ADJUDICATION OFFICER DECISION/RECOMMENDATION
Adjudication Reference: ADJ-00005779
Complaint/Dispute Reference No.
Date of Receipt
Complaint seeking adjudication by the Workplace Relations Commission under Section 14 of the Protection of Employees (Fixed-Term Work) Act, 2003
Complaint seeking adjudication by the Workplace Relations Commission under Section 14 of the Protection of Employees (Fixed-Term Work) Act, 2003
Date of Adjudication Hearing: 25/04/2017
Workplace Relations Commission Adjudication Officer: Jim O'Connell
In accordance with Section 41 of the Workplace Relations Act, following the referral of the complaint(s)/dispute(s) to me by the Director General, I inquired into the complaint(s)/dispute(s) and gave the parties an opportunity to be heard by me and to present to me any evidence relevant to the complaint(s)/dispute(s).
Complainant s Submission
- The Complainant has been employed by the Respondent since December 2nd 2002 as its Chief Executive. For more than 14 years, he has been employed on a series of fixed-term contracts, in contravention of section 9 of the Protection of Employees (Fixed-term Work) Act 2003 ("the Act of 2003"). The Respondent has failed to provide any, or any lawful, objective justification for its failure to provide the Complainant with a contract of indefinite duration.
- The Complainant understands that the decision to refuse him a contract of indefinite duration is one that was made by the Respondent's main shareholder, the Minister for Transport, Tourism and Sport ("the Shareholder"). That decision was based on certain policy considerations. We submit that these policy considerations are demonstrably in violation of EU law, a fact that is so clear that the Shareholder cannot be ignorant of it. For example, in a recent case with very similar facts, taken by a chief executive of another State-owned company, an adjudication officer determined that these policy considerations do not amount to objective justification for failing to provide a contract of indefinite duration.
- The Complainant requests that you find that, by operation of law, the Complainant is employed on the basis of a contract of indefinite duration and that you take action that is effective, proportionate and dissuasive, further to the established jurisprudence of the Court of Justice of the European Union (CJEU) and the Labour Court.
- Factual background
- The Respondent is a commercial semi-State company. It is almost entirely owned by the Shareholder, though the Minister for Public Expenditure and Reform also owns a single share in the Respondent. There are no other shareholders. The Respondent operates under the statutory authority of the Harbours Act 1996 as amended ("the Act of 1996"). The Respondent has a number of subsidiary companies that engage in related activities. The Respondent (along with two other ports) is one of three ports in the State identified as "tier 1 ports," which is the expression that signifies ports of the highest level of strategic significance.
- The Complainant was first employed by the Respondent by a fixed-term contract issued to him on September 26th 2002 ("the 2002 Contract"). The term of the 2002 Contract was from December 2nd 2002 to December 1st 2007. The 2002 Contract contained provision for up to two annual renewals (to December 1st 2008 and December 1st 2009 respectively). These renewals were to occur unless either party invoked a termination provision provided therein. The relevant provisions of the 2002 Contract are as follows.
PERIOD OF EMPLOYMENT
2002 Contract initial term 02/12/2002 to 01/12/2007
First renewal 02/12/2007 to 01/12/2008
2nd Renewal 02/12/2008 to 01/12/2009
3rd Renewal 02/12/2009 to 01/12/2012
4th Renewal 02/12/2012 to 01/12/2016
2016 extension on a without prejudice
"The Executive shall be deemed to have commenced employment on the 2nd day of December 2002 for an initial fixed term of five years. After which time, a rolling annual Contract will apply which limits the contractual obligations of both parties hereto to a maximum period of twelve months for the remainder of the Executives appointment, which will be a maximum term of office not exceeding seven calendar years in any event. This Agreement shall be terminable on three months' notice given at any time by either party in writing to the other provided that this Agreement shall automatically terminate on seven years after commencement without the necessity of any notice being given by either party and shall not be capable of renewal after such date. A new competition will then be held for the position. The Executive will be permitted to compete in this new competition."
On September 26th 2002, when signing this contract, to avoid any doubt, the Complainant wrote to the Respondent setting out his understanding of how that clause 2 "Period of employment" would operate in practice.
He wrote as follows.'
"1. Period of Employment
- That I will commence employment on the 2nd December 2002 and will continue for a fixed term of five years.
- That unless either party gives not less than 3 months' notice to the other, prior to the expiry of the five year term, my employment shall continue for a secondary period of 12 months. In addition, unless either party gives not less than 3 months' notice to the other, prior to the expiry of the secondary period of 12 months, my employment shall continue for one more period of 12 months. Following the expiry of this 12 month period, either party shall not be capable of renewal and the employment shall terminate.
- That on final termination of that employment, I may apply to compete in any competition for the post of Chief Executive with the company.
