WRC orders record €440,000 unfair dismissal award for founder of tech firm
Key Learnings
This case highlights several key learnings for Employers regarding their responsibilities and liabilities specifically in the context of unfair dismissal. This case serves as a compelling illustration of the importance of maintaining trust and confidence in the Employer-Employee relationship, as well as the repercussions of breaching this trust. This case underscores the critical need for Employers to support Employees in mitigating losses post-dismissal, rather than hindering their efforts.
Background
The Complainant, was the CEO, Chairman, and founder Hyph Ireland Limited(formerly Xhail). The Respondent, Hyph Ireland Limited, terminated the Complainant’s employment on the 19th of November 2021. The Complainant claimed that his dismissal had been premeditated based on an accusation that his visa status did not conform with US law. On November 19, 2021, the Chief of Staff of Xhail Group informed the Complainant that he was no longer an Employee. The Complainant was locked out of Xhail Group premises and had access to his email and company information blocked.
Summary of Complainant’s Case
The Complainant case claims that he was unfairly dismissed by the Respondent and that further to his dismissal the Respondent continued to take actions against him that he deemed to be discriminatory in nature. The Complainant argues that he believes that the unjust termination stemmed from accusations surrounding the status of his visa.
Given that the Respondent has acknowledged the dismissal was unfair, the main focus of the lawsuit was quantifying the Complainant’s overall losses. Mr. Keily was constrained by a non-compete clause that prevented him from engaging in any business, trade, concern, or commercial activity that competed with the company or any Group Company in the Prohibited Area of the Business. Post-employment the Complainant sought approval from the Respondent to start a new company to pursue innovative ventures, however, this was denied. He further reported having several meetings with the Respondent, which the Complainant believes were meant to limit his alternatives for mitigating his loss because they were prompted by the Respondent and were not without prejudice discussions.
Between November 2021 and November 2022, the Complainant ran a holiday business from his house in County Clare, earning around €10,000. As an artist, he made €2,000. After his non-compete clause expired, the Complainant began networking and looking for new business prospects.
Due to the circumstances surrounding his termination and the Respondent’s alleged constraining behaviour, the Complainant values his loss at €478K.
Summary of Respondent’s Case
The Respondents case denies the Complainant’s allegation that the Respondent failed to mitigate losses, with the Respondent arguing that the Complainant did not make enough attempts to look for other employment alternatives. In contrast to what the Complainant claims, the Respondent disputes that it refused the Complainant permission to form a new company. It claims that the Complainant could have ventured outside of his area of expertise or pursued other musical and technological endeavours not protected by the non-compete agreement or until the non-compete clause had expired.
The Respondent cites the Complainant’s establishment of a holiday-home business, as an example of feasible income-generating opportunities that were overlooked. In addition, the Respondent provided financial arrangements that the Complainant neglected to pay back, such as loans for furnishings and accommodation as well as an allowance for living abroad. The Respondent argues that the Complainant failed to mitigate loss because of his inertia. The Respondent argues that the Complainant had an obligation to actively look for employment prospects to lessen his losses.
Findings and Conclusions
The adjudication was under the Workplace Relations Commission and both the Respondent and the Complainant acknowledged that the Unfair Dismissals Act of 1977 applied to this case. The Complainant presented an oral testimony on his financial loss. Due to his termination of employment between the dates, 19th of November 2021 and the 1st of May 2023, the Complainant claimed his financial loss to have totalled €477,720. With this the Complainant cited the restrictions enforced on him and the denial of permission to start a new company, there was no evidence given by the Respondent to rebut this at the hearing.
On the evidence that was presented, the WRC found in favour of the Complainant. The WRC assessed the financial loss at €440,000, considering the Complainant’s efforts to mitigate and adjusting for a period where he could have sought alternative employment. In addition, the Respondent was fined €24,000 by the WRC for failing to give sufficient notice as required by law. Therefore, the WRC ordered that the Respondent give the Complainant a total of €464,000 in compensation.
Volunteer Care Worker Awarded €60,000 for Unfair Dismissal
Key Learnings
In this Case, the Complainant, despite submitting evidence that revealed he did not consider himself an Employee, succeeded in proving that his relationship with the Respondent charity had the requisite elements to establish an employment contract.
