Date of dismissal – A complex issue

Introduction

The “date of dismissal” issue has come before the WRC for determination on a number of occasions, where an employee seeks recourse to the Unfair Dismissals Acts (the “Acts”) but must have 12 months continuous service, to do so. The question that frequently arises in this context is the part played by notice, particularly where it is paid in lieu. Does the date of dismissal arise on the date notice was given, or when the notice period would have expired?

Earlier decisions determined that the date of dismissal was the date on which the notice would have expired. In Kinzinger v Marketo Emea Limited [2016] 6 JIEC 2801 there was a clause in the contract of employment which stated that once the employer exercised its right to pay the employee in lieu of notice, the employment terminated immediately, and the employee was not entitled to any further benefits. The EAT found that this clause did not operate to circumvent the strict notice requirements in the Act and parties could not “agree” to disregard the provisions of the date of dismissal as defined by the Act. Therefore, the Tribunal held that the date of dismissal included contractual notice and the employee had the requisite service to bring an unfair dismissal claim under the Acts.

In An Employee v A Technology Company [2018] (ADJ-00010670) the WRC held that the notice period was quantifiable for the purposes of the service required under the Acts. Therefore, the employee had the requisite service to pursue her claim, in which she succeeded.

Recent developments

The date of dismissal was recently comprehensively considered by the Labour Court in Action Health Enterprises Ltd v Michael D’Arcy ADJ-00014891.

By way of brief background, the employee commenced his employment under a contract of employment dated 31 January 2017. The contract of employment provided at Clause 10:

Termination with Notice:

“…employment may be terminated at any time by either you or the Partnership giving the other party at least 3 months’ prior written notice, or statutory notice, if greater.”

“Where notice of termination of our employment is given, whether by you or the Partnership, the Partnership will have the right to:

Pay you in lieu of notice the amount of your entitlement to basic salary in of all or part of such notice period.”

On 30 November 2017, the employee was dismissed on a no-fault basis. He received a letter informing him that he would receive a payment in lieu of his contractual notice period of 3 months and his employment would end immediately on the date of the letter. The letter stated that he would receive the payment within 14 days. As it transpired, he only received his notice payment on 17 December 2017, following a letter from his solicitors.

The employee brought an unfair dismissal claim to the WRC and was awarded €45,000. The employer appealed this decision to the Labour Court on the basis that the employee did not have the necessary 12 months’ service to bring an unfair dismissal claim.

The employer argued that nothing in the Minimum Notice and Terms of Employment Act, 1973 or in the Unfair Dismissals Act 1977 prevents an employee from agreeing to accept payment in lieu of notice.

Considerations

The issue for the Labour Court to consider was whether the date of dismissal for the purposes of the Act was 30 November 2017, being the date of the letter notifying his payment in lieu and immediate termination, or three months later when the notice period would have ended.

If the date of dismissal was 30 November 2017, the employee did not have the necessary 12 months’ service period to bring a claim under the 1977 Act. If on the other hand, the date of dismissal was 3 months’ later, when the notice period would have ended, then he would have had the necessary service period.

Employer arguments

The employer argued that the Minimum Notice and Terms of Employment Act, 1973 specifically states that it does not prevent the parties agreeing to accept payment in lieu of notice and, accordingly the ‘date of dismissal’ for the purposes of the 1977 Act was 30 November 2017.

The employer’s counsel also argued that even if there was ‘no notice’ given to the employee then section 1(b) applies

Section 1

(b) where either prior notice of such termination is not given or the notice is given does not comply with the provisions of the contract of employment or the Minimum Notice and Terms of Employment Act, 1973 (“the 1973 Act”) the date on which such notice would have expired, if it had been given on the date of such termination and had been expressed to expire on the later of the following dates –

1. The earliest date that would be in compliance with the provisions of the contract of employment

The earliest date that would be in compliance with the provisions of the Minimum Notice and Terms of Employment Act, 1973.

