EMPLOYMENT APPEALS TRIBUNAL
APPEAL OF: CASE NO.
HL Commodity Foods (Manufacturing) Limited UD1363/2012
against the recommendation of the Rights Commissioner in the case of:
Eileen Keehan -respondent
UNFAIR DISMISSALS ACTS, 1977 TO 2007
REDUNDANCY PAYMENTS ACTS, 1967 TO 2007
I certify that the Tribunal
(Division of Tribunal)
Chairman: Mr J. Lucey
Members: Mr. W. O'Carroll
Mr F. Dorgan
heard this appeal at Limerick on 16th June 2014
Appellant: Ms Aoife Hennessy, Sweeney McGann, Solicitors, 67 O'Connell
Respondent: Mr. Glenn Cooper, Dundon Callanan, Solicitors, 17 The Crescent, Limerick
This case came before the Tribunal by way of an employer appeal of the Rights Commissioner Recommendation ref: r-119031-ud-11 under the Unfair Dismissals Acts, 1977 to 2007 and a direct appeal under the Redundancy Payments Acts, 1967 to 2007. Hereinafter the appellant shall be known as the employer and the respondent the employee.
The employer opened in 2000 to manufacture processed cheese and ‘functional dairy products.’ The specialised functional ingredients are for use in the industrial and food service industry. The hub of the business is the production room. Research and development is also a significant part of the business. There is also a trading company that runs parallel to the employer. This sister company is responsible for buying and selling the ingredients for the employer, it also provides storage and packaging work to the employer on a contractual basis. All of the administration support services are carried out free of charge by the trading company. The employee was employed by the named employer.
The profit level was constant when the employee started work, but the manufacturing side of the business was never very profitable. By 2010 manufacturing was operating at a loss; that’s when the Managing Director (G) critically looked at the operation. The volume of orders from the employer’s 3 major customers significantly decreased; in one case by 73%. This meant there was only enough production work for 1-2 days per week. If there is no production work the staff can be re-directed to packaging work for the sister company. The situation left G with no option but to look at restructuring.
There was a consultant kept on retainer that had been involved in development of 2 of the most successful soft cheese products, this was changed to him being paid for any work he did (roughly one week whenever there was an idea to develop, app every few months).
There was no longer a requirement for a full 5-day week in manufacturing. There were 7 general operatives who were all reduced to a 3-day week, consequently there was no longer a requirement for an operations manager. The managing director (G) acted as the operations manager until the employee was engaged in 2008. G could revert to doing the operations manager role on a part-time basis so it was decided to make the position redundant. This decision was made at a Board meeting in November 2010. (Due to the sudden resignation of the Financial Director in December 2010 and all that ensued, making the employee’s position redundant was postponed).
The Financial Director resigned as Director in December 2010 but remained employed as the financial controller. The logistics manager also resigned at this time. On the 31st of January the financial controller suddenly resigned completely. It transpired that he and 2 colleagues from the U.K. branch of the employer (trading manager and sales manager) had left together to set up a business in competition to the employer, effective from the 1st of February 2011. The UK office closed as a result and G, as commercial manager at that time was heavily involved in trying to maintain the customers left with the employer. It was decided that the trading company would employ a business development manager to try and help the situation. The employee was fully aware of the situation.
At the end of January/February 2011 the employee told G that she had a health scare. The employee then said she would be going on sick leave from the end of February; the employee’s illness was serious. G felt that he could not inform the employee at that stage that her position was being made redundant due to the nature of her illness and his unwillingness to put her under any additional stress. There is no sick pay scheme in the employer but it was decided to pay the employee as long as possible. The employee was paid until the end of June but the employer could no longer afford to pay her salary. The employer wrote to the employee to inform her of this; the employee responded saying she would use her holidays to cover July and August and hoped to return to work in September.
The employer spoke to the employee on the phone in August; she said she had a consultant appointment on the 9th of September and would revert after that. The employee never contacted the employer so he wrote the letter of the 22nd of September informing her that her position was being made redundant. The employer had to remove the employee’s illness from the situation and think objectively about the future viability of the business. He offered to meet her and discuss the situation; this meeting took place on the 5th of October 2011. A follow up letter to the meeting was sent on the 10th of October. Other than the Managing Director and the 7 general operatives there was no alternative position in the company.
The employee wrote to the employer on the 24th of October raising some questions regarding her redundancy. This was replied to by letter of the 17th of November 2011 which included the RP50 form. By October 2011 manufacturing was operating at a loss of 80-90k. The 4 people hired were in the trading company and they were the financial controller, the logistics manager, the UK sales manager and the UK trading manager. Apart from the employee being unsuitable for these positions she did not work for the trading company. An old friend of the owner helped out the employer without pay. There was a number of other contract workers eg a Quality Control expert, none of which are directly employed by the company or do any work for the company on a regular basis. The trading company is normally profitable but due to the ex-employees setting up in direct competition it was not profitable in 2011.
The employee’s role as operations manager entailed being in charge of the day-to-day running of manufacturing in the employer. This included managing the general operatives, liaising with various government agencies and keeping all of the necessary paperwork up to date. The employee also did a lot of work for the trading company. The stand-alone manufacturing portion of the business was always very profitable.
There was ample time between the decision being made to make her position redundant and the employee going on sick leave to inform her of the decision. Following her medical appointment on the 9th of September the employee contacted the employer and informed him that she would be returning to work in 2 weeks’ time. The employee accepts that there was no further role available for her in manufacturing.
The Tribunal find that a genuine redundancy situation existed within the employer and that the employee was fairly selected for redundancy. The Tribunal therefore, upsets the Rights Commissioner Recommendation ref: r-119031-ud-11 under the Unfair Dismissals Acts, 1977 to 2007.
The Tribunal find that the appeal under the Redundancy Payment Acts, 1967 to 2007 succeeds and awards the employee a redundancy lump sum based on the following;
Date of Birth:
Date of Commencement: 25th March 2008
Date of Termination: 23rd October 2011
Gross Weekly Pay: €769.23
This award is made subject to the appellant having been in insurable employment under the Social Welfare Acts during the relevant period. Please note a ceiling of €600.00 per week applies to all payments from the Social Insurance Fund.
Sealed with the Seal of the
Employment Appeals Tribunal