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High Court grants Injunction but Limits Order to Pay Employee’s Remuneration for Only Six Months

O’Donovan v. Over-C Technology Ltd & Another [2020] IEHC 291

Facts: The Applicant / Plaintiff Mr O’Donovan began work as the Chief Financial Officer (“CFO”) for Over-C Technology Ltd in August 2019 with the CEO of the Respondent/Defendant as his line manager. Mr O’Donovan took annual leave from 13th December 2019 to 6th January 2020 and upon his return was called to a meeting with the CEO, Mr Elliot. He was informed at the meeting that his employment was terminated with immediate effect and he was to receive one month’s pay in lieu of notice.

Mr O’Donovan received a letter of termination dated 8th January but delivered on the 13th January which alleged that, inter alia, Mr O’Donovan had provided inflated and therefore misleading sales figures to the board meeting on 2nd December 2019; he had failed to adequately prepare for a board meeting on the 19th December 2019; he had failed to answer a basic question about the company’s ‘basic cash position’ and essentially his performance in the role as CFO was sub-standard.

On the 8th January, Mr O’Donovan had emailed Mr Elliot asserting that under his contract he was entitled to appeal the decision to terminate his contract. He received a response later that day stating that he was correct in relation to an appeal process and it would be arranged shortly.

On the 14th January, Mr O’Donovan received an email at 6.23pm from a director of the Respondent with the details for an appeal hearing to be heard on Friday 17th at 2.30 pm. Mr O’Donovan responded on the 16th January that the suggested time was not convenient. Mr O’Donovan then received a response on the 17th January stating: ‘I noted you do not wish to proceed with the appeal today. I now confirm that your dismissal stands.’

Preliminary Issue: On the 29th January, the Applicant issued proceedings seeking injunctive relief against the background of an action for wrongful dismissal challenging the decision of the 7th January to terminate his employment and the subsequent confirmation of that decision on the 17th January where it was deemed Mr O’Donovan had withdrawn his appeal. The Applicant pleaded that the wrongful dismissal was effected in breach of his contract and in breach of his constitutional right to fair procedures.

The Defendants adamantly denied that the termination was based on an allegation of misconduct but based on his substandard performance in the role and he had been terminated in line with the terms of his contract ‘within the stated probationary period’.

Decision:  The Court found that the Applicant had established a strong case that he had an implied contractual right to fair procedures in the assessment of his performance during his probationary period.  The Applicant averred that at no time was any issues in relation to his performance brought to his attention during the probationary period. His right to fair procedures had been breached in light of the manner and circumstances of the decision on 7th January to summarily dismiss the Applicant for his sub-standard performance and the decision on 17th January to deem his appeal of this decision to have been withdrawn.

Mr Justice Keane, finding in favour of the Applicant, granted an unusual modified Fennelly Order. A “Fennelly Order” is referred to the order made by Costello J. in Fennelly v. Assicurazioni Generali SPA (12th March, 1985)(the “Fennelly Decision”) and is an interlocutory order directing an employer to pay an employee all salary and other benefits to which the employee is entitled under the relevant contract of employment until the trial of the action, on the undertaking of the employee to carry out such duties under that contract as the employer may require. However, Judge Keane in this case ordered that the Defendants were restrained from repudiating Mr O’Donovan’s contract of employment pending the trial of the action on specific unusual terms, namely:

Judge Keane stated that the reason for this unusual order, which does not maintain the status quo until the date of the trial, was due to the fact that the Plaintiff had acknowledged that the relationship of mutual trust and confidence between the parties had irretrievably broken down. He therefore found that “his claim is, in reality, one for a fair termination process rather than for reinstatement in the role of CFO”. Keane J, relied on the decision  of Orr v Zomax Ltd [2004] IEHC 47 in which it had noted that the Supreme Court in the Fennelly Decision had limited payment to six months. However Judge Keane did not seem to take into account that in the Orr v. Zomax Ltd case, the hearing of the trial was expedited and was to take place within the six month period. Furthermore, there does not appear to be a written decision of the Supreme Court in Fennelly v. Assicurazioni Generali SPA and such reliance seems to be misplaced by Judge Keane.

Takeaway for the Employers:  If this decision is followed, it would change the impact of employment injunction orders, especially if the payment of remuneration can be limited to 6 months where both parties admits that the trust and confidence has irretrievably broken down. This type of order would encourage employers to make the employees run the breach of contract case rather than settling the action after the injunction stage.

Link

Authors – Anne O’Connell & Ethna Dillon

30th June 2020

Anne O’Connell Solicitors

Fitzwilliam Hall

Fitzwilliam Place

Dublin 2

www.aocsolicitors.ie

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