Complainant

Respondent

Parties

Christopher  Kane

Rlc Transport Ltd

Representatives

Donnchadh Woulfe BL instructed by Adams Law

Act

Complaint/Dispute Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under Section 8 of the Unfair Dismissals Act, 1977

CA-00064706-001

09/07/2024

Complaint seeking adjudication by the Workplace Relations Commission under Section 8 of the Unfair Dismissals Act, 1977

CA-00064706-002

09/07/2024

Complaint seeking adjudication by the Workplace Relations Commission under Section 8 of the Unfair Dismissals Act, 1977

CA-00064706-003

09/07/2024

This matter relates to the dismissal of the managing director of the Respondent. The Respondent is a family business set up in 2014 and entirely owned by the Complainant’s sister Ms Jaqueline Kane who worked in the office but left the management of the business to the Complainant. Their parents were paid out of the business but were not active employees. Their brothers also operated a separate transport company.

In September 2023 the Complainant’s parents stopped being paid by the Respondent and the Complainant raised concerns about the Respondent’s financial position. Over the following months Ms Kane sought access to the bank accounts and discovered payments to the Complainant and his pension which raised serious concerns. She also discovered outstanding debts to revenue.

The family had a meeting on the 16th of January where the Complainant agreed to step back from the Respondent and pursue his own business instead. After the meeting then changed the password on the Respondent’s email account. He was dismissed on the 22nd of January.

The Respondent initiated High Court proceedings against the Complainant alleging he had tried to appropriate the business unlawfully. These proceedings are ongoing.

On the 9th of July 2024 the Complainant submitted three complaints under the Unfair Dismissals Act related to the same dismissal.

The Complainant made oral and written submissions and gave evidence under oath. He submits that the dismissal was procedurally unfair and in breach of the act. 

The Complainant was getting nothing for his work in building up the business it was owned by Ms Kane who he had been trying to buy out of the business. His fleet of trucks was ageing whereas his brothers firm was doing particularly well and they had been boasting about this. He thought it was time for them to start paying for his parents. He was of the view that the Respondent could no longer afford it due to repair costs and additional costs associated with a lease. He cut his own salary down at the same time significantly. In reaction to this his brother Derek engaged in a hostile takeover of the business and had the shares transferred to him. 

He did make ad hoc pension contributions out of company funds. He did receive directors loans but paid them back before his dismissal. He is not sure when exactly. He believes his salary and renumeration were reasonable. His wife was an employee of the Respondent and she had a contract of employment from August 2021. He had no one to approve these matters and Ms Kane signed off on the Company accounts without objection.

Ms Kane never put these alleged payments to him in phone calls in December 2023 before dismissal and he had no opportunity to respond to them. There was a meeting on the 16th of January where they agreed to go their separate ways. He had known that he would be dismissed at that point. He began seeking business for his new company. He accepts that he changed the email passwords and at first refused to give them over to Ms Kane.

He met with the Respondent’s major client in or around the 22nd of January at their request. It was the client who decided to not carry on using the Respondent.

Mr Woulfe BL made oral and written submissions on behalf of the Respondent. At the time the Complainant was terminated the Respondent had established he had made many unauthorised payments to himself and was actively trying to appropriate the business and shut them out of key accounts. Their decision was entirely reasonable.

Mr Woulfe points to two specific instances where he submits the Complainant lied under oath. The first was in relation to directors’ loans which the Complainant says he paid back. When asked the Complainant could not locate the repayments in the Respondent’s bank records and failed to explain when they were supposed to have happened. He referred to the Complainant furnishing a contract of employment for his wife which is supposed to have been signed on the 3rd of August 2021 but which refers to the Bridget’s Day public holiday which did not exist until 2023. The Complainant has offered no explanation for the data on the associated word document indicating that this document was created on the 11th of January 2024.

The Respondent provided copies of the pleadings, affidavits and exhibits filed in the related High Court matter ahead of the hearing and referred to these in evidence and throughout the Complainant’s cross examination. 

Ms Jaqueline Kane gave evidence under oath.

She is the 100% shareholder of the business. The business paid her and her parents as well as the Complainant. The Complainant and her were the only two members of the family active in the business, he was Managing Director and she worked in the office. The Complainant was left run the business and she trusted him to do so. He was in charge of the bank accounts and payments.

The business was busy and, as far as she knew, profitable. Then in September 2023 she discovered that the Complainant had stopped paying their parents and he told her that there was no money in the business and that it was going into liquidation. He told her he would cut off her diesel card and phone but indicated that his wife and daughter’s phones would still be paid.

She then took advice from her brothers Derek and Jonathon and she got access to the bank accounts in December 2023. She discovered the Complainant had been making significant payments to himself and businesses he was associated with. He was making significant payments into his pension scheme. All of this was unauthorised. She raised these payments with him in a call and he told her they were not relevant.