- That after expiry of the initial 5 years, either party may terminate the contract on giving 3 months' notice to the other.
At the expiry of the five year term of the contract, neither party gave notice of termination of the contract further to paragraph 2. The contract was automatically renewed for one year (until December 1st 2008} further to the provisions of that paragraph. The Respondent did not provide the Complainant with the statement (required by section 8 of the Act of 2003) justifying the Respondent's failure to provide the Complainant with a contract of indefinite duration at that time.
At the expiry of the one year term of the renewed contract, neither party gave notice of termination of the contract further to paragraph 2. The contract was automatically renewed again for a further year (until December 1st 2009) further to the provisions of that paragraph. The Respondent did not provide the Complainant with the statement (required by section 8 of the Act of 2003) justifying the Respondent's failure to provide the Complainant with a contract of indefinite duration at that time.
The Complainant was obliged to compete for the post of Chief Executive of the Respondent (his own job) in 2009. He was successful in that competition. He received a contract dated 1st December 2009 ("the 2009 Contract")' which purported to be for a fixed term from 2 December 2009 to December 1st 2012, with provision for a renewal for a further period of not more than four years thereafter. The relevant provisions of the 2nd Contract are as follows:
“ The contract will commence of (sic) 2nd. December 2009. The contract is for an initial three year period. If the complainant is considered by the respondent to have carried out his or her duties to on acceptable standard, he or she may be offered one further contract of not more than four years. In any event, the appointment will be for a duration of no longer than seven years. If the Board proposes to renew the contract the complainant must be informed in writing the objective grounds justifying the renewal and the failure to offer a contract of indefinite duration by not later than the date of renewal of contract”.
“ The complainant will retire at the end of (a) The three year contract or (b) The end of the further four year contract. The complainant will not be entitled to any rights or benefits conferred by the Unfair Dismissals Acts, 1977-2001, or any amendments thereof upon his employment terminating due to the end of the contract”.
Nothing in the above contract shall allow the complainant to remain in place after the expiry of seven years from the date of the first appointment and shall not be appointed to any other position within the Company or Subsidiary thereof after the expiry of the contract."
When granting the 2009 Contract, the Respondent did not provide the Complainant with the statement required by section 8 of the Act of 2003 justifying the Respondent's failure to provide the Complainant with a contract of indefinite duration at that time.
In 2012, after the expiry of the three year period provided therein, the 2009 Contract was renewed for a further period of four years as provided therein. The renewal was effected by letter dated June 11th 2012. That letter purported to contain a statement further to section 8 of / the Act of 2003. The renewed contract was to have effect until December 1st 2016. ·
At the end of a Board meeting held on October 19th 2015 the Chairman raised the matter of the term of the Complainant's contract of employment. The Chairman requested that the Complainant would continue the duration of his employment until late in 2018. In response, the Complainant indicated that he would do so. This was agreed by the Board and the Chairman / indicted that he would discuss the matter with the Shareholder at the first opportunity.
The Complainant anticipated that the Shareholder would approve the Board's request in due course. A lengthy process followed, in which the Shareholder declined to approve the Board's/ request for the Complaint to stay beyond December 1st 2016.
The Complainant found the delayed nature of the process very distressing. Because the Complainant had agreed to remain in the employment until 2018, he passed up a significant employment opportunity with an unrelated company.
The Complainant did his best to achieve clarity in that process. It was at all times clear to him that the Respondent's Board of Directors ("the Board") were satisfied with his performance and wished for him to remain in his post. The Board believed that it needed the consent of the Shareholder before it could offer the Complainant a further contract renewal.
Further to the provisions of section 8(4) of the Act of 2003, the facts that:
(a) the Respondent failed to provide any statement under section 8 of the Act of 2003 in 2007, 2008 or 2009; and
(b) the statement provided in 2012 was evasive or equivocal;
permits you to draw "any inference [you] consider just and equitable" in this case. We submit that the appropriate inference to be drawn in this case is that the reason no proper statement was given on those dates was because no objective justification existed for the Respondent's failure to grant the Complainant a contract of indefinite duration.
We respectfully submit that it could not be clearer that the Respondent (and specifically the Shareholder) was fully aware at all material times that it has no legal basis to deny the Complainant a contract of indefinite duration. It nevertheless refused to give him such a contract. It has kept the Complainant in a state of uncertainty about his job for more than 14 years. It has put the Complainant through an intensely stressful and disruptive process. It has forced him to undertake the expensive and humiliating process of litigating against the company of which he is the chief executive. Because it was the Board who requested the Complainant to stay in employment after December 1st 2016, and the Complainant agreed to that request, the Complainant passed up other significant employment opportunities that were available to him.
In summary, we submit that the Shareholder has procured a situation that is manifestly an abuse of process.
