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WRC Confirms Genuine Redundancy

Facts: In Edward Timmons v AB Group Packaging Ireland Limited ADJ-0030801 the Complainant alleged he had been unfairly dismissed and submitted a complaint under the Unfair Dismissals Acts 1977-2015 (the “Acts”). The Respondent employer argued that the Complainant’s role had been made redundant. The Complainant was employed with the Respondent from 12th February 2001 until 23rd August 2020, initially as a Finance Manager and was later promoted to Finance Director.

In 2016 the Respondent, a global high volume paper bag supply chain company, made an unsuccessful attempt to enter the market in the United States of America. This led to significant losses. In submissions to the Workplace Relations Commission (“WRC”) the Complainant describes writing to the Managing Director “Mr DB” several times in 2016 and 2017 expressing concerns about him withdrawing large amounts of cash from the business, but his response was “I control the cheque book, not you”. To address the severe cash flow problems Mr DB sought to obtain a loan that required a guarantee the company was solvent. After taking legal advice the Complainant, Mr G McC (Operations Director Dublin) and Mr AR (Chairman) told Mr DB they could not sign the guarantee unless he agreed to recapitalise the company. Ultimately Mr DB sold his house, and the loan was obtained as an interim liquidity measure. The Complainant informed the WRC that Mr DB was furious that he had been “forced” to sell his house and the relationship deteriorated rapidly, to the extent that a severance agreement was drafted in October 2017 but never executed.

In 2018 the Respondent selected Netsuite as an Enterprise Resource Planning (“ERP”) software to integrate existing software systems and stand-alone spreadsheets. As a result, changes to the operations team were made. The Complainant’s role was identified as potentially being at risk but ultimately there was only a single redundancy at this time of the Group Operations Manager role. The Respondent outlined that at the end of 2019 Adare Human Resource Management was asked to draft a business case for reorganisation of staff based in Blessington. The report noted key financial challenges facing the company. As the Netsuite ERP system was rolled out across the business it was anticipated many finance tasks would become automated. Reports for senior managers, banks and other funding resources would be generated automatically. The role of Finance Director represented a significant and ongoing staffing cost to the business and was identified as being at risk of redundancy. The Complainant challenged this report, arguing, amongst other things, that the report was entirely silent on the biggest contributor to any liquidity issues, namely the huge dividends paid to Mr DB and his cash withdrawals.

The Complainant was informed that his role was at risk of redundancy on 20th January 2020. The Complainant was notified that there was only an Engineering Manager role vacancy at the time and that no other finance related vacancies existed which could be an alternative to redundancy. The Complainant was invited to submit suggestions/alternatives to redundancy. He responded challenging the legitimacy of the process stating that:

the purported reasons for redundancy do not make any sense whatsoever and in my opinion are baseless and nothing other than a blatant attempt to portray the unlawful termination of my contract as a redundancy”.

He argued that the role of Finance Director was essential for the proper running of the company and that it was not credible to suggest that his role was not required when there were now five companies operating in three jurisdictions. The Respondent had a Finance Director when it was significantly smaller. He also argued the new ERP system actually required more oversight than the old system. Four consultation meetings took place between 24th January and 24th February 2020. The Complainant was ultimately informed that his role was redundant on 24th February 2020. By email on 4th March the Complainant informed the Respondent that he wished to appeal the redundancy of his role. However, the Complainant was heavily critical of the appointment of Mr Ultan Courtney of First Call HR as appeals manager by the Respondent without his input. He refused to accept his appointment and would not engage with him. Mr Courtney prepared a report outlining that he believed the Respondent had discharged its burden of proof that the redundancy was genuine and that in his view the Respondent was justified in making his role redundant. Correspondence was received from the Complainant’s solicitor on 24th April calling upon the Respondent to revoke its decision and there was ongoing correspondence between the Respondent and the Complainant’s solicitor. It was submitted at the WRC hearing by the Respondent’s representatives that the redundancy process was both fair and reasonable for the following reasons:

Decision: The Adjudicator, Mr Jim Dolan, found that the complaint was not well-founded. He referred to the definition of redundancy in the Redundancy Payments Act, 1967 (as amended by the Redundancy Payments Acts 1971 and 2003). In this case the Respondent decided that the work which the Complainant was employed to do had diminished through the introduction of the ERP system and planned to redistribute the remaining work to other employees.

The Adjudicator noted the comprehensive consultation process, the conclusions from Mr Courtney that the redundancy was in fact genuine, and the right of appeal offered to the Complainant. Significantly, the Adjudicator regarded the failure of the Complainant to engage in the appeal process as a “major mistake”. The Adjudicator referred to the WRC decision in An Employee v An Employer ADJ-0000381:

“An appeal is not just an afterthought or a procedure that must be completed as a matter course. It is a very important part of the disciplinary process and the greater the sanction that has been imposed the greater its importance. An appeal allows a dismissed employee the last chance to make their case, highlight any mitigating factors and seek protection for faulty procedures or disproportionality of sanction”.

He noted that the circumstances were different in this case, but pointed out that the decision nevertheless demonstrated the importance of an appeal process.

The Adjudicator also referred to the confirmation at the hearing that the Complainant was never replaced. He found that it was a genuine redundancy situation and concluded that the Complainant was not unfairly dismissed.

Takeaway for Employers: This case demonstrates the importance of ensuring full and fair procedures in any redundancy process. The Respondent in this case was ultimately successful because they were able to demonstrate that a robust consultation process took place, and that the Complainant was given the opportunity to make his case.

It is important to remember that redundancies concern the role and must be impersonal. Any process which singles out a particular person or can be perceived as predetermined will leave an employer exposed in a potential unfair dismissal claim before the WRC.

Takeaway for Employees: This case highlights the importance of fully engaging in any redundancy process, including an appeal process when an appeal is offered. Failure to engage in the process may be detrimental to a potential future claim before the WRC.

Link  – https://www.workplacerelations.ie/en/cases/2023/january/adj-00030801.html

Authors – Tara Kelly, Jenny Wakely, Anne O’Connell

28th February 2023

Anne O’Connell Solicitors

19-22 Lower Baggot Street, Dublin 2


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