She removed him as a director in early January 2024 and came to the conclusion that he would need to be dismissed. The trust was totally gone.

They had a meeting on the 16th of January where they decided to go their separate ways and that Derek would come into the business. The Complainant accepted this and indicated he was going to open his own Company.

The Complainant then locked them out of their accounts and refused to give her access. He sent confidential information out of the business and tried to get clients to change contracts to reflect his new company. He sought payments for work done by the Respondent be made to his new company.

She cannot remember exactly what she knew at the point of dismissal as some things came to light afterwards. She was aware that he had wanted to take over the business, had changed the passwords to the email accounts and had taken money out of the business. They then lost their major client and believed this was following discussions with the Complainant. All of this warranted dismissal.

She knew he had made pension contributions she did not know that he was making payment of up to 10k a month.

Mr Derek Kane gave evidence under oath.

He got involved with the business in December. He hired forensic accountants to get a grip on what was happening. It was difficult to get access. The Respondent’s accounts were in dire straits and his company had to step in to ensure staff would be paid.

They met with the Complainant on the 16th of January. I was agreed he would go his separate way and was free to approach clients of the Respondent however he had to be upfront that he was out on his own. It was also agreed that the Respondent’s major client was not to be approached.

That agreement was not upheld. The Complainant presented himself as the business and sought to change contracts to have his new business put in place and the lease changed into his name. Then discovered they were losing the major client after their primary point of contact had a conversation with the Complainant and decided there was too much noise associated with the Respondent’s business.

Many of the key facts in this case are not in dispute.

The Complainant worked for the Respondent since its foundation. He made a success of the business and was unhappy that despite this he did not have any equity to show for his work and remained an employee. The Respondent was owned by Ms Kane. He wanted Ms Kane to transfer ownership to him in 2023 but no agreement was reached.

The Complainant stopped payments to their parents in September 2023 on the basis that the business was in financial trouble. His stated reason for this was that he had an ageing fleet of trucks and high costs associated with this. This raised concerns with Ms Kane who sought the assistance of her brothers to get a handle on the affairs of the Company and in December gained access to the bank accounts and removed the Complainant. This revealed a number of payments which concerned her.

There had been direct payments to the Complainant as well as various pension funds. The Complainant does not dispute that these payments were made and that there had been no direct approval for them by Ms Kane. Ms Kane signed off on the annual accounts each year which he believed was sufficient.

Ms Kane’s evidence was that she put this information to the Complainant in calls in December and he took the view that the payments were not relevant. The Complainant disputes this but is unclear when he became aware of the issue of payments.

Ms Kane came to the conclusion that the Complainant needed to leave the company and he was removed as a director in early January and at the same time a dismissal letter was drafted. The family had a clear the air meeting on the 16th of January where it was agreed that the Complainant would leave the business and pursue his own. The scope of this agreement may be in dispute, the Respondent’s evidence was that their largest client was not to be approached by the Complainant.

However, after this meeting the Complainant changed the password of the Company email account and shortly thereafter the Respondent’s largest client ceased trading with them after a meeting with the Complainant.

He was dismissed on the 22nd of January by way of a letter dated the 8th of January.

Unfair Dismissals Act (“UDA”) and the Burden of Proof

Once an employee has established that they have the 12 months’ service and that they have been dismissed, the burden will be on the employer to show that there were substantial grounds justifying the dismissal. 

Section 6(4) outlines that the conduct of the employee is a lawful reason to dismiss an employee.  

Fair Procedure - Policy and Statutory Instrument 146 of 2000. 

Section 14(1) of the UDA requires employers to have a written dismissal procedure and to provide employees with a copy of the same. Section 6(7)b of the UDA provides that the WRC may consider whether the employer has complied with their own procedure in determining whether the dismissal was unfair. The Complainant’s evidence was that there had been a disciplinary policy drafted by Peninsula but this was not followed in relation to him and this was not disputed by the Respondent.

The same provision of the UDA also allows the WRC to consider whether the employer complied with any code of practice relating to procedures regarding dismissal approved of by the Minister for Enterprise, Trade and Employment. The only such code of practice is Statutory Instrument 146 of 2000 created under the Industrial Relations Act, 1990.

This code outlines a number of general principles which should govern a disciplinary process. Disciplinary measures should be applied in a fair and consistent manner and adhere to the principles of natural justice and fairness.  The basis for any disciplinary action should be clear and the range of penalties that can be imposed is well-defined.

More specifically the code provides that any disciplinary process should: ensure that the details of any allegations or complaints are given to the employee in writing; identify the source of the allegations or complaint to the employee; give the employee the opportunity to respond fully to any allegations; allow the employee to be represented by a colleague or trade union official; consider any representations made by, or on behalf of, the employee and any other relevant evidence, factors or circumstances; allow the employee concerned to question witnesses; allow the employee an internal appeal following the issuing of any sanctions; and remove warnings from an employee's record after a specified period.

