+353 (0) 1 211 8434 - info@aocsolicitors.ie -
AOC Solicitors COVID-19 Hub - Read More

AOC
- News

AOC
- News

Labour Court Awards €262,260 Rather than Reinstatement in No Fault Dismissal Case

Introduction

This case involves multiple decisions concerning two companies, the Samina Corporation which had acquired MPSTOR Limited via share acquisition in 2015. The Complainant in both decisions was a senior employee and shareholder and had been key to the agreement where the company was bought out and Samina Corporation became its parent company.

The Complainant at the time of acquisition in 2015 was made Vice President of MPSTOR until 18th June 2018 when he was suddenly dismissed on notice, without being given a reason i.e. a no fault dismissal. MPSTOR was subsequently mothballed and most of its employees made redundant, both companies were represented by the one team in the Labour Court and will be referred to as the Respondent collectively in this article.

The Complainant, a Mr. William Oppermann, brought Unfair Dismissal proceedings to the WRC against both the Samina Corporation and MPSTOR, the results of which were appealed by all parties to the Labour Court. Unusually for an unfair dismissals claim the main issues disputed in these proceedings did not relate to the dismissal itself, it had been accepted by both Respondents that the Complainant had been unfairly dismissed.

Instead, this dispute focused on whether the Complainant was an employee of MPSTOR Limited or the Samina Corporation and, as he had been unfairly dismissed, whether reinstatement was the appropriate remedy instead of compensation.

Employer

The Complainant had successfully argued at the WRC that Samina Corporation and not MPSTOR was his employer at the time of his dismissal. This argument was based on a number of factors much of it related to an alleged lack of clarity in his contract which cited his role as Vice President of MPSTOR rather than MPSTOR Limited. Essentially the Complainant argued that his understanding at the time of the takeover was that he was becoming an employee of Samina Corporation with responsibilities for the MPSTOR part of the business which had just been bought by Samina.

Samina Corporation rejected this and appealed the decision to the Labour Court. They argued that while the contracts were drafted in a way that combined Samina policies and procedures with their new subsidiary the employment relationship was clearly between MPSTOR Limited and the Complainant. MPSTOR Limited employer number featured as the Complainant’s employer on his payslips and was identified as his employer on his P60.

Samina Corporation at the beginning of the hearing also volunteered to underwrite any award made by the Labour Court against MPSTOR to allay any fears that MPSTOR would be wound up to avoid paying an award.

The Court in reviewing the Complainant’s contract as a whole, found that while there are some inconsistencies and issues in the wording it was clear that from the document as a whole MPSTOR Limited were the Complainant’s employer.

Reinstatement

The Complainant argued for reinstatement or reengagement instead of compensation as the most suitable form of redress. The Respondent sought to identify a number of hurdles to this. Firstly, the Complainant’s role no longer existed. However, under cross examination on this point the Complainant suggested that he could perform European Sales related work instead and even pointed out that it would be open to the Company to make him redundant upon reinstatement if there was no role present.

Since being dismissed in 2018 the Complainant had been involved in setting up two new companies, one of which was becoming successful. Under cross examination on the question whether he would be a in a position to leave this company and return to the Respondent’s service the Complainant admitted that he would be faced with a difficult decision if an award for reinstatement was made.

Finally, the Respondent argued extensively that the relationship was too damaged and that the Complainant was at a too senior level for it to be feasible to reinstate him.

The Labour Court conducted an informative review of the case law regarding reinstatement and sought to apply these precedents to the situation presented to them. The Court noted the common thread of this caselaw was that in considering reinstatement the Court must consider both the interests of the employer and the employee. The Respondent had raised a number of practical issues which in their view prevented the possibility of reinstatement of the Complainant, including that they would have to reinstate the Complainant as Vice President of the company that was no longer functioning. The Court noted that there were no obvious reputational issues arising from the dismissal as most of the other employees of MPSTOR had been let go around the same time and that the Complainant had not even been entirely clear if he could take up reinstatement if offered.

The Court concluded that if reinstatement were to be awarded it would likely be a “paper” reinstatement which would not actually take effect. The only reason, why in the view of the Court, that a paper reinstatement should be considered is where there is a benefit attached to the contract of employment which ceased on termination and which the employee could reclaim via reinstatement. There was no such benefit in this case and as such the Court considered reinstatement inappropriate. It should be noted that the Complainant has an ongoing case in the High Court in relation to his share entitlement that he lost due to his dismissal and this may be the reason why the Labour Court did not take that loss of benefit into account.   

Award

A significant time had passed since the Complainant had been dismissed and though he received 3 months’ notice it had been 33 months since he was dismissed. As he was on a Vice President’s salary of €12,500 per month plus €242 medical insurance contribution his loss at the time of the decision was a significant €382,260.

The Court found that the Complainant had tried, somewhat successfully, to mitigate his loss, being involved in two new start-ups and earning €120,000 over that same period. The Court deducted his earnings over the same time period and awarded the Complainant €262,260.

Key Takeaways for Employers

Importantly for employers concerned about reinstatement being awarded by the Labour Court, this case illustrates that the Labour will carefully look into such a remedy but there are hurdles that an employee must overcome to ultimately be awarded reinstatement. The Court is entirely willing to look at the practicalities of such a decision, even as a paper remedy.  It balances the needs of the Company against their obligation to issue an effective remedy.

Employers should also note the significant monetary award in this case as goes to illustrate the increased risks involved for employers in unfair dismissal cases caused by the current backlog in the WRC and Labour Court.  Where there is a long wait involved in hearing a case the potential award rises due to the increased financial loss involved.

Labour Court Citation- MPSTOR Limited and William Oppermann, UDD2133, 12th May 2021

Authors – David Murphy and Anne O’Connell

11th June 2021

Anne O’Connell Solicitors

19-22 Lower Baggot Street, Dublin 2

www.aocsolicitors.ie

Related Articles