Constructive Dismissal in Ireland-What is Constructive Dismissal?

constructive-dismissa

Constructive dismissal in Ireland is covered by the Unfair Dismissals Act, 1977 in section 1(b) as it provides that a dismissal is, among other definitions,

“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.”

It is one of the most common employment claims taken by employees against former employers.

Essentially where an employee terminates his employment as a result of his employer’s conduct he may be able to successfully bring a case for constructive dismissal.

It is vitally important to note that in a constructive dismissal case the onus of proof is on the employee as he/she needs to prove that his/her resignation was justified. This can be contrasted with a case of unfair dismissal where the employer must prove that the dismissal was fair and justified.

Examples of potential constructive dismissal cases

Some examples of circumstances giving rise to a claim for constructive dismissal are set out below. However it is vitally important to understand that in all legal cases, the particular circumstances of the case will be a huge factor in success or failure and the examples below are not definitive or exhaustive.

  • A unilateral reduction in pay

This may give rise to a case for a successful constructive dismissal case as it may be a material breach of a fundamental clause in the contract of employment.

  • A change in job function

A unilateral change in the functions of your job may give rise to a successful constructive dismissal claim.

  • Adverse working environment
  • Change of work location

Where the contract of employment does not make provision for a change of work location it can give rise to a claim.

  • Undeserved warnings
  • Sexual harassment in the workplace
  • Abuse in the workplace
  • Change in work hours
  • Conduct of fellow employees.

All of the examples above have given rise to successful claims for constructive dismissal on one occasion or another; however this does not mean that these situations will automatically lead to a successful claim.

Remedies for constructive dismissal

Possible remedies for unfair or constructive dismissal which the EAT (Employment Appeals Tribunal) can order include

  1. Reinstatement in the job
  2. Re-engagement
  3. Compensation.

To bring a case under the Unfair Dismissals Act, 1977 you will need to have at least one year’s continuous service with the employer and have exhausted all internal grievance procedures of the company.

You must also bring your claim within 6 months of the date of termination of your employment (12 months in exceptional circumstances) and can bring it to a Rights Commissioner who will make a recommendation or you can bring your complaint directly to the Employment Appeals Tribunal who will issue a determination.

This determination of the EAT can be appealed to the Circuit Court by either you or the employer.

Constructive Dismissal-Will You Win Your Case?

Constructive dismissal cases are difficult to win because the burden of proof is on the employee to prove that she had no other option but to resign due to the unreasonableness of the employer.

The January, 2013 decision of the Employment Appeals Tribunal in the case of Daniel O’Gorman v Glen Tyre Company Limited illustrates this.

In this case Mr. O’Gorman was a mechanic who had gone on sick leave in May, 2010 and did not return to work. He resigned from his position in September, 2010.

Mr. O’Gorman brought a case for constructive dismissal.

Decision of EAT

The Employment Appeals Tribunal in its decision referred to the burden of proof on the employee as being a ‘very high one’. It held that the employee must prove that his resignation was not voluntary.

The EAT must look at the contract and decide whether there has been a significant breach of the employment contract going to the root of the contract.

If there has not been a breach by the employer the EAT will then look at the conduct of the employer and employee and decide on the ‘reasonableness’ of the decision of the employee to resign.

The claim by the claimant for constructive dismissal fell under three headings:

  1. The excessive workload placed on him
  2. Exclusion in the workplace, for example at lunch breaks
  3. Being bullied and harassed in the workplace.

Mr. O’Gorman suffered from Asperger Syndrome.

Mr. O’Gorman left work in May, 2010 and did not return due to stress, according to his parents and GP who stated it was work related. However, the employer stated that he did not know this until he received the 2nd medical certificate.

The EAT held that it is crucial in a constructive dismissal case that the employee fully informs the employer of the complaints being made against him and gives the employer the opportunity to resolve the problems.

Interestingly, the EAT in this held that the parents of the claimant had a duty to let the employer know of the issues.

The EAT found no significant breach of contract going to the root of the contract which would have prevented the employee from carrying out his duties as per the contract.

The EAT then examined the conduct of both parties and found that the decision of the employee to resign was not a reasonable one.

The claimant’s claim failed.

Read the full determination of the Employment Appeals Tribunal here.

Word of warning re resignations

Take legal advice before doing something as drastic as resigning your position of employment and be sure to exhaust all internal grievance/complaints procedures as this will ultimately strengthen any case you bring.

There is also a common law rule that once notice is given by either the employee or employer it cannot be unilaterally withdrawn so if you resign in haste you may repent at your leisure..

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Unfair Dismissals In Ireland-a Financial Landmine for Employers?

Unfair dismissal in Ireland is governed by the Unfair Dismissals Acts 1977-2007 and two points/fundamental principles need to be made clear about this legislation at the outset-

1. an employer must have substantial grounds for dismissing an employee
2. in doing so the employer must apply fair procedures to the process.

unfair-dismissal-ireland

The Unfair Dismissals Act covers people who have been in employment for at least 52 weeks continuous service and who have not reached the normal retirement age for the employment in question.