The Adjudicator disregarded the labels given to the relationship by both parties in evidence and determined the matter on the basis of the de facto relationship between the parties. By using this approach, the Adjudicator found that the requisite elements of mutuality of obligation, integration and control existed to establish a contract of employment and the Complainant was therefore entitled to a range of statutory employment rights including protection against unfair dismissal.
Organisations in the charity sector that use atypical employment arrangements should carefully consider the impact of this decision. Determining employment status is a technical area of employment law, and Organisations should refer to the questions laid down by the Supreme Court in Revenue v Karshan as part of an assessment to determine the correct employment status of atypical employment relationships.
Background
The Respondent was a registered charity that operated a centre in which the Complainant worked on a voluntary basis. The Complainant stated that up until December 2018, the Respondent’s staff was made up of long-term care workers (LTCW), short-term care workers (STCW), persons described as Employees and persons described as volunteers. The Complainant described himself as a LTCW having commenced with the Respondent in around 1977. The Complainant maintained that notwithstanding this description, a de facto employment relationship existed and he cited various factors in support of his position.
The Respondent stated that its ethos was that of a life sharing model where individuals – such as the Complainant – came and resided in the communities on a voluntary basis. The Respondent outlined the Complainant’s role in the community/centre in terms of the provision of care and learning opportunities to the service users. The Respondent stated that the Complainant willingly and knowingly entered the LTCW arrangement in its centre in or around 1980 and that this model came to an end on 31 December 2018 due to various regulatory requirements. The Respondent stated that the Complainant refused to sign or accept a leaving settlement payment. The Respondent maintained that the Complainant always operated as a volunteer, that his role was not governed by any contract specifically not a contract of employment, that he had no legal entitlement to any payment or benefit in kind and that he was never an Employee. On this basis, the Respondent submitted that the WRC did not have jurisdiction to deal with the complaints.
Summary of Complainant ’s Case
The Complainant stated that he commenced in the Respondent’s centre in or around 1980 and remained attached to that centre until 2018. He outlined his work/role in the Respondent’s centre including as a music therapist, in the areas of physiotherapy, active involvement, construction activities and care work. The Complainant stated that he lived in the centre with his chosen family and worked diligently with the users of the service – sometimes up to 72 hours/week. He outlined various investigations he was subjected to in or around 2017 which found he had no case to answer.
The Complainant stated that various issues related to the Respondent’s governance arrangements arose from around 2015 onwards. This resulted in a decision on 6 June 2017 to transfer the running of the centre at which he worked to the HSE and to phase out the LTCW model in favour of employed staff. In September 2018, the Brothers of Charity took over the management of the centre.
The Complainant explained that in around 2017 a transition group was established to consider the practicalities for the workers of this change in governance. The Complainant stated that representations were made that LTCWs would be taken on as Employees and failing that, would be given assistance in relation to leaving the Respondent – in other words a form of retirement or exit package. In this regard, the Complainant cited various meetings convened at the time, reports and correspondences including a transition document which he completed in November 2018 and on which he stated that he did not wish to be made redundant and reserved all his legal rights.
Summary of Respondent’s Case
The Respondent outlined its dealings with the Complainant and the other staff in 2018 in relation to the LTCW transition process. In this regard, the Respondent cited a written statement made by the Complainant on 27 November 2018 which indicated that the Complainant never regarded himself as an Employee, that he did not “have the requisite intention to create legal relations to enter into a contract of employment” and that post December 2018, he did not wish to transition into a role that was subject to an employment contract.
The Respondent stated that after the LTCW arrangement came to an end on 31 December 2018, the Complainant – by letter of 13 May 2019 – was offered a volunteer agreement and an LTCW transition plan which he did not accept. It was the position of the Respondent that for the Complainant to avail of statutory employment rights, he must first come within the definition of an Employee and that the Complainant did not satisfy the requisite tests. In this regard, the Respondent submitted there was an absence of the requisite mutuality of obligation, there was no contract of service, there never was an intention to create legal relations and the Complainant was never an Employee nor ever saw himself as such.
