Dismissal Issues

Constructive Dismissal

Under general contract law, the innocent party is entitled to terminate a contract where there is a fundamental breach by the other party, “going to the root” of the contract. One instance of a fundamental breach is where one party communicates to the other, that he does not intend to be bound by its key terms. The innocent party may terminate the contract, be thereby discharged from further obligations and take proceedings for compensation for breach of contract.

Constructive dismissal is the termination by an employee of his contract of employment, in circumstances where the conduct of the employer is so flagrant and egregious, that it justifies the employee’s immediate resignation. The circumstances must be such that is reasonable for the employee to terminate the employment contract.  He may then take proceedings for wrongful dismissal (breach of contract) or unfair dismissal at his choosing.

A claim for constructive wrongful dismissal requires that the employer commits a fundamental breach of contract. A claim for constructive unfair dismissal requires that the circumstances are such as to make it reasonable for the employee to resign without notice, whether or not as a matter of contract law it is otherwise reasonable to do so.


Constructive Dismissal Not Readily Found

Only highly exceptional circumstances will suffice for a successful constructive dismissal claim. The employee’s subjective assessment of what is justified is not determinative of the position. An employee will very rarely be justified in assuming that the employer’s conduct is sufficient to justify peremptory resignation. He runs the risk that he may be found not to have been dismissed at all.

An employee should go through internal disciplinary and grievance procedures before resigning. The Courts or WRC may conclude that the employee did not act reasonably if he fails to resort to available complaints and grievance mechanisms.  If the employee does not communicate his grievance before termination, the Court or WRC is likely to find his resignation not to be dismissal by the employer.

An employee who resigns, however, runs a risk that a court or the tribunal might determine that there has not been a constructive dismissal. The employer’s conduct may not be a repudiation of the contract such that in the circumstances, instant resignation is reasonable.


Fundamental Breach of the Employment Contract

What constitutes a fundamental breach of contract will depend on the terms of the contract. Only the most serious of breaches of an employment contract are sufficiently fundamental to justify termination of the contract or make it reasonable to resign instantly.  The breach must be fundamental and go to the heart of the relationship.

It is a question of interpretation of the employment contract in the circumstances, as to whether the employer’s breach is so serious and substantial as to justify immediate resignation either under the contractual basis or on the basis that it is reasonable for the employee to do so, the unfair dismissal test.  In considering the reasonableness of an employee’s resignation, the WRC looks at the entire circumstances.

In some cases, the circumstances may show a breach of the fundamental requirement of mutual trust and confidence.  An unjustifiable reduction in salary may constitute a constructive dismissal.  An insistence upon the performance of functions of a nature which are wholly outside the scope of the contract may be sufficient.


Fundamental Changes in Employment

It is a basic principle of contract law that one party cannot change a contract without the consent of the other. A contract may be changed by express or implied consent or by acquiescence with the new arrangements.

There is a presumption that an employer may change the general nature or organisation of work.  Work may be conducted in one way at one time, but technology may require a variation of the manner in which the work is undertaken. An employee is expecting to adapt itself to new working methods and techniques in the course of employment.

The contract deals with the immediate relationship such as hourly rate of pay, holidays, sick leave, etc. The law is reluctant to imply provisions in relation to promotion and career development etc. as contractual obligations.  These are deemed incidental matters.

A fundamental change in the nature of employment may be a breach of contract. However, changes in work practices and the manner in which the work is done are unlikely to be a breach of contract. Generally, requiring work to be done during an otherwise idle period for which payment is made, would not generally be a breach of contract.


Risks of Resignation

Only the most serious of breaches of an employment contract are sufficiently fundamental to justify termination of the contract or make it reasonable to resign instantly.  The breach must be fundamental and go to the heart of the relationship.

An employee who resigns, runs a risk that a court or the WRC might determine that there has not been a constructive dismissal. The employer’s conduct may not be a repudiation of the contract such that in the circumstances, instant resignation is reasonable.  In considering the reasonableness of an employee’s resignation, the WRC looks at the entire circumstances.

