ADJUDICATION OFFICER DECISION
Adjudication Reference: ADJ-00023978
Parties:
| Complainant | Respondent |
Anonymised Parties | A Sales Director | An IT Company |
Representatives | Ken Stafford Management Consultancy Services | Management Support Services (Ireland) Ltd |
Complaints:
Act | Complaint Reference No. | Date of Receipt |
Complaint seeking adjudication by the Workplace Relations Commission under Section 8 of the Unfair Dismissals Act, 1977 | CA-00030586-001 | 31/08/2019 |
Complaint seeking adjudication by the Workplace Relations Commission under section 6 of the Payment of Wages Act, 1991 | CA-00030586-002 | 31/08/2019 |
Date of Adjudication Hearing: 11/03/2021
Workplace Relations Commission Adjudication Officer: Pat Brady
Procedure:
In accordance with Section 41 of the Workplace Relations Act, 2015 and/or Section 8 of the Unfair Dismissals Acts, 1977 - 2015, following the referral of the complaints to me by the Director General, I inquired into the complaints and gave the parties an opportunity to be heard by me and to present to me any evidence relevant to the complaints.
Background:
The complainant had been employed by the respondent as a Sales Director and was made redundant on August 28th 2019. She complains that her selection for redundancy was unfair and that she was unfairly dismissed. She also claims outstanding wages arising from commission payments due to her, but not paid. The first hearing took place on November 11th, 2020 and was adjourned to enable further detailed submissions, specifically in relation to the Payment of Wages complaint. The second hearing took place on-line on March 11th, 2021. |
Summary of Respondent’s Case:
The company operates in the IT sector. The complainant was employed as a Sales Director on November 20th, 2017 and performed satisfactorily in her role. On June 25th 2019 she was invited to a meeting at which she was told that her position was ‘at risk‘ of redundancy. Even prior to this there had been discussions with the complainant as far back as February 2019, and she accepted that there was a problem about falling sales. Details were submitted regarding the shortfall in sales in 2018 and 2019 when the complainant achieved only a small fraction of the targets set for her. This was confirmed to her in writing the following day. A second meeting, the first formal consultation meeting, took place on July 4th, 2019 at which she was again told that there was not enough business to justify her role and that she was at risk of redundancy. A number of alternatives were considered. A written record of the meeting was provided to the complainant and she made several corrections to it. The next meeting, the second formal consultation meeting on July 29th and a review of the position took place at this meeting, including the steps that had been taken to avoid the redundancy, and the availability of alternative positions. None of these was suitable and the proposed redundancy was confirmed. As the complainant did not qualify for a statutory redundancy payment she was offered a gratuity of one month’s pay, in addition to statutory entitlements. The respondent says that the decision to make the complainant redundant was a result of a decision to carry on its business with fewer employees and to combine the work carried out by the complainant with that of another employee. It submits that this is in entirely in accordance with the provisions in the Redundancy Payments Act and section 6 (4) (c) of the Unfair Dismissals Act 1977. In summary, the termination of the complainant’s employment was solely and entirely a direct result of the position being made redundant. Prior to that decision there had been discussions with her and a consultation process during which alternatives were discussed but could not be found. Her position no longer exists and therefore a genuine redundancy insisted. Regarding selection, the redundancy involved a ‘pool of one’, and no other employees were considered for selection. There is no specific process defined for the conduct of a redundancy process beyond that it must apply fair procedure and in this case the company did. Complaint CA-00030586-002 Payment of Wages Act The complainant has claimed that she is owed about €120,000 in unpaid commission. The respondent says that here are no outstanding wages due to the complainant and that she had been paid all her due entitlements at the time of the termination of her employment. The complainant had an entitlement in her contract of employment to a commission payable on ‘New Client Sales’ The relevant clause in the contract is as follows. In addition to your basic salary you will also be eligible for Sales Commission on New Client Sales. The scheme is based on leading the successful sale of professional services. An allocation of 5% of the service revenue will be set aside for sales commission payment. Commission Payment will be paid quarterly based on completed sales in previous fiscal quarter. The contract continued with a requirement that the employee submit her figures to the company for checking, following which they would then be approved and paid. The complainant was paid a bonus in 2018 and 2019, (details submitted in evidence). In the first place, the complainant did not at any time make a claim for the payments which now form the basis of her complaint under the Payment of Wages Act, and this is critical; she even accepted that some of the payments now being claimed were not eligible for payment. In any event she is not owed any of the amounts claimed arising from the contractual entitlement and the definition of eligibility contained there. |
Summary of Complainant’s Case:
The complainant says that the redundancy is not a genuine one. It was clear to the complainant from her first meeting with the company that the CEO wished to terminate her employment. Around the same time, he had been making very positive statements about the company’s business prospects and this was demonstrated by the recruitment of a senior person. She was never told what the selection criteria for redundancy would be. The sales information was manipulated to cast the complainant in the worst possible light. A change in the financial year also had this effect making her performance appear worse than it was. The proposed alternative positions were not genuine. Regarding the claim for commission, her entitlement arose in respect of new business and this should include new business from existing clients, which was not considered. Also, the classification of certain business to justify its exclusion from consideration for bonus payment had, in the past, been considered for payment. She says that she was unable to access the information she needed to make the claims for commission while she was still employed. |
