A Guide to Unfair Dismissal in Ireland

Definition of Unfair Dismissal

Section 1 of the Unfair Dismissals Act

‘dismissal’ means……..

"(b) the termination by the employee of his contract of employment with his employer, whether prior notice of the termination was or was not given to the employer, in circumstances in which, because of the conduct of the employer, the employee was or would have been entitled, or it was or would have been reasonable for the employee, to terminate the contract of employment without giving prior notice of the termination to the employer,….."

(Also see A Guide to Unfair Dismissal in Ireland)

Justifying a Dismissal

A employer could give one of the following reasons to justify the dismissal:

• the capability, competence or qualifications of the employee for performing work of the kind which he/she was employed by the employer to do; the conduct of the employee;
• the redundancy of the employee;
• the employee being unable to work or continue to work in the position which they held. 

In relation to the grounds for the dismissal, case law shows that the employee does not have to be shown to have actually been incompetent or incapable, for example. It is sufficient that the employer show that, after a proper procedure, the employer honestly believed that they were incompetent or incapable.

When is a Dismissal Reasonable?

The applicable legal test is the “band of reasonable responses” test, as set out by Mr. Justice Noonan in the High Court case of The Governor and the Company of Bank of Ireland -v- James Reilly (2015) IEHC 241, wherein he stated:

“It is thus clear that the onus is on the employer to establish that there were substantial grounds justifying the dismissal and that it resulted wholly or mainly from one of the matters specified in s. 6(4), which includes the conduct of the employee or that there were other substantial grounds justifying the dismissal. Section 6(7) makes clear that the court may have regard to the reasonableness of the employer's conduct in relation to the dismissal. That is however not to say that the court or other relevant body may substitute its own judgment as to whether the dismissal was reasonable for that of the employer. The question rather is whether the decision to dismiss is within the range of reasonable responses of a reasonable employer to the conduct concerned - see Royal Bank of Scotland -v- Lindsay UKEAT/0506/09/DM.”

In his decision on this case, considering the issue of the response of a reasonable employer, Mr. Justice Noonan referred to the case of Allied Irish Banks -v- Purcell [2012] 23 ELR 189, where Ms. Justice Linnane quoted from the findings in British Leyland UK Ltd -v- Swift [1981] IRLR 91:

The notion of a band of reasonableness was first endorsed by the Court of Appeal in British Leyland UK Ltd -v- Swift. The Court found that there is a band of reasonableness within which one employer might reasonably dismiss an employee. Lord Denning MR stated:

“The correct test is: Was it reasonable for the employers to dismiss him? If no reasonable employer would have dismissed him, then the dismissal was unfair. But if a reasonable employer would have dismissed him, then the dismissal was fair. It must be remembered that in all these cases there is a band of reasonableness, within which one employer might reasonably take one view, another quite reasonably takes a different view”. “The correct test is: was it reasonable for the employers to dismiss him? If no reasonable employer would have dismissed him, then the dismissal was unfair. But if a reasonable employer might reasonably have dismissed him, then the dismissal was fair. It must be remembered that in all these cases, there is a band of reasonableness, within which one employer might reasonably take one view, another quite reasonably take a different view."

In the judgement in the Circuit Court in Allied Irish Banks plc -v- Purcell Judge Linnane expressly approved the British Leyland test and she went on to state:

“It is clear that it is not for the EAT or this court to ask whether it would dismiss in the circumstances or substitute its view for the employer’s view but to ask was it reasonably open to the respondent to make the decision it made rather than necessarily the one the EAT or the court would have taken”.

(Also see Unfair Dismissals and Alternative Sanctions)

Dismissal following a Performance Improvement Plan

The employer should tell the employee before the dismissal the ways in which he/she is failing to do the job adequately, warn the employee of the possibility of dismissal on this ground and give an opportunity to improve.

There is an obligation on the employer, where the competence of an employee is in question, to update the employee of his or her performance before taking the decision to dismiss.

Lardner J. in the Labour Court in Bolger v. Showerings (Ireland) Limited set out the requirement that the employer should tell the employee before the dismissal the ways in which he is failing to perform the function of his job adequately; warn the employee of the possibility of dismissal on those grounds; and before dismissal, give the employee an opportunity to improve.

In An Employee -v- A Limited Company (Adjudication Reference: ADJ-00021794) it was determined that the employee concerned was given every opportunity to improve their performance but failed to do so. The Adjudicator noted that the employer did everything in their power to assess the dismissed employee:

"He was placed on a Performance Improvement Plan and was given every opportunity to improve his performance. I do not accept the complainant’s evidence that he was not given assistance or help in relation to improving his performance. To the contrary his Performance improvement Plan was very carefully management. He was at regular intervals given an opportunity to ask questions and seek assistance and had what was required of him explained in detail. As part of his PIP he was also required to attend two coaching sessions with his managed. He was given a copy of the disciplinary procedure and had that explained to him at every step of that procedure. He could not have been in any doubt that his employment was at risk if he did not improve his performance."

Dismissal due to Gross Misconduct

In cases where the dismissal relates to gross misconduct, the Workplace Relations Commission set out the appropriate test to be applied in such circumstances.

