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Unfair Dismissal and Settlement Agreements – Tribunal rules it “vital” for an employee to seek advice before signing

In a recent case before the Employment Appeals Tribunal, Kerrigan v Smurfit Kappa Ireland Limited (UD 1921/2011) the employee appealed against a recommendation of a Rights Commissioner (ref r-105234-ud11 JOC,) under the Unfair Dismissal Act 1977 (as amended). The case is interesting insofar as it reiterates again the importance of allowing an employee take the appropriate advice before signing a settlement or compromise/waiver agreement.Preliminary issueAt the outset the Respondent raised a preliminary issue that the Tribunal had no jurisdiction to hear the unfair dismissal claim as the claimant had signed a compromise agreement in full and final settlement of all claims. Evidence was given that on 7th September 2010 the claimant who worked in Waterford was called to a meeting in Cork the following day. The general manager and regional sales manager were present and the claimant was told the sales team was being restructured and his position was being made redundant with immediate effect. The claimant was very upset after the meeting and was subsequently invited to a following meeting on 10th September.At the meeting on 10th September, the claimant refused to sign the Form RP50 as the date of termination and monetary calculations were incorrect. The claimant was also handed a discharge form to read which he understood was incorrect and refused to sign it. The claimant’s position was that he was told that if he did not sign the Discharge Form he would not receive the ex-gratia element of his severance payment. The general manager stated that he had gone through the severance agreement with him.On 14th September the claimant read the discharge agreement in full and signed it together with the Form RP50. The discharge agreement read as follows:“I ,(the claimant), hereby accept the sum of €25,280.76 gross in full and final settlement of all claims arising out of my employment with (the respondent) or the termination thereof, both under statute and under common law in all respects for all purposes.I confirm that this sum is inclusive of but not limited to any entitlements, rights, or claims that 1 have or may have had under the Minimum Notice and Terms of Employment Information Act, 1973-2001, the Industrial Relations Acts 1949-2004, the Unfair Dismissals Acts 1977-2001, the Redundancy Payments Act 1967-2003, the Protection of Employees (Part Time Work) Act 2001, the Protection of Employees (Fixed Term Work) Act 2003, the Payment of Wages Act 1991, the Organisation of Working Time Act 1997 and the Employment Equality Act 1998-2004 etc.I confirm that this document has been read over and explained to me prior to my signing it and that accordingly I both understand and accept the contents of this document in full.”The respondent stated that the claimant had negotiated the settlement figure but the claimant was not advised to seek advice before signing it.Determination on Preliminary IssueThe Tribunal ruled that it had jurisdiction to hear the appeal and referred to caselaw including Hurley v the Royal Yacht Club [1997] ELR 225 where Buckley J.in the Circuit Court concluded that there must be informed consent in respect of a waiver and explained what this meant.“I am satisfied that the applicant was entitled to be advised of his entitlements under the employment protection legislation and that any agreement or compromise should have listed the various Acts which were applicable, or at least made it clear that they had been taken into account by the employee. I am also satisfied that the applicant should have been advised in writing that he should take appropriate advice as to his rights, which presumably in this case, would have been legal advice. In the absence of such advice I find the agreement to be void”The Tribunal also referred to the decision of the High Court in Sunday Newspapers Ltd v Kinsella and Brady[2008] ELR 53 which sets out a statement of the law in this area. The Tribunal noted that the Hurley test encompassed two elements and that it was “vital” that an employee be advised to seek appropriate advice.Substantive CaseThe Tribunal heard that the Respondent had three main plants in Ireland including Dublin, Lurgan and Cork and smaller plaints including Waterford and the Mallow Road. During 2008 business dropped dramatically and the Cork plant and the smaller plants lost 50% of business. As a result a series of redundancies were made.  Over the period, 110/120 employees in the Cork plant, comprising 80% of its workforce, had been made redundant.The sales team was the last to be restructured as the respondent wanted to keep its customers reassured and looked after. Three sales development executives, including the claimant, reported to the Cork office and each was responsible for a particular area. A review took place in mid 2010 which confirmed a need for a redundancy in the sales structure. The general manager opened a spread sheet to the Tribunal to explain the percentage volumes and values of work done by the three sales development executives reporting to the Cork office. Based on these figures the respondent decided to retain the Cork sales development executive in Cork, to transfer the Galway sales executive to Lurgan and to make the claimant redundant. The general manager further noted that this was explained to the claimant at the meeting on 8 September 2010. He noted that the claimant’s performance was not an issue and there was no other vacancy in the company as there had been 140 redundancies.The claimant’s role was terminated almost straight away due to commercial sensitivity and knowledge of customers and pricing. the general manager further noted that it was common case that last-in-first-out principle applied on a site by site basis and the claimant was the only sales development executive and employee in the Waterford area.The claimant did not accept that each sales development executive had a defined geographical area. He also could not understand the timing of his redundancy as only a few days before the decision was taken he was given a new car. The claimant stated that he was very shocked when he was told about the redundancy at the meeting of 8th September. He stated that he was told not to go into the office on 9th September and was told some of his customers had been contacted and he was afraid some of the customers could draw inferences. The claimant felt the decision to make him redundant was made without consulting him and other options should have been considered. The claimant also stated that he did not wish to waive his notice and wanted to work it but unlike employees in previous redundancies, he was not allowed to.Determination on Substantive CaseThe Tribunal accepted the claimant’s evidence that he was only given the first page of a document entitled Compulsory Redundancy/Restructuring Terms” (which had been drawn up in August 2009 as a result of negotiations at the LRC at the time of previous company redundancies). The Tribunal noted that the second page of the document stated that LIFO would apply. The Tribunal noted in this instance that the selection of the claimant on this basis was not unfair as it was common case that LIFO applies on a site by site basis.The Tribunal noted however as therewas a lack of fair or any procedures surrounding the dismissal, the Tribunal was entitled to exercise the discretion conferred on it by Section 6 (7) of the Unfair Dismissals Acts 1977 as substituted by section 5 (b) of the Unfair Dismissals (Amendment) Act 1993, which provides:”Without prejudice to the generality of subsection (1) of this section, in determining if a dismissal is unfair dismissal, regard may be had, if the rights commissioner, the Tribunal or the Circuit Court, as the case may be, considers it appropriate to do so:(a)   to the reasonableness or otherwise of the conduct (whether by act or omission) of the employer in relation to the dismissal“.                                                                                                                                                                                                                                                                                                                       The Tribunal concluded that the respondent’s failure to apply any fair procedures was unreasonable and rendered the dismissal unfair. The claimant was awarded the sum of €10,000.00, in addition the redundancy lump sum and ex gratia payment.

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