Findings and Conclusions:
The facts of the case are well set out above. Looking at the complaint of unfair dismissal first, the complainant was recruited in November 2017 to a position as a Sales Director to generate new business in the Irish market. Unfortunately, according to the respondent’s evidence this did not work out. The targets set for the role were not met in 2018 or 2019 and the complainant fell short by some considerable distance; initially achieving about half of the target set, and continuing to deteriorate further, even against targets that had been further revised downwards. It was not disputed that there had been a series of conversations between the parties which reviewed the ongoing performance issues. The complainant offered some explanations about the impact of a change in the financial year, but this failed to explain the shortfall. She also argued that she was excluded from some projects that could have improved her performance. Again, these related to isolated projects and from the general evidence submitted the failure of the complainant to achieve the targets provided a reasonable basis for the respondent to re-evaluate the position. I note in particular that the respondent submission was complimentary to the complainant in this regard, saying, somewhat generously in the circumstances that ‘there have never been any issues with her work or performance’. This suggests that whatever the factors contributing to the disappointing performance (against what was presumably expected when the complainant was recruited to the position) they were in large measure outside her control. The respondent submitted that the problem was that there was simply not enough business in Ireland I accept therefore, on the basis of the evidence that a genuine redundancy situation existed. This meets the first pillar of a defence of redundancy to a complaint of unfair dismissal. The procedure then falls under scrutiny. It is well established that the overriding principle in a redundancy situation is that of impersonality. By this is meant that it is a job, or post that is initially defined as being redundant. The Redundancy Payments Acts 1967 to 2007 provides the legislative basis for assessing redundancies. A valid redundancy situation is deemed to have occurred where a dismissal occurs "wholly or mainly" from one of the following situations: 1.Where an employer has ceased or intends to cease to carry on the business for the purposes for which the employee was employed by him, or has ceased or intends to cease to carry on that business in the place where the employee was so employed. 2.Where the requirements of the business for an employee to carry out work of a particular kind, in the place where he was so employed, ceased or diminished, or are expected to cease or diminish. 3.Where an employer has decided to carry on the business with fewer or no employees, whether by requiring the work for which the employee had been employed, (or had been doing before his dismissal) to be done by other employees or otherwise. 4.Where an employer has decided that the work for which the employee has been employed should henceforth be done in a different manner for which the employee is not sufficiently qualified or trained. 5.Where an employer has decided that the work for which the employee has been employed (or had been doing before his dismissal) should henceforth be done by a person who is also capable of doing other work, for which the employee is not sufficiently qualified or trained. It should be noted that a redundancy will not be a valid defence to a claim for unfair dismissal in circumstances where: 1.The employee was unfairly selected for redundancy or was selected for redundancy in a manner not consistent with his contract of employment or the previous manner in which redundancies had been dealt with in the company provided that there is no special reason such as would justify a deviation from prior standard practice. Or, 2.Where the redundancy is not a genuine redundancy situation. Where an employee alleges that they have been unfairly selected for redundancy the onus of proving fair selection and therefore a fair dismissal rests with the employer. The formal consultation process is set out above in the evidence of the respondent which submitted that there was a ‘pool of one’ for the selection process. This can arise, but a particular responsibility then arises to ensure that the section process is fair and objective, and that the sequence of events of identifying the post first, and the person second is preserved to ensure the principle of impersonality is respected. It is certainly insufficient on its own to submit that a person is automatically in a pool of one because she was the postholder in the position selected for redundancy. It is necessary to show that there is something very specific about the skillset of the person holding the position that renders her unsuited for other positions, and something equally specific about the requirements of the position. The distinguished UK employment Judge McMullan QC has noted. It is in legal if not grammatical terms correct to say that the selection of the Claimant as from of a pool of one was right. Selection only operates, when fairness is concerned, where there is a number of similarly qualified possible targets for redundancy. In this case there was only him. The decision by management to make that post redundant inevitably put him at risk. Once the Tribunal had acquitted the Respondent of any criticism about the procedure it adopted, then it seems to us that the Tribunal would not have been correct to interfere with any decision of the management that caused the redundancy of the Claimant.
