Employment lawyer Grahame Walsh, of Irish law firm McCann Fitzgerald, gives
an overview of procedures employers have to go through to terminate a contract
in Ireland, and the protection employees have against unfair dismissal
When dealing with termination of employment in Ireland, employers need to be
aware not only of the traditional common law protections and statutory
provisions that prevent an employee from being wrongly or unfairly dismissed,
but also of the likelihood that an aggrieved employee may turn immediately to
the courts and seek an order preventing the termination by way of injunction.
Anti-dismissal injunction
The Irish courts have, in a series of recent employment-related cases,
granted injunctions preventing the implementation of a termination of
employment and ordering restoration of benefits such as salary, pension
contributions, and provision of a car pending the trial of a claim that an
individual has been wrongfully dismissed.
In a few rare cases, it has directed reinstatement pending trial.
Injunctions have been granted in a number of circumstances, including summary
dismissal, lack of fair procedures, lack of notice and constructive dismissal.
Traditionally, courts would not, at common law, order what was effectively
the continuance of a contract of employment by re-instating an employee.
The effect of the injunction remedy is to cause employers to act, pending
determination as to whether the employer is entitled to terminate the
employment relationship, in all respects as if the individual were still an
employee.
In theory, the individual is available to his or her employer but,
practically, the purportedly dismissed employee will not return to his or her
place of work. It is for that reason that almost all such cases have been
commercially resolved following the injunction application.
The Irish courts place great emphasis on the principles of natural and
constitutional justice, and have granted injunctions in cases where employers
have failed to observe proper and fair procedures in the manner in which they
seek to terminate a contract of employment.
In one Supreme Court decision, the judge, in granting an order to prevent a
termination, stated that, "Dismissal from one’s employment for alleged
misconduct with possible loss of pension rights and damage to one’s good name
may, in modern society, be disastrous for any citizen.
"These are circumstances in which any citizen, however humble, may be
entitled to the protection of natural and constitutional justice."
A court may award an employee who has been wrongfully dismissed damages for
losses suffered as a result of the unlawful breach of the employment contract.
In addition to a claim for damages consequent upon a breach of the contract,
related claims are also being made for discrimination and stress-induced
illness.
Unfair Dismissal
Under Unfair Dismissals legislation, an employee who has worked for at least
eight hours per week for more than a year is entitled to rely on the
legislation to challenge a dismissal. Under the legislation, a dismissal is
deemed to be unfair and the onus is on the employer to establish otherwise.
Dismissals may be justified on one of a number of grounds, including the
employee’s competence, capability, conduct or redundancy. In addition to
demonstrating that there were substantial grounds justifying the dismissal, the
employer must show that it acted reasonably in effecting the dismissal.
An employer considering dismissal for poor performance should apply fair
procedures, such as notifying the employee of the dissatisfaction and affording
an opportunity to improve before effecting the dismissal.
In a redundancy situation, the employer must show not only that a genuine
redundancy situation existed, but also that the employee was fairly selected
for redundancy.
Employees must be informed about the disciplinary procedures at their
workplace and should be notified of any changes.
In the event that no such procedure exists, the employer must nevertheless
follow a fair and reasonable procedure.
As a minimum, the employee must be informed of the reason for the
termination and given an adequate opportunity to make representations.
The procedures followed by an employer may be important when deciding
whether a particular dismissal was fair or not.
Irish courts and tribunals have consistently held that where, objectively,
there were substantial grounds justifying the termination of the contract but
the process of termination was procedurally flawed, the dismissal will be
unlawful.
In cases other than gross misconduct – when the employer is entitled to
terminate without notice – an indefinite contract must be terminated by notice.
Legislation sets out the minimum statutory notice periods that apply to all
employees who work for at least eight hours per week and have completed 13
weeks of continuous service with the employer, however, in practice, individual
contracts will provide for longer notice periods.
Remedies for Unfair Dismissal
Claims of unfair dismissal are normally heard by the Employment Appeal
Tribunal (EAT) and must be made within six months of the date of dismissal.
If both parties agree, the claim can be heard more informally by a Rights
Commissioner, whose recommendation may be appealed to the EAT.
The remedy, which may be sought or awarded in the case of unfair dismissal,
is reinstatement, re-engagement or compensation of up to a maximum of two
year’s remuneration (includes salary plus all benefits).
Special Protection
Dismissals that are connected with pregnancy, religion, politics, race,
colour, sexual orientation, age, membership of the travelling community or
trade union membership are automatically unfair. Selective dismissals of
employees on strike are also unfair.
Compromise agreements
In effecting a termination, it is common practice in Ireland for employers
to make, together with any statutory entitlements, an ex gratia payment to the
departing employee. The level of this payment will depend on factors such as
seniority, length of service, particular industry norms and any perceived
exposure that the employer may have in relation to the termination.
In consideration for the ex gratia payment, the employee will normally sign
a compromise agreement in full and final settlement of any claims that they may
have against their former employer.
The agreement will generally contain a clause stating that the employee has,
prior to signing, had the benefit of legal advice, nevertheless, as in the UK,
the extent of the enforceability of such agreements is the subject of much
current debate.
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The impact of the legislation and court decisions in Ireland is clear. An
employer, in effecting a termination, must not only demonstrate that
substantial and justifiable grounds exist for the termination, but must also
adhere rigidly to procedures that are demonstrably fair and reasonable. Failure
to do so may involve the employer in costly and time consuming litigation.
Edited by Clare Murray, employment law partner at Fox Williams and editor
of www.hrlaw.co.uk , Fox Williams’ online
employment law service
