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July 2012 Archives

One of the most common sources of dispute between employer and employee is when termination of employment occurs.

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.

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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.

 

Termination of employment in Ireland

Contracts of employment may be terminated in a number ways including:

  • agreement,
  • dismissal,
  • repudiation and
  • frustration.

 

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 in circumstances whereby 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 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.

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).

However where an employee is being dismissed for a very serious breach of contract, there is no entitlement to any notice. Invariably the employee will argue that the reason for his dismissal, if there was a breach of contract, is disproportionate and excessive punishment.

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.

By Terry Gorry Google+

Unfair dismissal and constructive dismissal cases can prove very expensive for employers, not to mention traumatic occasions for employees.

Unfair dismissal in Ireland is governed by the Unfair Dismissals Act 1993 and two points need to be made 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

The Unfair Dismissals Act covers people who have been in employment for at least 52 weeks continuous service. Employees who are not covered include FAS trainees, members of the Defence Forces and 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.

 

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.

constructive-dismissal

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

Unfair Dismissal Categories

There are a number of categories of dismissals which the Unfair Dismissals Act 1977 and 1993 deem to be automatically unfair.

They are

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.

 

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 sometime 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.

By Terry Gorry Google+

The Tupe regulations should be a critically important consideration if you are selling your business or if you are working in a business which is being taken over.

tupe-regulations

The Transfer of Undertakings Directive of 1977, which became part of Irish law by the European Communities (Safeguarding of Employees’ Rights on Transfer of Undertakings) Regulations, 1980, protects the rights of employees where the business in which they are employed is transferred to a new owner.

What is an undertaking?

It is important to note that the TUPE directive covers undertakings and businesses or parts of undertakings and businesses-this leads to the critical question of what an undertaking is and as there is no definition in the legislation it has led to much case law with each case being decided on it’s own particular facts.

 

 

Key elements of the TUPE regulations

The key thrust of the TUPE directive is that the rights and obligations in respect of employment contracts of the transferring business are transferred to the new business.

  • There must be a change of employer-this is a fundamental criteria
  • A change of employer can occur where full ownership does not change (management responsibility may change and transfer to a subsidiary for example)
  • Pension entitlements are excluded insofar as they do not have to be continued by the new company
  • The parties to a transfer have an obligation to notify, inform and consult with employees or their representatives
  • If TUPE legislation is breached the problem rests with the new business (the transferee)
  • The TUPE directive does not apply where the reason for the transfer is the insolvency of the transferring business.
  • TUPE also does not apply where the business is transferred by a transfer of shares
  • TUPE may apply even where there is no agreement between the two businesses, for example where a lease or franchise is surrendered by operation of law.

 

Who does TUPE apply to?

Firstly employees but also persons having an employment relationship with the transferor. This may mean agency workers, depending on who pays them, for example and the Labour Court has held that agency workers can be covered by the directive, depending on the particular circumstances of the case.

Conclusion

If you are thinking about purchasing a business in Ireland or the EU there is quite a lot of complex issues which you would be well advised to obtain legal advice for.

There is considerable body of decided case law which teases out many issues that have arisen in this area-matters like

  • the cessation and resumption of a business prior to transfer,
  • what is an undertaking,
  • who is covered by the legislation,
  • whether public bodies are undertakings,
  • questions surrounding dealerships and franchises,
  • transfer of part of an undertaking,
  • the difference between an “activity” and an undertaking and so forth.

For this reason do consult a solicitor if you feel that your rights have not been upheld in this potentially complex area.

By Terry Gorry Google+

What is constructive dismissal?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

  • Reinstatement in the job
  • Re-engagement
  • 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.

 

Word of warning to employees

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

By Terry Gorry Google+

In contentious business a solicitor may not calculate fees or other charges as a percentage or proportion of any award or settlement.
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