No Fault Dismissals - Case Law Update

Introduction

Further to our previous Insight on no fault terminations (see here) the issue has once again come before the High Court in the highly publicised case of Philip Nolan v Science Foundation Ireland [2024] IEHC 368.

Background

The background to this case is that on 27 May 2024, the Board of Science Foundation Ireland (“SFI”) terminated Mr. Philip Nolan’s employment as the Director General of the organisation on the basis of a “no fault termination”. Following the notification of the decision to dismiss him, Mr Nolan on 30 May 2024 obtained an interim injunction to restrain SFI from taking any further steps on foot of the decision to dismiss him.

At the hearing of the interlocutory application, Mr Nolan contended that he was dismissed due to allegations of misconduct. He argued that the decision had been reached without affording him any fair procedures and that his dismissal was therefore unlawful. SFI argued that Mr Nolan had not been dismissed for misconduct reasons, but rather, had been dismissed in accordance with the provisions of his employment contract and therefore was not entitled to fair procedures.

The key question for the Court was whether Mr Nolan was dismissed for misconduct and therefore entitled to fair procedures, notwithstanding SFI’s claim that the termination came pursuant to his contract terms.

Allegations of Misconduct

In evidence given to the Court, it was submitted that in December 2023 the chair of the Audit and Risk Committee of SFI received five protected disclosures from senior members of staff, each making allegations against Mr Nolan. The allegations included complaints of bullying and breaches of the requirements of good corporate governance. An investigation was established and an independent investigator appointed to conduct an investigation into these allegations.

The investigator found that the Plaintiff’s behaviour did not amount to bullying but concluded that there were instances of inappropriate behaviour by Mr Nolan and that this could ground allegations of gross misconduct. In respect of two of the protected disclosures, it was found that the behaviour was at the upper end of the spectrum of inappropriate behaviour, just below bullying. Mr Nolan strongly rejected the allegations.

Decision

Applicable Law

In considering the relevant legal authorities, Mr Justice Rory Mulcahy restated the principles concerning the grant of an interlocutory injunction as set out in Merck, Sharp & Dohme Corporation v. Clonmel Healthcare Limited [2019] IESC 65, [2020] 2 IR 1, which recalibrated the Campus Oil test. Furthermore, he noted that in order to obtain an injunction to prevent the termination of employment, it is necessary to demonstrate not just a fair question to be tried but a strong case likely to succeed at hearing, as per Maha Lingam v. HSE [2005] IESC 89, [2006] 17 ELR 137.

Mulcahy J also referred to O’Donovan v. Over-C Technology Limited [2021] IECA 37, where the Court of Appeal held that there was no requirement for fair procedures where it was accepted that the dismissal was on grounds of poor performance.

Strong Case

Ultimately, the High Court was not satisfied that Mr Nolan had established a strong case that he had been dismissed on grounds of misconduct. The affidavits filed on behalf of SFI stated clearly that the Board’s decision to dismiss Mr Nolan was made due to the dysfunction in the organisation, rather than on grounds of misconduct. Although Mulcahy J acknowledged that this dysfunction was connected with the matters of the protected disclosures, he stated that the affidavits make clear that it did not base its decision on grounds of misconduct.

Mulcahy J did question SFI’s characterisation of Mr Nolan’s dismissal as a “no fault termination”, as the affidavits sworn implied that the Board considered the Plaintiff was at “fault” for the dysfunction in the operation of SFI. Mulcahy J said that SFI seems to suggest that Mr Nolan was dismissed for what was described as ‘poor performance’ in the Over-C Technology case which, as mentioned, makes clear that fair procedures would not be required in such instances.

Least Risk of Injustice

Mulcahy J considered even if the strong case threshold was met, it would not be appropriate to grant an order requiring SFI to facilitate Mr Nolan’s return to work as it would involve the Court micro-managing Mr Nolan’s employment and undermine SFI’s ability to ensure its duty of care to all of its employees.

Mulcahy J stated that there was a very serious question over whether the employer/employee relationship between the parties could ever be repaired. He stated that the least risk of injustice would not have been served by granting Mr Nolan an injunction restraining his termination.

Conclusion

Ultimately, Mr Nolan was unsuccessful in his application for an interlocutory injunction. This case serves as a welcome clarification for employers on the law surrounding no fault dismissals and the threshold for employees to reach in seeking the intervention of the courts in such cases.