The Labour Court has frequently adverted to the fact that Member State Courts and tribunals, when they find that an employer has been in breach of obligations to employees that are rooted in European law, must provide redress that is effective, proportionate and dissuasive further to the principles set down by the CJEU in Von Colson and another v Land Nordrhein
Westfalen (1984) Case C-14/83.23
If a clear line is not drawn in this case then the Shareholder is likely to continue to violate its legal obligations.
The respondent submitted;
The Complainant /s contract dated 26th September commencing on the 2002 was for an initial period of five years commencing on the 2nd December 2002 and was a contract for a fixed term of five years with an option of two further years. That contract expressly provided that it "shall automatically cease on seven years after commencement without the necessity of any notice being given by either party and shall not be capable of renewal after such date. A new competition would then be held for the position".
The Complainant was successful in the competition and was furnished with a new contract dated December 1st 2009. The "2009 Contract" was for an initial period of three years and subject to Board approval, the Chief Executive may be offered one further contract of not more than four years. "In any event the contract will be for a duration of no longer than seven years. If the Board proposes to renew the Contract the complainant must be informed in writing of the objective grounds justifying the renewal and the failure to offer a Contract of Indefinite Duration by not later than the date of renewal of contract".
The 2009 Contract goes on to state that at paragraph 1.6 "the complainant will retire at the end of (a) the three year contract or (b) at the end of appropriate, other appointing bodies) should be in a position to decide periodically whether to appoint a different Chief Executive.
This approach was, we believe, reflected in the position pertaining to other senior appointments in the public sector such as secretaries general in the civil service, local authority managers and other such offices.
The Respondent is obliged to comply with Government Policy.
However the Chairman of the respondent has requested that I would bring to the attention of the Adjudicator that Complainant has done sterling work for the Respondent and that they are presently involved in the very significant provision and financing of additional facilitiata time when complainant/s expertise, knowledge and experience is a critical requirement having regard to the absolute necessity for additional Port infrastructure.
It is accepted by my client that, in effect, there was continuity of service in this case, insofar as a P45 did not issue to complainant on the termination of his original (2002) contract.
Whilst recognising and fully respecting Government policy on this matter it is the express wish of the respondent that complainant would continue in his present role to pursue the continued promotion of the respondent activities as a Tier One facility for customers, the community in general, and in managing and controlling the cost base for respondent’s location
On the basis of the evidence presented to the hearing I find as follows:
Time Limit - The complainant presented a complaint to the Adjudicating Officer on 16th November 2016 and covers the period commencing from the 15th may 2016. I find that the respondent at all times treated the claimant as a fixed term employee and that at the time of his complaint and during the six-month period covered by his complaint he was employed on a fixed term basis. I find that the provisions of the Act cover the claimant's employment and I also find that the complaint was presented within the time limits set down in the Act.
- Applicable Contract of Employment - I accept the claimant's evidence that he was given a second contract by the then Chairperson and that that contract provided that the agreement "shall be for an initial term of 3 years commencing 2nd December 2002 and expiring on 1st December 2007 and thereafter the term shall be on a rolling one year basis with a maximum permissible aggregate period of 4 years." However I find that the first contract issued to the claimant, which provided that the "term of agreement shall be on a rolling one year basis with a maximum permissible period of seven years commencing on 2nd December 2002 and expiring on 1st December 2007 was not revoked by the respondent and they did not replace it with the second contract.
I find that the first contract remained the claimant's contract of employment.
I find that both parties entered into the one year contract commencing 2nd December 2016 on a without prejudice basis and on the understanding that the claimant would process his complaint under the Act.
- Section 8 - Written Statement
The complaint was presented to the Workplace Relations Commissioner on the 16th November 2016 and covers the period commencing December 2016. I find that the complaint in relation to Section 8 is out of time in so far as it relates to the renewal of the claimant's fixed term contract on any date prior to 2nd December 2016. In relation to the renewal of his fixed term contract with effect 2nd December 2016, I find that that the respondent did provide the claimant with a written statement in accordance with the provisions of Section 8(2) of the Act. I find that no breach of Section 8 of the Act occurred.
- Section 9 - Successive fixed-term contracts
- Rolling Contracts - Labour Court Determination No. FTD085 Dublin Airport Authority- Shannon Airport & Brendan Keehan & Peter Flannery addressed the issue in that case of the legal effect that should be ascribed to the respondent's decision in that case to extend the claimant's contract on a 'month-to-month' basis. The respondent in this case defined rolling contracts as meaning that the 12-month period rolls forward continuously and that at any time during the claimant's employment the respondent's contractual obligation to him is limited to a maximum of 12 months. It is clear in this case that the claimant was not a permanent contract of indefinite duration employee. It is also clear that the respondent intended the claimant's employment to be for terms of no longer than 12 months at any one time and subject to a maximum aggregate duration of 7 years.
