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Labour Court Finds Redundancy To Be An Unfair Dismissal Decision As No Meaningful Effort To Consider Alternative Options

This was an appeal by the Respondent, Cuan Tamhnaigh Teoranta, to the Labour Court of a Workplace Relations Commission (“WRC”) decision in which the Adjudication Officer found that the Complainant, Mr Declan McShane, had been unfairly dismissed from his employment with the Respondent. The Adjudication Officer awarded the Complainant €12,000 in compensation.

Facts: The Respondent manufactures carpets for the aviation industry. The Complainant was employed to work on a weekend evening shift that had been established for the purpose of manufacturing a particular product – long, uninterrupted production runs of standard aviation carpet with non-complex designs. This particular shift (referred to as “Shift A”) had been in place for approximately 12 years prior to termination of the Complainant’s employment.

Evidence was given on behalf of the Respondent that its total output for this product reduced from 262,000 metres in 2018 to 240,000 metres in 2020 and that the demand from customers was increasingly for shorter runs of bespoke carpet that required greater design input and technical support which was available only on the Respondent’s weekday production shifts. A review of the Respondent’s business was carried out in early 2019 and a decision was made that Shift A was no longer profitable and ought to be discontinued.

The Respondent held two meetings with the Complainant; an initial meeting on 29 June 2019 during which he was informed of the review that had been carried out and that the Respondent was considering discontinuing Shift A; and a second meeting on 7 July 2019 at which he was informed that his employment was being terminated due to redundancy. The Complainant was informed at the first meeting that the Respondent was considering potential redeployment options and he was invited to put forward alternative suggestions, but did not do so.

The Complainant’s employment was terminated in July 2019 and he was paid two weeks in lieu of notice. The Complainant’s two colleagues who also worked on Shift A were also made redundant.

The Complainant did not dispute that a genuine redundancy situation existed, but argued that he had been unfairly selected for redundancy as a result of complaints that he had previously made to the WRC regarding his working hours and rest periods and that there had been no genuine engagement with him regarding alternatives to redundancy.

Decision: The Labour Court was satisfied that there was a strong business casefor discontinuing Shift A and that a redundancy situation existed. However, the Court found that the Respondent’s engagement with the Complainant over two very brief meetings (at the second of which he was dismissed) was “perfunctory and pro-forma” and that there had been “no meaningful effort made…to consider options for alternative employment for the Complainant.” The Court also referred to the absence of evidence before it that the Complainant was afforded an opportunity to appeal the Respondent’s decision to dismiss him for redundancy. It dismissed the appeal and upheld the Adjudication Officer’s decision that the Complainant was unfairly dismissed.

Award: The Complainant gave evidence that he attempted to mitigate his loss initially by contacting two businesses in the Killybegs area seeking employment, but that it appeared to him that he was unlikely to successfully obtain employment locally because in his view he was regarded as a troublemaker. He therefore decided to retrain as an HGV driver. He completed the relevant training and obtained his HGV licence in December 2019. He held various jobs as an HGV driver between early January 2020 and the date of the hearing. At the time of the hearing his earnings were equivalent to what he had been earning during his employment with the Respondent and he had no ongoing loss.

Referring to the Complainant’s evidence, the Court found that between the date his employment was terminated and the end of December 2019, the Complainant either “deemed himself unavailable for work” (which the Complainant denied) or “made no effort to mitigate his loss for this period.” The Court also referred to the statutory redundancy payment of €3,393.32 that the Complainant had received and retained. The Court found that the appropriate redress was four weeks’ pay in accordance with section 7(1)(c)(ii) of the Unfair Dismissals Acts and awarded him compensation of €1,939.04. This was a significant reduction from the WRC award and highlights the importance of Complainants making significant efforts to find alternative employment and to mitigate their loss.

Takeaway for Employers: In our January 2022 newsletter, we referred to the WRC decision in Ray Walsh v Econocom Digital Finance Ltd. and notedthe importance of a redundancy consultation procedure and the requirement for an employer to engage with employees and to investigate possible alternatives to redundancy, even in situations involving closure. In that case there had been no consultation procedure at all. While there was a brief consultation meeting in Cuan Tamhnaigh Teoranta v Declan McShane and the Complainant was asked to put forward suggested alternatives to redundancy, the Labour Court was not satisfied that there had been any meaningful engagement with the Complainant regarding alternatives. This case therefore demonstrates that it is not sufficient for an employer to treat a consultation process as a mere box ticking exercise, but that there must be genuine engagement exploration of alternative options.

An interesting point to note from the Cuan Tamhnaigh Teoranta decision is the Labour Court’s reference to there having been “no evidence before the Court that he [the Complainant] was afforded an opportunity to appeal the Respondent’s decision to dismiss him for redundancy” although it is not clear from the decision how much emphasis the Court placed on this in deciding that the Complainant was unfairly dismissed. While an employee does not have a legal right to appeal an employer’s decision to dismiss him/her for redundancy, employers should be aware that the absence of an appeal mechanism is sometimes taken into consideration in the context of WRC/Labour Court unfair dismissal decisions and there may be situations in which an employer ought to facilitate an appeal.

Link  – https://www.workplacerelations.ie/en/cases/2022/february/udd224.html

Authors – Jenny Wakely and Anne O’Connell

28th February 2022

Anne O’Connell Solicitors

19-22 Lower Baggot Street, Dublin 2

www.aocsolicitors.ie

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