In a recent decision from the Workplace Relations Commission (“WRC”) in Danica Gutierrez v Cafico Corporate Services Limited (ADJ-00050330), the WRC found that the Respondent had breached both the contract test and the reasonableness test and upheld the Complainant’s constructive dismissal complaint.
Facts: The Complainant was employed as a Senior Client Manager with the Respondent corporate services company from 15th August 2022. She resigned from her position on 30th January 2024.
The Complainant was called to a meeting on 26th September 2023 with the Chief Accounting Officer and was informed that she would be placed on a Performance Improvement Plan (“PIP”). In her submission to the WRC, the Complainant submitted that this came without any advance warning, and she claimed that there were no clear measurable or tangible goals; no specific examples of poor performance; and the plan in general was unclear and ambiguous. The Respondent, in its submission, denied this and stated that a plain reading of the PIP demonstrated clearly defined categories. They also argued that clear periodic milestones were also given to monitor the Complainant’s progress and a review meeting was scheduled for 25th October.
On 3rd October 2023, just three working days after her PIP meeting, the Complainant was invited to a further meeting and offered a severance package consisting of two months’ notice pay (despite her contractual notice being three months) and a €5,000 ex gratia payment. There was much dispute about various other aspects of the meeting that took place on that date.
Decision: In reaching a decision the Adjudicator, Eileen Campbell, noted that there were two versions of events before her that were “entirely at odds in most respects” in relation to what took place at the meeting on 3rd October 2023.
The Adjudicator noted that, in accordance with section 1(b) of the Unfair Dismissals Acts, there are two instances in which a resignation may be considered to be a constructive dismissal: (i) where an employer’s conduct amounts to a breach of contract or repudiation of a contract of employment (the “Contract Test”) or (ii) where an employer’s conduct towards an employee is such that it was reasonable for the employee to resign (the “Reasonableness Test”). She referred to the decision in Western Excavating v Sharp [1978] ICR 221 in which both tests were set out. She also noted the reciprocal duty on an employee to act reasonably in affording their employer the opportunity to address any issues.
The Adjudicator did not accept some of the Complainant’s arguments on which she grounded her complaint, including the Respondent’s failure to investigate a client complaint about her, and her argument that she was not afforded sufficient fair procedures in relation to the PIP process. In relation to the former, she noted that:
“It is the unfortunate reality of commercial arrangements that if such commercial arrangements that a client may simply insist that a certain individual no longer handle their business and they are perfectly entitled to do so if they are not satisfied with the level of service they receive.”
In relation to the Complainant’s reliance on the breach of fair procedures in relation to the PIP, she noted that:
“It is not standard practice that the full panoply of fair procedures afforded in the context of a disciplinary procedure apply in regard to the conduct of a PIP.”
The Adjudicator regarded the pivotal question to be whether the effect of the interactions between the Complainant and the Respondent at the meeting on 3rd October 2023 “crossed a threshold so as to damage the relationship to such an extent that it was reasonable for the Complainant to resign.”
The Adjudicator noted that although various aspects of the meeting of 3rd October were in dispute, it was agreed that the meeting in fact took place and that two months’ notice and €5,000 (ex-gratia) were offered. The Adjudicator regarded this as “the defining moment where the employment relationship between the Complainant and the Respondent was unequivocally and unambiguously damaged by the undisputed action of the Respondent.”
The Adjudicator found that the Respondent’s conduct in and around its decision to offer the Complainant an exit package only three working days after she had been placed on a PIP was an action taken by the Respondent “which any reasonable person would consider to be so serious or significant that it goes to the root of the contract of employment between the employer and employee.” The Adjudicator found that the Complainant met the contract test and the reasonableness test, and that the Respondent had breached both tests.
The Adjudicator was satisfied that the Complainant’s failure to raise a grievance was not fatal to her complaint, noting that there was no grievance procedure in either the Complainant’s contract of employment or the employee handbook. There were no internal remedies available to her. The Adjudicator regarded this as a “striking omission” and referred to S.I. No. 146/2000 – Industrial Relations Act 1990 (Code of Practice on Grievance and Disciplinary Procedures) (Declaration) Order 2000, which provides that employers should have written procedures for dealing with grievance issues and disciplinary issues.
The Adjudicator found that the Complainant was unfairly dismissed and decided that compensation was the appropriate form of redress. The Complainant calculated her actual loss to be €48,548.55, but the Adjudicator was not satisfied with the efforts made by the Complainant to mitigate her loss and she awarded the Complainant €17,917.50 for the constructive unfair dismissal.
Takeaway for Employers: This is a very interesting decision for any employer contemplating offering an exit package to an employee during a PIP process. Exit discussions directly between an employer and an employee are not “without prejudice” and can therefore be referred to by either party in the context of WRC proceedings. The decision also demonstrates the importance of having a grievance process in place. While an employee is usually expected to exhaust all internal processes before resigning in a constructive dismissal case, in this case the Complainant’s failure to do so was not fatal to her case as there was in fact no grievance process in place.
Link: https://www.workplacerelations.ie/en/cases/2024/october/adj-00050330.html
Authors – Ethna Dillon and Jenny Wakely
27th November 2024
Anne O’Connell
Solicitors
19-22 Lower Baggot Street
Dublin 2.
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