However if there is no retirement age provided for in the contract then the employee can continue working and any dismissal will give rise to a claim for unfair dismissal.

However employees in the following categories do not have to show 52 weeks continuous service:

  •  employees who have been dismissed for trade union membership, pregnancy, maternity, ante-natal, post natal related matters, employees dismissed for exercising rights to parental leave or carer’s leave.

Employees who are not covered by the legislation include FAS trainees, members of the Defence Forces, Gardai and civil servants.

It may seem blindingly obvious but only employees may use the legislation in respect of a termination of employment-sub contractors for example would not be covered.

Fixed Term and Specified Purpose Contracts

Unfair dismissal legislation does not apply to fixed term and specified purpose contracts provided

  1. The contract was in writing
  2. The contract specifically excluded the legislation
  3. The contract was signed by both parties.

Many employers use fixed term and specific purpose contracts in the belief that they are under no obligation to renew once the term has expired.

However, non-renewal can amount to  a dismissal.

The employer must be able to show that it was a genuine fixed term contract in the first place and that there was a commercial justification for it.

Read more about fixed term contracts here.

Employees’ Remedies for Unfair Dismissal

An employee who has been dismissed has two avenues of remedy open:

  1. A claim to a Rights Commissioner or Employment Appeals Tribunal within 6 months (12 months in exceptional circumstances) or
  2. The Courts where he/she can bring an action for breach of contract or breach of constitutional rights. Because the cause of action  is a breach of contract the time limit is six years.

To bring a claim for unfair dismissal under the Unfair Dismissal Acts 1977-2007 the employee must show

  1. He was dismissed
  2. He had a contract (oral or written)
  3. He had 1 year’s continuous service
  4. He must be over 16 years of age.

Constructive Dismissal

An employee may succeed in a claim for constructive dismissal in circumstances where the employee resigns the employment as a result of the employer’s conduct towards the employee.

Circumstances giving rise to this situation include a reduction in pay, a deterioration in the working environment, change of job roles, unwarranted warnings, change of location of the job and many others.

Not all of these situations will always give rise to a successful claim for constructive dismissal but these are the kinds of things that employers must be very careful about if they don’t want to end up in the Employment Appeals Tribunal.

However employees on probation up to a period of one year are excluded from the protection of the legislation.

Unfair Dismissals

Once a dismissal has taken place the burden is on the employer to show that it was not an unfair dismissal.

There are a number of categories of dismissals which the Unfair Dismissals Act 1977 and 1993 deem to be automatically unfair. They are on the grounds of
1. trade union membership
2. the colour, race or sexual orientation of the employee
3. the employee’s religious or political opinions
4. where the employee is involved in legal action against the employer
5. the employee’s age
6. the fact that the employee is a member of the traveling community
7. the employee becoming pregnant
8. the employee taking part in industrial action.

These are the main grounds which the legislation deems to give rise to an unfair dismissal claim and are deemed by the law to be automatically unfair.

In addition if you can show that you qualify to bring a claim under the Unfair Dismissals legislation and your employer accepts that there was a dismissal, it will be for your employer to show that there were fair grounds for the dismissal as the burden of proof shifts from you to the employer.

Fair Dismissals

There are a number of limited grounds on which a dismissal can be justified by the employer as fair dismissals. They are on the grounds of

  • competence, capability or qualification
  • redundancy
  • misconduct
  • fixed term contracts or specific purpose contracts coming to a natural end
  • other substantial grounds.

Redundancy Defence

The employer has a defence in the form of redundancy but he must be able to show that the employee has been fairly selected for redundancy. However if the employer seeks to employ the redundancy defence he can expect that if an unfair claim is made against him he will find that his redundancy defence is put under a fair degree of scrutiny.

For example, it is not enough that the employer can show that his workforce numbers requirement is expected to decline some time in the future-he must be able to show that is requirements will lower in the very near future to the redundancy that he has just carried out.

Fair Procedure

The Employment Appeals Tribunal is very strong on fair procedure in relation to the termination of an employee’s job; they have held many times in the past that if they find that fair procedure was not followed then they will deem the dismissal to be unfair, regardless of the circumstances.

Adopting and implementing this Code of Practice on Grievances and Disciplinary procedures, while not mandatory, is an important factor in the employer successfully defending a claim of unfair dismissal.

Read about the essential elements of a good Grievance And Disciplinary procedure. The basic principles are

  1. The procedure is fair and rational
  2. The basis for the disciplinary procedure is clear ie the employee knows what he has done wrong
  3. The penalties are clear
  4. An internal appeals mechanism is in place.

The range of disciplinary sanctions provided for include an oral warning, a written warning, suspension with/without pay, transfer etc.

Generally the employer is required to set out the employee’s shortcomings, point out the required improvements, and give sufficient time to make the improvements.

The acid test tends to be what would a reasonable employer do and this will depend on the particular circumstances as the conduct may be of such serious nature as to warrant immediate dismissal. These circumstances are limited though an d the employer should take legal advice before dismissing without notice.

