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Unfair Dismissal and Restrictive Covenants

€25,000 award for failure to inform employee breach could lead to dismissal

Unfair Dismissal and Restrictive Covenants – €25,000 award for failure to inform employee breach could lead to dismissal


In the recent case of An Employee v An Employer UD 510/2011, the Claimant alleged that he had been unfairly dismissed as a result of breaching a restrictive covenant in his contract of employment.

Background

In this case the Claimant was employed as a leisure centre manager from October 2008 to September 2010.

The Respondent alleged that the Claimant had breached the restrictive covenant in her contract of employment whilst the Claimant contended that the restrictive covenant which the employer sought to rely on, was neither binding nor enforceable. The Claimant also contended that his employer had conducted an inadequate investigation into the issues which resulted in the decision to terminate his employment and that his actions did not constitute gross misconduct.

Without prejudice to the enforceability of the restrictive covenant, it was contended on behalf of the Respondent that the Claimant had not been unfairly dismissed as the Claimant’s contract provided that he “should not be engaged or connected with any other business activity during the term of your employment with (the employer) and associate companies without the prior written consent of (the employer)”.

The Respondent contended that on 5 August 2010, the Claimant had accepted that he had been engaged in another business activity during the course of his employment with them. This had not been disclosed to the Respondent either before the Claimant commenced employment or during the course of the Claimant’s employment with the Respondent. The Respondent contended that the covenant in the Claimant’s contract of employment had been clearly explained to him when he had taken up employment with the Respondent, that he had acknowledged in writing that he had understood it and that the covenant was, therefore, binding on him.

The Respondent also contended that the investigation conducted had established that the Claimant was involved in another business activity during the course of his employment with the Respondent and this had been accepted by the Claimant. The Respondent believed that the Claimant wrongfully withheld this information and that such withholding of information constituted gross misconduct.

The Respondent further contended that the covenant in question had been applied fairly to all employees, that fair procedures had been applied and that the Claimant had been afforded every opportunity to make submissions both to the initial disciplinary investigation (carried out first by the Respondent’s general manager and HR manager and subsequently by the group financial controller on appeal).

Determination

The Employment Appeals Tribunal noted that the Claimant had no previous disciplinary record and that his business did not interfere with his day to day position with the Respondent.The Tribunal also noted that the Claimant’s other business activity was 60 kilometres away and while his contract included a restrictive covenant he was not advised that if it was breached, it could lead to his dismissal.

The Tribunal concluded that the dismissal was unfair and that the Claimant was awarded €25,333 under the Unfair Dismissal Acts 1977 (as amended).