Halpin v Sandpiper Books Ltd UKEAT/0171/11/LA
While the complainant saw the attempts to identify alternative employment for her as tokenism, it would not be uncommon in smaller businesses that alternatives for senior, relatively specialised managers would be difficult to find. A breach of fair procedure requirements will arise where no attempt is made to consider alternatives rather than the failure to actually find one. Understandably, from the moment it is flagged the apparent inevitability of a termination will be a source of great distress to a complainant, (she described the consultation process as a ‘box ticking exercise’). In circumstances where it falls within the criteria set out above and is properly processed, as it was here, and the necessary boxes are ‘ticked’ from a process point of view, as is required by the obligations of fairness it will not render the termination unfair. An element of the complainant’s case involved identifying apparent inconsistencies and anomalies in statements made by the respondent and certain other actions. Ultimately, these were without merit and represented a degree of ‘clutching at straws’ that did not go to the core of the validity of the redundancy. The recruitment of a senior manager to the company to which she referred was to a different entity. In respect of complaint CA-00030586-002 under the Payment of Wages Act a very considerable amount of time over the two hearings was devoted to a detailed, individual examination of each of the complainant’s claims. (There were thirty-eight in total). It was a very substantial claim, in the region of €120.000.00. She faced two obstacles. The first was that she was required to claim the payments and had not done so. Her justification was that she could not access the necessary information to do so. This was weak and unpersuasive, and I am satisfied that she fully understood the need to claim as any eligible business fell due for a commission payment. Her failure to claim at the time undermines her claim for payment now and it seems to have been constructed for the purposes of her unfair dismissal complaint. Given the very significant sum involved it is entirely lacking in credibility that the complainant actually believed that this money was due to her while she was still employed but did not make a claim, or that the difficulty in accessing the necessary information actually prevented her. A more significant obstacle arises in respect of the interpretation of the following clause in her contract. ‘In addition to your basic salary you will also be eligible for sales commission on new client sales. This scheme is based on leading the successful sale of professional services. An allocation of 5% of the service revenue will be set aside for sales commission payment. Commission payment will be paid quarterly based on completed sales in previous fiscal quarter.’ There are a number of criteria here; one is that it be new business, and another that she ‘lead’ the successful sale. As noted above, every single claim made by the complainant was the subject of review and analysis over both hearings and took into account the criteria set out above in the contract in detail. In some cases, she had a degree of involvement but not sufficient to qualify for the requirement to have led the negotiation. In others it did not meet the criterion of being new business. (In one case it was agreed that a payment did arise, and the complainant confirmed that this was paid to her after the hearing. One other valid claim had been paid before the hearing). I am satisfied and find that no further commission remained payable by reference to the criteria set out in her contract. I find that the claims made were not eligible for payment and the complaint under the Payment of Wages Act is not well-founded. |
Decision:
Section 41 of the Workplace Relations Act 2015 requires that I make a decision in relation to the complaint in accordance with the relevant redress provisions under Schedule 6 of that Act.
Section 8 of the Unfair Dismissals Acts, 1977 – 2015 requires that I make a decision in relation to the unfair dismissal claim consisting of a grant of redress in accordance with section 7 of the 1977 Act.
For the reasons set out above complaints CA-30586-001 and 002 are not well founded. |
Dated: 26th April 2021
Workplace Relations Commission Adjudication Officer: Pat Brady
Key Words:
Unfair Dismissal, Redundancy, Payment of Wages |