In O'Riordan versus Great Southern Hotels [UD1469-2003], the Employment Appeals Tribunal/Workplace Relations Commission stated as follows:

"In cases of gross misconduct the function of the Tribunal is not to determine the innocence or guilt of the accused of wrong doing. The test for the Tribunal in such cases is whether the respondent had a genuine base to believe, on reasonable grounds, arising from a fair investigation that the employee was guilty of the alleged wrongdoing."

A significant body of case law exists with regard to the issue of the separation of the investigation stage from the disciplinary decision-making process in the context of providing fair procedure, particularly in a process that results in the termination of an employee’s employment.

In Joseph Brennan Bakeries -v- Rogers (UDD1821), the Labour Court stated:

“The Court considers that the multiplicity of roles undertaken by TG [ the General Manager] in the process calls into question the fairness of the procedure. TG was the person who initiated the investigatory procedure and he oversaw the procedure himself. That procedure resulted in a disciplinary procedure which TG also oversaw. The Court is satisfied that the within enterprise is of a nature which afforded the Respondent the opportunity to ensure a clear separation of investigation and disciplinary processes by the selection of available management level personnel to carry out the different stages of the procedure.”

Date of Dismissal

The date of dismissal will be the date of the effective termination of employment or the date that the proper notice period would have expired. The effective date is important for the calculation of any length of service in terms of qualifying jurisdiction, the six months for the lodgement of the claim with the Workplace Relations Commission and also the calculation of an award for instance in relation to redundancy. 

Appeal to a Dismissal

If there is an appeal to a dismissal, in general this will not operate to alter the date of dismissal unless it is specified to do so, therefore, a complaint to the Workplace Relations Commission can take place concurrently.

There is no obligation on an employer to provide an appeal process, and it is not set out in the Code of Practice SI 146 of 2000. 

Bringing a Workplace Relations Commission Claim for Unfair Dismissal

The Workplace Relations Commission will examine whether the employee was told of the complaints and allegations that were forming the basis of the proposed dismissal; whether the employee was given an appropriate opportunity to respond to those allegations; whether the employer believed the truth of the allegations; whether there were reasonable grounds to support the belief by the employer and whether the dismissal was proportionate. 

Redress for Unfair Dismissal

Three remedies are available following a successful claim of unfair dismissal: reinstatement of the employee in the position held immediately prior to the dismissal; reengagement of the employee in the position held immediately prior to the dismissal or in a different position which would be on reasonably suitable terms and condition; or payment of such compensation in respect of loss not exceeding 104 weeks remuneration where a financial loss is attributed to the dismissal. 

The Unfair Dismissals Act provides that:

7.— (1) Where an employee is dismissed and the dismissal is an unfair dismissal, the employee shall be entitled to redress consisting of whichever of the following the adjudication officer or the Labour Court , as the case may be, considers appropriate having regard to all the circumstances

a) re-instatement by the employer of the employee in the position which he held immediately before his dismissal on the terms and conditions on which he was employed immediately before his dismissal together with a term that the re-instatement shall be deemed to have commenced on the day of the dismissal, or

(b) re-engagement by the employer of the employee either in the position which he held immediately before his dismissal or in a different position which would be reasonably suitable for him on such terms and conditions as are reasonable having regard to all the circumstances, or

(c) (i) if the employee incurred any financial loss attributable to the dismissal, payment to him by the employer of such compensation in respect of the loss (not exceeding in amount 104 weeks remuneration in respect of the employment from which he was dismissed calculated in accordance with regulations under section 17 of this Act) as is just and equitable having regard to all the circumstances, or

(ii) if the employee incurred no such financial loss, payment to the employee by the employer of such compensation (if any, but not exceeding in amount 4 weeks remuneration in respect of the employment from which he was dismissed calculated as aforesaid) as is just and equitable having regard to all the circumstances.

Compensation for Unfair Dismissal

The Unfair Dismissals Act provides that:

(2) Without prejudice to the generality of subsection (1) of this section, in determining the amount of compensation payable under that subsection regard shall be had to—

(a) the extent (if any) to which the financial loss referred to in that subsection was attributable to an act, omission or conduct by or on behalf of the employer,

(b) the extent (if any) to which the said financial loss was attributable to an action, omission or conduct by or on behalf of the employee,

(c) the measures (if any) adopted by the employee or, as the case may be, his failure to adopt measures, to mitigate the loss aforesaid

Duty to Mitigate Loss following Dismissal

The dismissed employee has a responsibility to find alternative employment as soon as is reasonable practicable, after the dismissal. This may be contested at an adjudication hearing.

Previous decisions on this issue at the Workplace Relations Commission note the decision of the Employment Appeals Tribunal in the case Sheehan v Continental Administration Co Ltd (UD858/1999) where it stated, “a claimant who finds himself out of work should employ a reasonable amount of time each weekday in seeking work. It is not enough to inform agencies that you are available for work nor merely to post an application to various companies seeking work. The time that a claimant finds on his hands is not his own, unless he chooses it to be, but rather to be profitably employed in seeking to mitigate his loss”.

It is clear that there is a legal duty to mitigate financial loss by taking diligent steps to secure comparable alternative employment and case law shows that the standard required is a high one.