No-fault dismissal leads to €250,000 award

The Workplace Relations Commission (WRC) recently ordered a tech company to pay a massive €250,000 compensation payment to a former senior executive.

The employer’s defence centred on the fact that it had exercised its right to terminate the employee on notice within the terms of the employment contract.

Facts

The claimant began work with the organisation on 1 January 2006 and held a senior executive position at the time of his dismissal.

On 18 June 2018, he learned via a conference call that the employer was terminating his contract of employment.

The employee received no explanation and was requested to vacate his office immediately. A senior HR executive from the UK was present during the conference call and the employee submitted further evidence outlining how he needed assistance to exit the building as all the security codes were changed during the telephone call.

He received his salary of €150,000 per annum during the notice period in accordance with the terms of the contract of employment and his employment ended on 18 September 2018.

The former employee sought to be reinstated or re-engaged as his preferred remedies for his dismissal.

Background to the dismissal

The employer’s parent company bought the business in 2015 with a view to selling it to its biggest customer. A proposed integration with the lead customer and subsequent sale of the employer’s product to that company could not be agreed.

The employer stated that failure to complete this sale triggered a radical restructuring process of the business resulting in a clear majority of the employees being made redundant.

The employer was therefore strongly opposed to reinstatement which it claimed would in effect see the claimant re-joining the business to oversee his own redundancy in an operation that has ceased to trade.

Findings

The WRC accepted that the employer had a contractual right to terminate the employment relationship but ruled that this did not prevent the employee from making an unfair dismissal claim.

The WRC ruled that in reaching the decision to terminate the contract of employment the employer failed to demonstrate that fair procedures were applied.

The WRC was further critical of the employer who failed to respond to the employee’s queries about why his position was being terminated and denying him his rights and procedures contained in the employer’s own handbook.

Ultimately the WRC concluded that fair procedures were totally denied to the employee.

As the employee’s ability to mitigate his loss was hampered by restrictive covenants in the employment contract, the WRC ordered the employer to pay him €250,000 in compensation.

Note for employers

While employers generally do enjoy a contractual right to make ‘no-fault’ dismissals, all terminations of employment should be assessed on their own facts and on the basis of specific HR or legal advice.

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