I find that the claimant was employed on a series of rolled-over fixed term contracts. Section 2 of the Act provides that "renewal" includes extension and cognate words
shall be read accordingly". I find that the claimant's employment commenced on 2nd December 2002 i.e., before the Act came into operation and therefore Section 9(1) applies.
I find that with effect from December 1st 2007 he had completed his fourth year of continuous employment and that his contract was renewed on more than one occasion after that date. Following the first renewal (after completion of three years continuous employment) on 2nd December 2007, renewals of the claimant's contract on a fixed term basis would contravene the Act unless objective grounds justifying each renewal existed at the time of the renewals.
Objective Grounds - The respondent argued that the policy contained in the Buckley Report and adopted by Government reflected an aim of Government's economic and social policy and that it is an appropriate measure chosen to reflect that aim. The seven year maximum rolling annual contract is part of a wider piece designed to improve productivity in the commercial semi state sector and is clearly in the public good and it they submitted that the measure is a necessary and proportionate objective in the context where higher rates of pay were introduced to match the fixed tenure provided to Commercial Semi State Chief Executives.
The Buckley Report was concluded and implemented prior to Council Directive 1999/70/EC of 28th June 1999 concerning the framework agreement on fixed term work concluded by ETUC, UNICE and CEEP and prior to the enactment of the Protection of Employees (Fixed Term Work) Act in 2003. The State did not seek to exclude Chief Executives of Commercial Sate Companies from the provisions of the Council Directive and neither was this category of employee excluded from the provisions of the Act. Section 17 of the Act excluded members of the Defence Forces; Trainee Garda Siochana and Nurses in Training.
The claimant's contract of employment Paragraph 2 - Period of Employment - covers the term of the Agreement. 2.1 states, inter alia, "the term of this Agreement shall be on a rolling one year basis with a maximum permissible period of sever years commencing on 2nd December 2007 and expiring on the 1st December 2008 " 2.2. states "This Agreement is subject to and conditional upon the observance by both parties hereto of the key recommendations (herein after called "the Guidelines") of Report No 37 of the Review Body on Higher Remuneration which introduced the concept of rolling annual contracts of employment and any other recommendation which amend, extend, consolidate or replace the Guidelines. The Guidelines are set out in the Schedule to this Agreement and form an integral part of the terms and conditions of this Agreement in all respects". 2.3 states "Where a conflict or discrepancy arises between the terms of this Agreement and the Guidelines, the Guidelines shall prevail in all circumstances." 2.4 states "The Executive shall be precluded from re-employment by the Company (or any holding, subsidiary or associated company) following the determination of this Agreement (howsoever arising).
I find that the claimant's employment commenced approximately 6 months prior to the coming into operation of the Protection of Employees (Fixed Term Work) Act 2003. I find that the implication of the rolling one-year contract was that on any day of the claimant's employment his entitlement was to employment for a 12- month period.
I find that, contrary to the provisions of Section 8, the respondent did not at any renewal date (prior to 2nd December 2016 ) give the claimant a written statement informing him of the objective grounds justifying the renewal of his fixed term contract and the failure to offer a contract of indefinite duration, at the latest by the date of the renewal.
I find that the reference in the claimant's original contract to the Buckley Report and "the Guidelines" was not identified by the respondent at any time (prior to the renewal of 2nd December 2016) as the objective grounds justifying the renewal of his contract on a fixed term basis and neither did the respondent identify or refer to the objectives ascribed to the Buckley report and its proposal of rolling annual contracts with a maximum duration of 7 years linked to improved remuneration packages for Chief Executives of Commercial State Bodies.
I find that at no time did the respondent identify precise and concrete circumstances relevant to the claimant's post that constituted objective reasons justifying his continued employment on a fixed term contract and not on a contract of indefinite duration. In all the circumstances I find that there were no objective grounds justifying the renewal of the claimant's contract on a fixed term basis with effect from the 2nd December 2007 and in accordance with the provisions of Section 9 (3) I find that by operation of law the claimant's contract of employment effective 2nd December 2007 is deemed to be a contract of indefinite duration.
Section 41 of the Workplace Relations Act 2015 requires that I make a decision in relation to the complaint(s)/dispute(s) in accordance with the relevant redress provisions under Schedule 6 of that Act.
I declare that the complaint is well founded in so far as the claim under Section 9 is concerned. I require the respondent to comply with the provisions of Section 9(3) and to deem the claimant's contract of employment to be a contract of indefinite duration with effect from 2nd December 2007.
I find that the complainant was placed under a lot of strain while waiting for a response from the appropriate shareholder this was unnecessary. The complainant had to incur substantial legal costs to protect his rights..
I find that for breach of his rights I am awarding €9,000 in compensation.
Dated: 21st July 2017
Workplace Relations Commission Adjudication Officer: Jim O'Connell