appropriate dismissal procedures within one month on initiating employment under section 14 of the Unfair Dismissals Act 1977.In the event that this directive is altered, a minimum of 28 days notice must be given to the employee.

However this obligation does not apply where no agreed procedural framework was in place between the parties or the employee’s trade union or where no such procedure is based on custom and practice.

It is estimated that as much as 80% of employers’ lost unfair dismissal cases are lost because of procedural unfairness.

Codes of Practice on Disciplinary Procedures

In the advent of any dismissal procedures being initiated, the employee has a Constitutional right to expect fair procedures.

In essence this means that an employee must be made aware of any evidence against them and should be afforded the opportunity to respond to the allegations.

In the event that a breach of fair procedures is found then the courts can order that the employee be continued to be paid pending a full hearing of the action.

Procedures are necessary to ensure that discipline is maintained in the workplace and that disciplinary measures can be applied in a friar and consistent manner.

The procedures must comply with the principles of natural justice and fair procedures including

1. Details of the allegations or complaints are put to the employee concerned.
2. The employee concerned is given the opportunity to avail of representation.
3. The employee concerned has the right to affair and impartial determination of the issues being investigated, taking into account the allegations or complaints themselves, the response of the employee to them, any representations made by or on behalf of the employee concerned and any other relevant or appropriate evidence factors or circumstances.

It is advisable that allegations be set out in writing, that the source of the allegation or complaint be given or that the employee concerned be allowed to confront or question the witnesses

Disciplinary action may include:

1. An oral warning
2. A written warning
3. A final written warning
4. Suspension without pay ( not advisable)
5. Transfer to another task
6. Some other disciplinary short of dismissal

See Labour Relations Commission codes of practice also.

Dismissal

Fair Dismissal

In circumstances where an employee can demonstrate that they were dismissed from a contract of employment, then the onus is on the employer to demonstrate that this dismissal was justified and  fair.

In order to achieve this an employer must show that the dismissal was premised upon one or more of the grounds set out in the Unfair Dismissals Act 1977. In doing so the employer must also rebut any allegation of dismissal on any improper grounds alleged by the employee.

The grounds upon which dismissal may be premised include: capability, competence, qualifications, conduct, redundancy, illegality or another case premised on unnamed “substantial grounds”.

1) Capability

Capability grounds are usually premised on issues like lateness, absenteeism, and persistent absence through illness.

If lateness or absenteeism is at issue then the employer will be expected to have documentary evidence to substantiate this claim such as clocking in records, or absenteeism files that are not medically certified. In addition the employer should have evident of the severity of the absences being brought to the attention of the employee.

If illness or injury is at issue, it is often assumed that you cannot be dismissed while on certified sick leave from you work. However, this is not true.

It is difficult to lay down hard and fast rules to apply to these cases as each are different and each will be treated on its own merits. Accordingly these instances are usually divided into short term and long term categories.

Short term illnesses are taken to include medical illnesses which require the individual to be absent for short periods from the work place. Assuming that the employer is not actually questioning the validity of the terms cited they will be expected to have:

1. Established that a pattern of absences exists and it that it is causing problems

2. Satisfied themselves that the problem is unlikely to get better in the long run.

3. Warned the employee the dismissal may occur if things do not improve.

Many of the same considerations exist in a long term absence cases. However, employers will in this instance be expected to secure detailed medical evidence which suggests that an early return is unlikely.

The precise time frame in which an absence will be considered unreasonable will vary from case to case depending on it effect on the work place.

In circumstances where there is a deviation in the medical evidence to both parties as to the likely date of return, the employer should seek a third opinion in advance of taking a decision to dismiss.

2) Competence

Competence is taken to refer to the standards which are expected of an individual employee as regards their job. The employer should take the earliest opportunity to outline these expectations to the employee so that each party is fully aware.

In the circumstances where you fall short of the standards expected, it is understood that this should be communicated to the employee through formal procedures in addition to a specification as to the improvements necessary. The improvements should be achievable and be within a reasonable time timeframe.

Ultimately, a final warning should be given to the employee setting out the likely hood of dismissal should there not be a marked improvement.

3) Qualifications

This kind of situation envisages two potential forms: either the employee misled the employer about qualifications during the process of applications or the job was offered contingent on certain qualifications being secured which have subsequently not been secured.

4) Conduct

Conduct is taken to cover a very large area of behaviour and might be accurately termed misconduct. In this regard there is a very clear need to differentiate between gross misconduct and ordinary instances of misconduct.

Gross misconduct may give rise to summary dismissal without notice or pay in lieu of notice.

Alternatively a series of instances may collectively lead to dismissal. In the case of instances of minor misconduct warnings as to future behaviour must be issued.

5) Redundancy

In this case the employer should establish that the current levels of staff are unsustainable and that accordingly the dismissal of the employee was justified.

This may be countered by the employee in circumstances where evidence suggests that:

  • There was no economic imperative or justification for the redundancies eg. Company continues to operate profitably
  • That the space vacated had been refilled
  • That the process of selection for redundancy was unfair
  • That the basis for selection was premised on discrimination

6) Illegality

This situation is taken to occur in a situation where the employee’s continued employment in their current situation would be a breach of the law. The most obvious example of this may be said to occur where a valid driving license is required to continue work in a haulage business as a truck driver.

In certain circumstances, the court may be prepared to accept an argument that reasonable accommodation of the employee should have been considered prior to dismissal, that is to say, an employee no longer able to carry out a specific task may be used in a different role.

7) Other Substantial Grounds

In circumstances whereby the employer cannot rely on any of the grounds as aforementioned, then an onus will be imposed upon them to justify the dismissal on the basis of other “substantial grounds”.

Unfair Reasons

The Unfair Dismissals Act lists numerous grounds upon which dismissal premised upon, if proven to be so, will be unfair including:

1. Taking part in a strike action
2. Membership of a trade union or participation in union activities
3. Religious or political opinions
4. Actual or threatened civil or criminal proceedings to be taken against the employer. This is taken to extend to situations whereby the individual is merely to act as a witness
5. Race, colour or sexual orientation
6. Membership of the traveller community
7. Pregnancy
8. Exercising right under the Adoptive Leave Act 1995
9. Exercising right under the Parental Leave Act 1998
10. Exercising right under the National Minimum Wage Act 2000
11. Unfair selection for redundancy
12. Exercising right under the Maternity Protection Act 1994
13. Exercising right under the Carer’s Leave Act 2001

Learn more about employment law in Ireland.