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5 Ways to Avoid Unfair Dismissal Claims
Unfair dismissal is the most common type of employment claim against employers in Ireland. Dealing with these claims can be extremely costly and time consuming. Employers are well advised to follow their own written procedures, to the letter, in employment contracts and handbooks, and to treat employees fairly and reasonably throughout any termination process, writes Claire McDermott from Flynn O'Driscoll.
In order for a dismissal to be deemed to be fair, the test is twofold: (1) there must be a substantial reason for the dismissal, and (2) the procedures used must be fair.
The Unfair Dismissals Acts set out a number of instances where dismissals will automatically be deemed to be unfair. These include trade union activities, strike action, dismissals relating to any protective leave (e.g. maternity), religious or political opinions, race, gender and sexual orientation.
Here are five things employers should NEVER do when considering terminating an employee’s employment.
1. Never act in the heat of the moment
At a very minimum, on dismissing an employee, employers must give the employee reasonable notice, which is dependent on their length of service with the company. This must be done in accordance with the Minimum Notice and Terms and Conditions of Employment Act or the notice provisions as set out in the employee’s contract. In circumstances where an employee offers their resignation in a heat of the moment scenario, it could be risky for an employer to rely on it. The best advice is that if a resignation is made during a heated exchange, it would be prudent for the employer to allow the dust to settle before issuing a P45. No matter how bad the employee has behaved, the employer should hold his breath and take immediate external advice on how to proceed.
2. Never make an example of an individual employee
In circumstances where there are breaches of company policy within the workplace, such as practical jokes or bad time-keeping, and these practices are being carried out by a number of employees, be very careful not to make an example of any one individual employee.
In the recent case of RSA Insurance and Philip Smith, the former Chief Executive of RSA in Ireland was awarded €1.25 million in a case where it was determined by the Employment Appeals Tribunal (EAT) that Mr. Smith had been constructively dismissed from his role. The case related to a report, which RSA Insurance had produced as a result of an investigation into the financial reserves of the insurance company. Mr Smith noted during the hearing that the later part of the report was a character assassination of him, which left him with no choice but to resign. There were also claims that the report had been drafted in such a way as to pre-determine that the decision would be taken by the Company to dismiss Mr Smith. These claims were upheld by the EAT who noted that the practices within RSA were known by more than a dozen employees.
3. Never terminate by reason of redundancy without consultation
Redundancy is a highly regulated area. Where a genuine redundancy situation exists, employers will still need to exercise caution and ensure that they act in accordance with the legislation as well as following their own procedures. Fair procedures need to be followed at every step, and employers are advised to engage in at least a two-stage consultation process. The process should include an explanation as to why the company needs to restructure or make changes, any selection criteria to be used, and consultation on any suitable alternative positions that might be available within the company. Those selected for redundancy should be asked for their feedback and any alternatives to redundancy before any final decision is made. Where proposals are put forward by employees, the company should take time to consider same and revert to the employees as to whether they are viable alternatives.
4. Never terminate someone’s employment while they are on Maternity Leave
The Maternity Protection Acts provide protection for those on maternity leave in Ireland. They provide that the termination of an employee’s contract of employment by her employer while she is absent from work on maternity leave, additional maternity leave, or any other pregnancy related leave, is void. Any notice of termination served by the employer during any of these periods is also void. On a literal reading, the legislation also prohibits an employee from resigning during maternity leave. Accordingly, employers should – in the case where an employee on maternity leave gives notice of her intention to resign – advise the employee that they are prohibited by the legislation from allowing her resignation to take effect during the maternity leave period and that, if the employee so wishes, she will have to give notice of her resignation after her maternity leave has ended.
5. Never ignore the warning signs
An employee may succeed in a claim for constructive dismissal in circumstances where the employee resigns as a result of the employer’s conduct towards them. The recent UK case of MacLennon v Hartford Europe Group Ltd gives some guidance on the response required from an employer whose employees may be showing signs of burn-out. In this case the employee worked 55-60 hours per week, as well as working some weekends and in the evenings. The Court noted that long hours alone would not give rise to a situation where an employer ought to have known that this could lead to stress or burn-out. However, they went on to note that employers – in order to avoid claims for work related stress or constructive dismissal – should be monitoring the demands that they put on their employees. Any grievance or complaint raised by an employee should be treated seriously.
While it will never be an easy decision to dismiss an employee, employers should ensure that they don’t make the situation worse by falling foul of legislation and should take measures to reduce their exposure to costly unfair dismissal claims. Thankfully, however, if things go badly employers can take some comfort in the knowledge that Irish courts aren’t quite as generous as the courts in the US, where recently a jury unanimously ordered AutoZone to pay more than $185 million in compensation after a San Diego woman claimed she was demoted and fired because of her gender.
Written by: Claire McDermott, Solicitor, Flynn O'Driscoll – Business Lawyers
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