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.

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.

Please note the WRC (Workplace Relations Commission) replaced the Employment Appeals Tribunal from 2015 but the law concerning unfair dismissal has not changed and he principal act is the Unfair Dismissals Act 1977.

Employers-How to Avoid Costly Employment Claims