Non-adherence to the Respondent’s policy or the code of practice does not automatically make a dismissal unfair, however it is something the WRC can rely on in determining that a dismissal was unfair. 

Fair Procedure – The overriding obligation of reasonableness.

Section 6(7) of the UDA provides an overriding obligation on the employer to have acted reasonably in relation to the dismissal. This duty to act reasonably does not allow an Adjudication Officer to substitute their own judgement for that of the employer. Instead, I must decide whether the decision to dismiss was within the range of reasonable responses of a reasonable employer (Governor and Company of the Bank of Ireland v Reilly [2015] IEHC 241).

The Labour Court has determined that a failure to properly investigate allegations of misconduct or to afford an employee who is accused of misconduct a fair opportunity to advance a defence will take the decision to dismiss outside the range of reasonable responses, thus rendering the dismissal unfair (Pottle Pig Farm v Panasov UD/17/24).

There are extreme situations where an employer might believe that it is reasonable to dismiss an employee immediately and without process.

It is clear from the evidence before me that by the third week of January the relationship between the parties had entirely broken down. The Complainant had agreed to resign but had instead locked Ms Kane out of the Respondent’s email system. The Respondent had a reasonable belief that their Managing Director was trying to expropriate the business.

The circumstances present a compelling argument that the Respondent dismissing the Complainant without process was reasonable. However, for the Respondent to establish this in the context of the UDA I am of the view they would need to outline that they could not have protected their business without summarily dismissing the Complainant. They potentially could have suspended him pending an accelerated disciplinary process where they put their concerns to him and let him respond. If they were concerned with his ongoing actions they could have issued him with explicit instructions and the threat of summary dismissal if he failed to comply with these.

It may be that these measures were not a realistic option, but it is the Respondent’s obligation to establish this was the case and I am not satisfied that they have done so.

In the circumstances I am of the view that the Respondent’s actions in dismissing the Complainant without a fair process brought the decision to dismiss outside the range of reasonable responses.

Award

Compensation awarded under the UDA is limited to financial loss arising from the dismissal and is capped at two years’ renumeration. Section 7 of the act is clear on how awards should be determined and the High Court, per Mr. Justice Charleton in  Jvc Europe Ltd v Panisi [2011] IEHC 279, has outlined the process in some detail.

The first step of is to determine financial loss.

Compensation in unfair dismissal claims is limited by the financial loss attributable to the dismissal and this is what needs to be determined first.

Financial loss is defined by two separate categories, pursuant to section 7 of the UDA 1977 (IRL).

The first is any actual loss and any estimated prospective loss of income attributable to the dismissal. The second category of financial loss is any actual loss and any estimated prospective loss in relation to superannuation and statutory redundancy rights.

On review of the evidence available to me I am unclear as to what the Complainant’s financial loss is.

Firstly, I am not actually clear on what his position is as to what his lawful renumeration is supposed to have been. The Respondent has pointed to additional salary payments which he says were part of his normal salary but he has not explained why they were made into separate accounts. He made ad hoc pension contributions from the Respondent’s funds and transferred himself monies which he says were loans.

While these payments obviously ceased after his dismissal I am not sure what his income is from his new company or when it started trading. The Complainant continued to occupy the Respondent’s premise in January and then began delivering their stock. He then engaged with the Respondent to seek payment for this work as through his own company though it appeared to overlap with his time as an employee. He has provided a single payslip from the company he owns for March 2024 which compared to the payslips he provided from the Respondent present a loss.

In light of the very serious issues Mr Woulfe identified with the Complainant’s evidence on cross examination and considering his handling of the Respondent’s monies, which was a company he did not own, I am not satisfied that I have any sort of reliable picture of what he has gained since his dismissal from the company he does own.

In the circumstances the Complainant has not established financial loss attributable to the dismissal.

7(c)(ii) of the UDA  provides that where there is no financial loss compensation is limited to four weeks renumeration as is just and equitable having regard to all the circumstances.

It took the Respondent issuing proceedings for injunctive relief before the Complainant consented to return control of their email account which he had indicated by email he didn’t have the password for. After their recovery of the Respondent’s recovery of their email account they could see that the Complainant actively redirected existing clients from the Respondent to his company using this email address and presenting his actions as his updating details.

On review of the evidence available to me I determine that a nil award is just and equitable.

CA-00064706-001

I find the complaint well founded. I do not direct the Respondent to make any payment to the Complainant.

CA-00064706-002

This is a duplicate complaint related to the dismissal already determined under CA-00064706-001. As that complaint has been determined I find that this complaint is not well founded.

CA-00064706-003

This is a duplicate complaint related to the dismissal already determined under CA-00064706-001. As that complaint has been determined I find that this complaint is not well founded.