Where, for example, an employee, is unjustifiably demoted, it may be possible to claim constructive dismissal, if immediately or after a short trial period, he resigns.  In the latter case, he may need to show that he protested at the demotion. However, if the employment contract entitles the employer to change the scope of employment, the employer may be able to justify what would otherwise constitute a constructive dismissal.  If the discretion is very wide, the WRC is likely to imply that it must be exercised reasonably.


Fixed Term Contract Expires

A dismissal under the Unfair Dismissals Act occurs where there is a termination by the employer of the employee’s contract of employment with or without notice. Where a fixed term or purpose contract terminates, there is no termination by either employer or employee.  Accordingly, the legislation deems there to be a dismissal. Such contracts do enjoy statutory protection, which is discussed in other articles.

A fixed term or fixed purpose contract is one which is for a particular period or a particular purpose. A fixed term employee is one whose contract of employment terminates by an objective condition such as the date of completion of a specific task or event.  A fixed purpose contract is for employment for a particular task or purpose of inherently limited duration.

If there is no express right to terminate the contract on the part of the employer, the employee may be entitled to compensation if it is terminated before the expiration of the relevant period or purpose. If the employee has not express right to terminate before the period ends or the purpose is fulfilled, the employer could, in theory, sue the employee if the loss is suffered in hiring a replacement.


Termination under Contract Law

The principles of wrongful dismissal and the termination of contracts are relevant where a repudiation arises.  The general principle of contract law is that a repudiation by one party entitles the innocent party to elect to either affirm or accept termination of the contract.

There have been different opinions regarding whether an unaccepted repudiation terminates the contract.  This may be of significance when entitlements are accruing, such as the entitlement to bring an unfair dismissal’s claim itself.

If as a matter of contract law an acceptance of the employer’s repudiation is required, then it is the employee who terminates the contract by accepting it, rather than the employer.  On this view, the employee dismisses himself. This interpretation would undermine the scheme of the Unfair Dismissals Acts and although arguable in principle, the courts are likely to avoid reaching this conclusion.


Question over Dismissal

A person is generally dismissed where he is unequivocally told that his employment is at an end or the circumstances make this abundantly clear that this so.  An employee’s repudiation of the contract is likely to be deemed a self-dismissal in highly exceptional circumstances only.

Questions may sometimes arise as to whether particular circumstances amount to a dismissal.  This may raise the question as to whether there has been a dismissal or a resignation.  The entire circumstances may need to be examined.  If it is reasonable for the employee to believe that he has been dismissed, then this is the likely conclusion.

The date of dismissal is important in the context of qualification for unfair dismissal rights.  The Unfair Dismissals Act provides that the date of dismissal is the date on which notice of termination would have expired if minimum notice had been given. Where longer notice is given, it fixes the date of termination. Where a shorter notice or no notice are given, the minimum notice legislation determines the date of dismissal.


Various Circumstances of Termination

An agreed termination agreement is not a dismissal. This may arise in the context of an agreed redundancy or termination agreement. If an employee resigns because he pre-empts an immediate dismissal in order to characterise it as a resignation, this may be deemed a dismissal.

Where a settlement agreement is entered whereby the termination of employment is on voluntary terms, there is no dismissed.

The death of an employer or employee will terminate employment.


Insolvency

The commencement of insolvency proceedings may terminate the employees’ contract.  Under certain circumstances, continuity of employment may continue with an insolvency officer.  Employees may be retained by a receiver, liquidator or other insolvency officials.

In some circumstances, it may be reasonable to infer a new arrangement has been entered between receiver / liquidator and employees.  In these circumstances, continuity of service may continue.

The Acquired Rights Directive does not usually apply to transfers in the course of liquidation or insolvency.  If, however, the transfer is undertaken in order to ensure the on-going continuity of the business or portion of the business, there may be a transfer of undertaking for the purpose of the legislation.