The Respondent further stated that the Complainant was now retired and excluded from any benefit from the Unfair Dismissals Acts or the Redundancy Payments Acts. In addition, the Complainant had made no attempt to mitigate his losses.
Findings and Conclusions
The preliminary matter of determining the employment status of the Complainant was the central issue of the evidence and submissions since it also determined whether the Complainant had locus standi to bring his complaints before the WRC.
The tests for determining employment status include consideration of the degree of control exercised over the worker, whether the person is integrated into the workplace and whether or not a mutuality of obligation existed in terms of the Employer having been required to provide work for the Employee and the corollary obligation on the Employee to complete that work.
The Adjudicator was satisfied that there were numerous indications to determine that the Complainant was an Employee. The evidence indicated that he was integrated into the workplace for some 38 years, he was described as an LTCW and from the evidence presented, there was control over the work he did. The Complainant was obliged to comply with the Respondent’s extensive policies including for example its disciplinary procedure which provided for dismissal – ie for a co-worker’s “Involvement with the Community to cease forthwith”. For the most part, the same workplace policies applied to LTCWs and Employees in the same manner.
As against that, there were a number of factors which did not indicate that there was any employment relationship such as the fact that the Complainant was not paid wages in the usual manner nor was he subject to PAYE tax, he did not receive payslips and was not a member of any pension scheme. Similarly, no evidence was presented that the Complainant’s working hours or leave arrangements were based on any objective criteria or that there was any alignment with statutory provisions. Nor was there any sick leave scheme.
The Adjudicator found that the weight of the competing pieces of evidence favoured a finding that the Complainant was employed by the Respondent.
The Adjudicator favoured the approach adopted by the Labour Court in the similar case of Camphill Communities of Ireland V Elke Williams which determined that there was uncontested evidence of the Complainant ‘entering into an arrangement with the Respondent whereby she would provide her labour on a 24/7 basis in return for the Respondent providing her with a place to live and meeting her needs…….the Respondent accepts that for Revenue purposes at least that these benefits constitute taxable income. In those circumstances it is difficult to see how the intention to create legal relations did not exist…..On that basis the Court finds there was a contractual arrangement between the parties…..While the Complainant was not in receipt of what would normally be considered a salary or wage, she did receive more than reimbursement for expenses…..Therefore the Court finds that she was not a volunteer…..….the service requirements were in the main regular and predictable carried out at the same location week in week out….. the Complainant would do the work that was required to be done.….In order for the Complainant to get her needs met……the Respondent had to provide the Complainant with work. In the nature of this case once the mutuality of obligation was established at the commencement of the contract it continued without break or interference…..The Court…..finds that that having examined the relationship between the Respondent and the Complainant that there was a mutuality of obligation….The Court…… finds that the requisite elements of mutuality of obligation, integration and control existed to establish a contract of employment.’
In all the circumstances, the Adjudicator ruled that the Complainant was entitled to bring his complaints to the WRC on the basis that he was employed by the Respondent.
The Adjudicator found that the Complainant was therefore unfairly dismissed contrary to the provisions of the Unfair Dismissals Acts for the following reasons:
- Services continued to be provided by the Respondent after 31 December 2018 of a similar nature to those performed by the Complainant up until that date. The Complainant was offered a volunteer agreement in 2019. Whilst ostensibly that constituted a change from LTWC to proposed volunteer, I consider the probability was that in reality the Complainant’s role had not been made redundant;
- The Complainant was not afforded fair procedures in the nature of S1 146/2000 nor was he provided with any specific justifiable reason for the termination of his employment within the terms of Section 6(4) of the Unfair Dismissals Act [1977-2020] other than that the role of LTWC was coming to an end – which reason was of a general nature and applicable to the Respondent’s service generally. The Complainant was entitled to be appraised in specific terms of the reasons for his dismissal and afforded a fair process to deal with the matter having regard to the requirements of natural justice and the Respondent’s own Disciplinary Procedure.
Decision
The Adjudicator determined that the Complainant be compensated €60,000 for his loss of earnings arising from the unfair dismissal.
The Adjudicator also awarded compensation in relation to a contravention of the Terms of Employment (Information) Act in the sum of €1,000.