On that basis, the earliest date of termination would be the date that complied with the provisions of the Minimum Notice and Terms of Employment Act, 1973 which is one week’s statutory notice, giving a date of dismissal of 7 December 2017, which would still be insufficient for the employee to bring a claim.

Employee arguments

The employee’s solicitor argued that the contractual notice provision displaces the employee’s entitlement under the 1973 Act. Therefore, the employee was entitled to 3 months’ notice of termination from 30 November 2017.

The employee’s solicitor submitted that the payment in lieu of notice did not override the statutory definition of ‘date of dismissal’ for the purposes of the 1977 Act. Therefore, the ‘date of dismissal’ for the purpose of the 1977 Act includes the notice period, whether it was worked or not. The employee’s solicitor relied on an extract from Desmond Ryan in ‘Redmond on Dismissal Law’:

“the Unfair Dismissal Act, as amended, deems the date of dismissal to be the date on which notice, had it been given, would have expired. In practice, this can mean there is a crucial distinction between the employee’s date of termination (when he or she ceased to be an employee pursuant to the contract of establishing the length of services qualification and the time limit rules under the Unfair Dismissal legislation)”.

Court Determination

The Court noted that this case raises a complex question that is still an issue in employment law.

A key consideration for the Court was that payment in lieu was prompted by a letter from the employee’s solicitor’s requesting payment, which was made on 17 December 2017. The Court noted that the employee did so in reliance of clause 10 of the contract. Therefore, two issues arose. Firstly, if the employee was dismissed on the date of dismissal without either contractual or statutory notice then section 1(b) of the 1977 Act applies. The Court agreed that under this section the earliest date of termination for the employee would only add one week onto 30 November 2017 which would still be insufficient for the employee in this case to bring a claim.

Secondly, the Court held that if the employee relies on the terms of the contract to seek payment in lieu of notice, the employee, through his solicitor approbated the contract and cannot seek to reprobate it now. The Court referred to Superwood Holdings plc v Sun Alliance & London Insurance plc [1995] 3 I.R. 303 where it was quoted with approval that “... the repudiating party cannot be allowed to approbate and reprobate...”. The Court stated a similar position was adopted in Manor Park Homebuilders Limited v AIG Europe (Ireland) Limited [2009] 1 ILRM 190.

Having regard to section 7(1) of the 1973 Act “Nothing in this Act shall operate to prevent an employee or an employer from waiving his right to notice on any occasion or from accepting payment in lieu of notice". The Court held that the effect of this subsection is that where an employee waives his or her entitlement to notice or accepts payment in lieu of notice then their right to notice under section 4 is extinguished. In this case, the employee was deemed to have accepted the payment in lieu of notice as he had his solicitors write to the employer seeking the payment and quoted the provision of his contract.

The Court therefore overturned the WRC decision, including the award of €45,000, and held the “date of dismissal” in this case was 30 November 2017, being the date, the employment came to an end. Therefore, the employee did not have requisite 12 month’s service to bring an unfair dismissal claim under the Unfair Dismissal Act, 1977, meaning the Court had no jurisdiction to hear the employee’s claim under the Act.

Key takeaways

The issue of the date of dismissal is far from settled and will continue to create its own difficulties in employment law claims. However, this case has clarified that where it had been agreed to make a payment in lieu of notice, then the date of dismissal will be the date on which notice is given. A clause to this effect is usually included in the contract of employment. However, it would be prudent for employers to have an employee sign that they are accepting payment in lieu of notice and therefore have no further entitlement to notice, at the time of giving notice.

Just to note that this does not apply for the purpose of redundancy terminations, as the termination date in a redundancy is the date (statutory) notice expires. So even though an employee might finish up and leave the place of employment on the earlier date, their statutory redundancy payment should be calculated to the end of their statutory notice period. This is set out in section 7(2) “In any case where an employee accepts payment in lieu of notice, the date of termination of that person's employment shall, for the purposes of the Act of 1967, be deemed to be the date on which notice, if given, would have expired.”