Wrongful Dismissal

Overview

A “wrongful” dismissal refers to the termination of an employment contract, in breach of its terms. Wrongful dismissal claims are taken in the Civil Courts, in common with other breaches of contract claims.

In the case of the vast majority of employees, their employment contract may be terminated by relatively short notice. Under contract law, the employer may generally terminate the employment for any reason whatsoever. There need not be a good reason. If the dismissal is with the correct notice, there is no breach of contract.

If no notice or insufficient notice of dismissal is given, there is a breach of contract, but the loss and consequent compensation are limited to little more than the lost salary in the notice period. Therefore, in the case of even a blatantly unfair dismissal, the general civil law leaves most employees with no effective remedy.


Unfair Dismissal

Under contract law principles, wrongful dismissal is available, only where the dismissal is in breach of contract.  The dismissal can be for an  unfair, unreasonable or arbitrary reason.  The common law does not judge the merits or the employer’s motivation in terminating the contract.  Although there is no claim for wrongful dismissal or breach of contract in this case, there may be a claim for unfair dismissals in these circumstances under the statutory procedure.

Unfair dismissal legislation was introduced to provide employees with a remedy for unfair dismissal. It creates a stand-alone set of rights, which are enforced in a claim to the Workplace Relations Commission or the Labour Court, on appeal. The rights cannot be asserted in claims for breach of contract in the civil courts.

For most employees, an unfair dismissal claim gives the more effective recourse for an unjustifiable dismissal. However, in some cases, particularly for senior employees with longer term contracts, or for those who hold an office, a wrongful dismissal claim may be more effective. The courts may grant an injunction to restrain a wrongful dismissal, as with any other civil claim for breach of contract. In contrast, in an unfair dismissal claim, the WRC and Labour Court do not have the power to issue an injunction.


Minimum Notice

The minimum notice legislation requires minimum notice periods for dismissal by the employer, which range from one week (in the case of service up to two years) to eight weeks in the case of service of up to 15 years. The employee must generally give at least one week’s notice of termination.

The common-law rules presumptively require equal periods of notice from the employer and employee. The minimum notice legislation requires one week’s notice by an employee to employer on termination, where the employee has been continuously employed for over three months.  The employment contract may, of course, provide a longer period.

The legislation covers most employees and civil servants. An immediate termination may be permissible under the legislation in circumstances where he employee has committed a fundamental breach of contract, usually by gross misconduct. See below in relation to summary dismissal.

The termination of employment in breach of the minimum notice periods may be the subject of a complaint to the WRC.   It may be combined with an unfair dismissal claim.


Common Law

It is generally implied that an employment contract may be terminated by reasonable notice, given by either employer or employee. Even where the contract provides that the employment is “permanent”, it is usually implied that it may be terminated on reasonable notice.

The expiry of a probationary period does not displace the implication that the employment contract may be terminated by reasonable notice.  The courts in effect, imply that the employment is “permanent” subject to the general right of the employer to terminate the contract.

The requisite notice period to terminate the contract may be stated in the contract, or it may be implied. The notice period must be of at least, the length laid down in minimum notice legislation.  In practice, many contracts will imply the notice period specified by minimum notice legislation.  Accordingly, in most cases, reasonable notice periods will be little more than a few weeks.

In the case of senior employees, there may be a written contract which provides for a longer notice period. A notice period longer than that prescribed by the minimum notice legislation may be implied in the case of very senior employees.

An accepted resignation terminates the contract of employment by consent.  There is, therefore, no breach of contract by which a wrongful dismissal claim may be made. Minimum notice and unfair dismissal rights do not apply unless there is a constructive dismissal.


Serious Misconduct I

Even where an employee is entitled by his contract to a period of notice or to a fixed period of employment, he or she may be subject to summary dismissal for serious misconduct.  This follows from the general principle of contract law, that if a party to a contract commits a fundamental breach of contract (repudiation) which goes to the core of the relationship, instant termination by the “innocent” party is allowed. Therefore, there is no wrongful dismissal.

The grounds required to justify dismissal without notice usually consist of act or (less commonly) omissions by the employee which are wholly inconsistent with the terms of the contract of employment. The matter, circumstances or incident must be so serious that the relationship of trust between the employer and employee has irretrievably broken down.  Dishonesty, serious misbehaviour or violence may justify instant dismissal.

However, anything short of serious misconduct or perhaps extreme incompetence which poses an immediate and irredeemable risk, is not likely to justify an immediate dismissal.  In most circumstances, reasonable notice is required at a minimum.


Serious Misconduct II

The contract may expressly or impliedly require that fair procedures be followed.  In the context of unfair dismissals legislation most circumstances short of the most extreme cases, require warnings and opportunities for the employee to rectify the position.

What constitutes sufficiently serious misconduct, such as to justify immediate dismissal, will depend on the circumstances.  For example, in a small intimate working environment, less serious misconduct may cause a fundamental breach of trust.  The courts will not usually second-guess the assessment of the employer made in the particular circumstances, if the conclusion reached was reasonable under the circumstances.

A ground for dismissal unknown to the employer at the relevant time but which would, in fact, have justified termination, may not be relied on. On one view, some breaches, are so significant that they will cause a termination and breach of contract by themselves. The alternative view is that a fundamental breach of contract does not automatically terminate the contract, but gives the innocent party the option to terminate


Procedural Failures

There will be a breach of contract / wrongful dismissal where a disciplinary or equivalent procedure has been incorporated into the contract but has not been followed.  Notwithstanding that objective grounds may exist for termination, the contract itself may provide or imply that dismissal may take effect, only after the agreed procedure has been followed, and the relevant grounds have been established and determined.