The appointment of a receiver out of court does not terminate contracts of employment.  Directors and senior personnel may be impliedly removed from office or employment by the assumption of managerial powers by a receiver. The appointment of an examiner will not affect the employment relationship.  However, an examiner may ultimately be unable to procure a scheme in which event liquidation may follow.


References and Sources

Primary References

Employment Law  Meenan  2014 Ch. 24

Employment Law Supplement Meenan 2016 Ch.24A

Employment Law Regan & Murphy  2009  Ch.22 ( 2nd Ed 2017)

Employment Law in Ireland Cox & Ryan 2009 Ch.2

Dismissal Law in Ireland  Redmond 2007 Ch.10

Other Irish Books

Employment Law Forde & Byrne 2009

Principles of Irish Employment Law   Daly & Doherty           2010

Employment Law Contracts (Book & CD-ROM)       Beauchamps, Solicitors          2011

Acts

Unfair Dismissals Act 1977 (10/1977)

Worker Protection (Regular Part-Time Employees) Act 1991 (5/1991),

Unfair Dismissals (Amendment) Act 1993 (22/1993)

Protection of Employees (Part-Time Work) Act 2001 (45/2001

Civil Service Regulation (Amendment) Act 2005 (18/2005) (Part 6)

Protection of Employment (Exceptional Collective Redundancies and Related Matters) Act 2007 (27/2007)

Industrial Relations (Amendment) Act 2015 (27/2015), s. 39

Periodicals and Reports

Employment Law Yearbook (annual) Arthur Cox

Employment Law Reports

Irish Employment Law Journal

Employment Law Review

Legislation

Dismissal & Redundancy Consolidated Legislation   Barrett, G        2007

Irish Employment legislation (Looseleaf)       Kerr     1999-

Employment Rights Legislation (IEL offprint) Kerr     2006

Dismissal & Redundancy Consolidated Legislation             Barrett, G            2007

Principles of Irish Employment Law          Daly & Doherty 2010

Termination & Redundancy, What is the law?      Hayes, Barry & O’Mara   2005

Termination of Employment Statutes (IEL)            Kerr       2016

Termination of Employment: Practical Guide for Employers          Purdy    2011

Shorter Guides

Employment Law Nutshell      Donovan, D     2016

Employees: Know Your Rights           Eardly  2008

Essentials of Irish Labour Law           Faulkner          2013

Websites

Workplace Relations Commission http://www.lrc.ie/en/

Irish Human Rights and Equality Commission https://www.ihrec.ie/

Health and Safety Authority http://www.hsa.ie/eng/

UK Texts

Textbook on Employment Law, Honeyball, et al. 13th Ed. 2014

Labour Law, Deakin and Morris 5th Ed. 2012

Employment Law, Smith and Wood 13th Ed 2017

Selwyn’s law of Employment Emir A 19 Ed. 2016

Employment law : the essentials. Lewis D Sargeant M and Schwab M 11 Ed.2011

Labour Law Collins H, Ewing K D and McColgan  2012

Industrial relations law reports. (IRLR): Law Section,

Employment law Benny R Jefferson M and Sargent  5th Ed.  2012

Pitt’s Employment Law 10th  Ed. Gwyneth Pitt 2016

CLP Legal Practice Guides: Employment Law 2016 Gillian Phillips, Karen Scott

Cases and Materials on Employment Law 10th  Ed. Richard Painter, Ann E. M. Holmes 2015

Blackstone’s Statutes on Employment Law 2015 – 2016 Richard Kidner

UK Practitioner Services

Tolley’s Employment Handbook 2017 Mrs Justice Slade 2017

Butterworths Employment Law Handbook 2017 Peter Wallington 2017

Blackstone’s Employment Law Practice 2017 Edited by Gavin Mansfield, John Bowers, John Macmillan 2017

UK Periodicals and Reports

The Employment Law Review 8th  Ed.   Erika C. Collins 2017

Industrial Relations Law Reports

Employment Law in Context: Text and Materials 2nd  Ed. David Cabrelli 2016