Remedies for unfair dismissal

The employee can bring a case for unfair dismissal under the Unfair Dismissals Acts 1977-2007 to a Rights Commissioner or the Employment Appeals Tribunal within 6 months.

The awards against the employer can include

  • reinstatement
  • re-engagement
  • compensation from a minimum of four weeks remuneration up to a maximum of 2 years remuneration.
Remuneration in this context includes salary, bonuses, benefits.
The Rights Commissioner and Employment Appeals Tribunal will consider what the employee has done to mitigate his loss and whether he has been able to find work since the dismissal.

Assessment of Loss

While the EAT can award up to 104 weeks compensation, the employee has a duty to mitigate his/her loss be seeking alternative employment.

The employee’s loss is financial loss (not injury to feelings etc.) up to a maximum of 104 weeks but this was amended by section 6 of the Unfair Dismissals (Amendment) Act 1993 which has the following effect:

1. if an employee has a nil financial loss (eg he immediately gets employment or is unfit to work due to sickness) the maximum he can be awarded is 4 weeks’ remuneration.

2. social welfare benefits should not be regarded in calculating financial loss.

The EAT can also reduce the award for any contributory conduct by the employee.


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The Truth About Amending the Terms of Employment in Ireland

Employment contract
Employment contract

Terms and conditions of employment – are employers entitled to unilaterally vary such terms and conditions?

In short, the answer is no.

Firstly though, lets take a look at what are the terms and conditions of employment and how they arise.

Terms And Conditions of employment

An employee’s terms and conditions of employment may be a mix of those terms that are

  • clearly set out in his/her contract,
  • those implied by custom and practice and the employer’s duty to act reasonably,
  • those which are incorporated through collective agreements and
  • those which derive from statute (such as the right to minimum wage or annual leave) which apply automatically.

(This is part of the employment law in Ireland series of articles)

Amending terms and conditions of employment-historically

Where an employment contract does not expressly enable the employer to vary the terms of employment, employers may either:

1. Obtain the employee’s express agreement to the change (recommended);
2. Terminate the employee’s employment on due notice and offer re-engagement on new terms (not recommended); or
3. Attempt to impose the change unilaterally (not recommended).

Options 2 and 3 above are not recommended and leave the employer at significant risk to a successful claim for unfair/constructive dismissal/non payment of wages claims.

Unilateral variation of an employee’s terms and conditions of employment to the employee’s detriment may give rise to:

1. A claim of constructive dismissal under the Unfair Dismissal Acts 1977-2007 or at common law;
2. A claim for damages for breach of contract;
3. A claim in respect of an unlawful deduction under the Payment of Wages Act 1991;
4. A “trade dispute” under the Industrial Relations Acts 1946-2004,
5. Industrial relations issues, and
6. Injunctive proceedings to prevent the unilateral variation.

What is contractual, and not merely a work practice, may not be varied unilaterally.

Such variation must be agreed between the parties regardless of whether the term is express or implied.

In practice, whether or not an employee benefit constitutes a term or condition of employment may be somewhat academic if changing it is likely to give rise to industrial relations issues and human resources problems.

In Neville v Waters Munster Glass Ltd RP558/2003, the claimant, having refused to accept a reduction in salary and to work a reduced three day week, was consequently made redundant.

Although the claimant argued that he had been unfairly dismissed, the tribunal held that a genuine redundancy situation existed.

It is clear from a UK case, GAP Personnel Franchises Ltd v Robinson UKEAT/0342/07, that where employees do not accept a unilateral variation by the employer, especially one that has an immediate impact (e.g. the reduction in pay or benefits), they should make it clear, preferably in writing, that they do not accept the change and are working under protest.

Otherwise the employee may eventually be held to have implicitly accepted the change.

Variation of terms and conditions of employment in a recession

With unemployment rising to a rate of 8.3% and FÁS forecasting that this rate will exceed 12% during 2009, resistance to changing terms and conditions was low.

There has been no change in the legal requirement to obtain employee consent for such variation, however many employees are accepting paycuts where they are being implemented in a genuine effort to avoid job losses and to try to ensure the employer’s survival.

However, it is significant to note that workers opting to accept a paycut, in order to avoid the threat of job losses, may find themselves being made redundant if the employer is ultimately forced to close down.

The statutory redundancy payment is based on the employee’s current wage which will mean a lower statutory severance package than the employee would have received on the previous higher wage.

Amending terms of employment in Practice

In the course of varying terms and conditions employers should:
1. Maintain clear communication with employees;
2. Provide employees with reasonable notice of any variation to terms and conditions;
3. Be able to explain why the change is necessary and inform the employees of the alternative (i.e. a more formal re-structuring and ultimately possible job losses);
4. Consider whether the new terms can be imposed in stages as opposed to implementing all variations at once. This may help to ease the transition and allow employees to plan for the change; and
5. Consider whether an incentive can be suggested to assist employees in accepting the change. This does not necessarily have to be a financial benefit.

You might also be interested in changing the employment contract and how to reduce employees’ wages.

Employers-How to Avoid Costly Employment Claims