Under the Terms of Employment legislation, an employer is obliged to give an employee a notice in writing of the procedure to be observed for dismissal, within 28 days of entering an employment contract.  This will generally be incorporated in the notice of terms of employment, which must be given to an employee in writing upon commencement of employment.

In the absence of a specific written disciplinary procedure, the courts will usually imply requirements for fair procedures in relation to the determination of matters which may lead to dismissal.  The courts are especially willing to imply requirements for fair procedures in relation to disputed matters which may have a serious consequence such as potential dismissal.


Office Holders

Office holders are those whose position derive from law. Their position involves a designated role or office with responsibilities. They are usually public sector positions. The courts have been willing to categorise directors as office holders because functions being derived from Companies law.  Many wrongful dismissal claims are taken by the holders of offices in public institutions.

The Irish courts have implied that there is a requirement for fair procedures in relation to matters impacting upon the reputation and livelihood of office holders. The requirements of constitutional justice apply. There should be an independent decision maker, in so far as possible. The person should be given the opportunity to meet the case against him. This may require prior notice of the evidence. He should have the opportunity to challenge the evidence against him by cross example, by a legal representative, if necessary.

The courts seemed prepared to go further and were prepared to imply requirements of due process and procedural fairness into private contracts of employment. However, the issue became of much less significance, with the enactment of unfair dismissal legislation in the mid-1970s. The courts have felt less need develop the principle into the private sector.


Contractual Grounds

The grounds of dismissal may be specified in the contract.  In this case, there may be a wrongful dismissal / breach of contract claim, if the employment has not been terminated for a valid reason under the contract. For example, a senior employee may be appointed for a fixed term or even for life, subject only to being dismissed for serious misconduct.  In this case, a termination on the purported ground of serious misconduct, which did not have a sufficient basis in fact, might be found to be a breach of contract.

A wrongful dismissal claim may be based on the breach of an implied term.  In this context, the implied mutual obligations of trust and confidence between employer and employee are of key importance.  If either employer or employee conducts himself in a way that destroys the relationship of trust and confidence, then the employment contract may be breached in a manner which justifies the “innocent” party in terminating it. He may claim compensation for breach.

The full scope and implications of the duties of mutual trust and confidence have not yet been worked out by the courts.  Arguments have been made that a breach of fair procedures may constitute a repudiation of the contract by the employer.  However, this would come close to duplicating unfair dismissal law, which has provided by a separate statutory code outside of the contractual terms.


Contractual Fair Procedures

The pressure for a broader approach to the implication of fair procedure requirement, arises in part from the fact that unfair dismissal legislation is subject to a cap of two years’ salary. In an English case (where there is similar unfair dismissals legislation) the courts were unwilling to extend the principle in such a way as to effectively circumvent the cap on damages recoverable under unfair dismissals legislation.

Difficult questions of interpretation have arisen where an implied duty is argued for, in conjunction with express contract terms which deal with the same subject matter.  Implied terms cannot override express terms.  However, the courts endeavour to interpret contracts with an expressed or implied terms in a manner consistent with the implied terms of mutual trust and confidence.  The Irish courts have not been willing to imply a wholesale requirement for fair procedures which contradict, clear contractual rights of termination.


Breach and Termination

Where the breach of the employment contract is so serious as to fundamentally undermine trust and confidence, the innocent party may, but need not necessarily terminate the contract. The question arises as to whether an employee who has been summarily dismissed without reason may himself hold open the employment contract by refusing to accept the repudiation. This may be significant for example in the context of qualifying for unfair dismissal or another context where the continuation of the employment contract would cause entitlements to continue to accrue.

If the employee leaves in such circumstances, then he may be interpreted to have accepted the repudiation by the employer.

The fact that an employment contract has been terminated does not mean that the contract ceases to exist. Consequences may continue to flow from it When a contract is terminated the parties continue to have residual or “secondary” rights under it.  For example, the innocent party may be entitled to continue to enforce a restrictive covenant, claim for damages and enforce an arbitration clause.

The modern view of contract law is that even when a contract is terminated by repudiation on acceptance, secondary obligations remain.  These include obligations to pay compensation.  The other effect is that the remaining obligations of the “innocent party” are released and discharged.


Prolonged Illness

In some cases, where employees have terminated employment while an employee is receiving long-term sick pay or similar employment-related insurance benefits, the courts have held that there has been a breach of contract. The courts have implied a contractual term, not to frustrate entitlement to insurance benefits which were intended to be available. This is based on the duties o mutual trust and confidence.

In some cases, persons have been lawfully dismissed on the grounds of redundancy, while absent on sick pay short-term. In these cases, the courts have allowed employers to terminate for a good reason, even in circumstances where the dismissal terminates insurance benefit, provided that this is not inconsistent with the implied terms.  The Irish courts have taken this more restrictive view in one case.


References and Sources

Primary References

Employment Law  Meenan  2014 Ch. 19

Employment Law Supplement Meenan 2016

Employment Law Regan & Murphy  2009  Ch.14 ( 2nd Ed 2017)

Employment Law in Ireland Cox & Ryan 2009 Ch.14

Dismissal Law in Ireland  Redmond 2007 Ch.4,5 & 6

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