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Wrongful Dismissal and Redundancy – High Court considers breach of contract action

In a judgement delivered on 31st January 2013 in Treacy v Irish Packaging Recycling Limited [2013] IEHC 41, Justice Laffoy considered whether the defendant was liable for breach of contract in respect of how the plaintiff was dismissed.BackgroundThe Plaintiff commenced employment with Greyhound Recycling & Recovery in September 2008 as a Business Manager. His starting salary, performance bonus and loyalty bonus at the time amounted to €90,000 per annum. The plaintiff continued in employment within the Greyhound Group until 1st August, 2011, when a new contract of employment was issued to him and his new employer became Greyhound Green Bin. Clause 12 in the Plaintiff’s new contract of employment provided for notice of termination which stated:“Your employment may be terminated at any time by the Company giving you not less than six months notice in writing except during the probationary period where notice of termination shall be one month. The Company reserves the right to give you pay in lieu of any period of notice which you are . . . entitled to receive.”At the beginning of January 2012 there were major changes in relation to the arrangements for the collection and disposal of waste in the Greater Dublin area. The defendant put in an initial bid on 6th January, 2012. On 13th January, 2012, the defendant entered into a licence agreement in relation to the MRF at Ballymount with Dublin City Council who were acting for the four Regional Authorities in the City and County of Dublin. As part of the agreement between the parties, the employees of the Greyhound Group who had been employed in connection with the MRF would be transferred to the defendant pursuant to the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003. The plaintiff transferred as a result.The defendant had been furnished with a list of the seventy-seven employees it would be taking on when it executed the Licence Agreement however there was a mechanism in the Licence Agreement for addressing any problem which might arise in relation to the transfer of employees including:“The Licensee will accept and take on all MRF staff previously notified to the Licensee, in good faith, pending the outcome of an independent assessment as to whether they are wholly or mainly engaged in the activities that are subject to transfer. On 26th January, 2012 the plaintiff was called to a meeting of senior executives of the defendant and was told he was being made redundant. The following day he was informed he was to receive one month’s notice despite the plaintiff informing the defendant that he was entitled to six month’s notice under his contract. On 31st January, 2012, the defendant wrote to the plaintiff informing him that he would receive his statutory entitlements and one month’s notice (and any other entitlements).The plaintiff’s solicitors wrote to the defendant on 6th February, 2012 requesting that the defendant withdraw the “purported redundancy notice dated 31st January” and that the plaintiff be allowed to return to work.  Despite the fact that proceedings had been issued, the defendant wrote directly to the plaintiff at the end of February 2012 enclosing his statutory redundancy payment, Form RP50, Revenue Form P45 together with a payslip which indicated he would receive one month’s wages in lieu of notice.Key IssuesJustice Laffoy noted the key issues in the case were:(a) whether the defendant was liable for breach of contract having regard to the manner in which the plaintiff was dismissed from his employment; and (b) if so, the damages to which the plaintiff was entitled. Justice Laffoy noted that the core issue turned on whether the plaintiff’s contract of employment was properly terminated by the defendant. Justice Laffoy noted that in circumstances where the plaintiff had been given payment in lieu of one month’s notice, the termination was in accordance with law and with the express or implied terms of his contract of employment and that therefore the only issue which the Court had to determine on liability turned on the construction of the contract dated 1st August, 2011. Justice Laffoy referred to the statement of Keane J. in Kramer v. Arnold [1997] 3 I.R. 43, which was endorsed by the Supreme Court in Igote Ltd. v. Badsey Ltd. [2001] 4 I.R. 511, where Keane J. stated (at p. 55):“In this case, as in any case where the parties are in disagreement as to what a particular provision of a contract means, the task of the court is to decide what the intention of the parties was, having regard to the language used in the contract itself and the surrounding circumstances.”Justice Laffoy noted that the inclusion of a probation clause in the plaintiff’s contract was ludicrous as it could not be doubted that the Greyhound Group was satisfied as to the suitability of the plaintiff to perform the functions of Recyclable Manager given that he had been with the Greyhound Group for almost three years at that stage. Justice Laffoy was also satisfied that it was not the intention of the parties that the plaintiff would be deemed to be on probation from 1st August, 2011 to 31st January, 2012 and that she was satisfied that the intention of the parties was that the plaintiff would be entitled to not less than six month’s notice.Justice Laffoy also noted that the defendant could have invoked Clause 3.17 of the Licence Agreement to obtain a determination whether the plaintiff had been wholly or mainly engaged in the activities which were subject to transfer but the Defendant chose not to invoke that provision.  Justice Laffoy concluded that the plaintiff was entitled to not less than six month’s notice in writing under the 2011 contract and therefore the defendant was in breach of contract and the plaintiff was entitled to damages for wrongful dismissal. DecisionJustice Laffoy pointed to Redmond on Dismissal Law in Ireland (2nd Ed.) at para. 11.04, where it provides that where an employee is wrongfully dismissed he is entitled, subject to the rules of mitigation, to compensation for loss of remuneration during notice or on an unexpired fixed period of contractual employment. She stated that the plaintiff should be compensated on the basis of a gross monthly rate of €6,416.67 in respect of salary from 1st January, 2012 for six months and that he should be entitled to a loyalty bonus he would have received during the first half of 2012 in the sum of €5,000, and a performance bonus due for the first half of 2012 of €2,700. The plaintiff was also entitled to a car allowance of €850 for six months in the sum of €5,100. Justice Laffoy confirmed that the plaintiff’s cause of action in these proceedings was at common law for wrongful dismissal and that the court had no function at first instance in relation to any claim for a redundancy payment under the Redundancy Payments Act 1967 (as amended) in relation to his dismissal by reason of redundancy. The High Court also confirmed that it had no function at first instance in relation to any claim a person may have under the Unfair Dismissals Act 1977 (as amended), for compensation for unfair dismissal and no function in determining whether the dismissal of the plaintiff as an employee should be deemed not to be an unfair dismissal. Justice Laffoy concluded that the High Court, in the substantive proceedings, had no jurisdiction to deal with the issues in relation to redundancy which were raised in the plaintiff’s statement of claim. 

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