+353 (0) 1 211 8434 - info@aocsolicitors.ie -

- News

- News

Employee Awarded Highest Ever Compensation for Unfair Dismissal by WRC

The Workplace Relations Commission (“WRC”) has made its highest ever unfair dismissal award to an employee in Michael Kiely v Hyph Ireland Limited ADJ-00037708. The Respondent in this case initially disputed that the Complainant was unfairly dismissed, but on the last day of hearing it accepted that it unfairly dismissed the Complainant, and the matter was reduced to a consideration of the quantum of the Complainant’s financial loss.

Facts: The Complainant was CEO, Chairman and founder of Score Music Interactive Limited which, in May 2021 changed its name to Xhail Ireland Limited, and later (in August 2022) to Hyph Ireland Limited (the “Respondent”). He commenced employment with the Respondent on 20th June 2013 and his employment terminated on 19th November 2021. The Complainant’s position was that his dismissal was contrived on the basis of an allegation that his visa status was not in compliance with US law. He was simply informed by email on 19th November 2021 that he was no longer an employee of the company. He was also informed that he was prohibited from accessing or entering Xhail premises “by any means unless accompanied by an Xhail employee” and that it would be considered trespass to do so and “Xhail will not treat such an unlawful act mildly.” The Complainant was locked out of his email and his access to other company information was blocked from 20th November 2021.

The Complainant’s salary was €13,090.43 gross per fortnight, €340,351.18 per annum. The Complainant calculated his financial loss arising from his dismissal as approximately €478,000.

The Complainant was 58 years old and claimed that it would be difficult for him to rebuild what took a long time to build. The Complainant told the WRC that the Respondent impeded his ability to mitigate his loss. He was subject to a 12-month non-compete clause. In or around February 2022, the Complainant sought permission from the Respondent to set up a new company, but the Respondent refused to grant him permission and also refused to agree to him working as a contractor of the Respondent.

The Complainant earned approximately €10,000 in 2022 by running a holiday business from his home in County Clare. He earned €2,000 as an artist. Following the expiration of his non-compete clause, the Complainant told the WRC that he started networking and exploring new business opportunities.

The Complainant asked the WRC to consider the nature of his dismissal and what he regarded as “oppressive conduct” on the part of the Respondent. He asked the WRC to take account of the Respondent’s conduct in accordance with section 7 of the Unfair Dismissals Act in considering the appropriate level of compensation.

The Respondent argued that the Complainant had failed to mitigate his loss and had provided no evidence that he had engaged in “a meaningful way” to mitigate his loss. The Respondent denied that it had refused to permit the Complainant to set up a new company. The Respondent told the WRC that it had no requirement to engage the Complainant as a contractor. It was argued on behalf of the Respondent that there were “many areas where the Complainant could have worked both in music and technology that were not subject to the covenant clause or in direct competition with the Respondent.” It was further argued that the Complainant could have sought employment in other areas for a temporary period, but did not. It was also argued that the Complainant’s holiday home business would have been more successful (and his earnings higher) if he had returned to Ireland to run it rather than remaining in the United States.

The Respondent also referred to certain other financial matters, including an alleged outstanding debt in respect of a loan agreement they said he had with it, which was the subject of separate court proceedings in the United States.

The Respondent’s position was that the failure to mitigate his loss was due to the Complainant’s “inertia”. The Respondent told the WRC that the Complainant believed that it would reach an agreement with the Respondent and as a result, failed to make efforts to mitigate his loss. The Respondent referred to the decision in Sheehan and Continental Administration Company Limited UD858/1999 which provided that:

“A Claimant who finds himself out of work should employ a reasonable amount of time each weekday in seeking work. It is not enough to inform agencies that you are available for work nor merely to post an application to various companies seeking work…The time that a Claimant finds on his hands is not his own, unless he chooses it to be, but rather to be profitably employed in seeking to mitigate his loss.”

This decision has been affirmed by the Labour Court in Access IT CLG/Access IT v Ms Andrea Galgey UDD2242 and in St John of God Hospital Limited v Ms Catherine McDowell UDD2238.

Decision: The Adjudicator, Brian Dalton, found that the Complainant’s sworn oral evidence that he was refused permission by the Respondent to form a new company

“must be accepted by the Workplace Relations Commission (WRC) and that he was held to the restrictive covenant in his contract of employment, as no evidence to rebut this was given at the hearing.”

The Adjudicator also noted that the Complainant denied that he had entered into any loan agreement with the Respondent which was the subject of separate court proceedings in the United States.

The Adjudicator regarded the Respondent’s behaviour towards the Complainant as “oppressive”. He referred to the “particularly cruel” breach by the Respondent of the obligation of trust and confidence towards the Complainant. He noted that the distress caused to the Complainant and his wife did not form part of his assessment of the Complainant’s financial loss, but found that the manner of the Complainant’s summary dismissal “did impact on his ability to mitigate his loss and extended the time for him to commence his new venture.” He also noted that the Covid pandemic had impacted significantly on the Complainant’s holiday home business.

The Adjudicator found that the Complainant was unfairly dismissed and assessed his financial loss to be €460,000 over 17 months. He made an adjustment of €20,000 to account for a five-month period following expiration of the Complainant’s non-compete clause, reducing the financial loss figure to €440,000. The Adjudicator ordered the Respondent to pay the Complainant €440,000 in compensation for his unfair dismissal. In doing so, the Adjudicator commented that the Complainant had “significantly” mitigated his loss by starting a new business on the expiration of his non-compete clause, commenting that it was “remarkable” that a 58-year-old music entrepreneur had managed to re-establish himself in only 17 months.

Takeaway for Employers: This decision is interesting in terms of the comprehensive assessment of financial loss by the Adjudicator. Of particular note is the Adjudicator’s view that because the Complainant was a “successful entrepreneur” he had “every right to pursue that goal to re-establish himself in a similar role that he was dismissed from”, and that it was not reasonable for him to compromise that “legitimate goal” by accepting “any work that detracts from that objective.” Employers need to bear this in mind in terms of assessing the potential level of exposure in respect of a former employee who is or was a successful entrepreneur, and the efforts that he or she has made to mitigate his or her loss. Employers should also consider the potential impact of post termination restrictions on a former employee’s ability to mitigate his/her loss.  

It will be interesting to see if this decision is appealed to the Labour Court in respect of the level of compensation awarded, and the efforts made by the Complainant to mitigate his loss. It will also be interesting if subsequent decisions follow this line of reasoning in respect of assessing the adequacy or otherwise of a complainant’s efforts to mitigate loss.

Links https://www.workplacerelations.ie/en/cases/2024/february/adj-00037708.html

Author – Jenny Wakely

 26th April 2024

If you found this article useful you might like our employment law newsletter. We write monthly articles, like this, covering interesting cases, decisions, news and developments in Ireland.

Related Articles