Maria Cronin v Eircom Ltd

• Jurisdiction: Ireland
• Judge: Miss Justice Laffoy
• Judgment Date: 25 October 2006
• Neutral Citation: [2006] IEHC 380
• Court: High Court
• Docket Number: [2002 No.
• Date: 25 October 2006

[2006] IEHC 380

THE HIGH COURT

No. 6893 P/2002

CRONIN v EIRCOM LTD

BETWEEN/

MARIA CRONIN

PLAINTIFF

AND

EIRCOM LIMITED

DEFENDANT

POSTAL & TELECOMMUNICATIONS SERVICES ACT 1983

MCGREGOR MCGREGOR ON DAMAGES 17ED 2003

TURNER v GOLDSMITH 1891 1 QB 544 CA

RHODES v FORWOOD 1876 1 APP CAS 256

DEVONALD v ROSSER & SONS 1906 2 KB 728

COLLIER v SUNDAY REFEREE PUBLISHING CO 1940 2 KB 647

BREACH v EPSYLON INDUSTRIES LTD 1976 IRLR 180 1976 1 ICR 316

MAHMUD v BANK OF CREDIT & COMMERCE INTERNATIONAL SA 1998 AC 20

EASTWOOD v MAGNOX ELECTRIC PLC 2004 UKHL 35

- [2006] IEHC 380; [2007] ELR 84

Facts: the plaintiff was an employee of the defendant who had been seconded to its operations in England. Her contract provided that at the end of the secondment she would continue in employment in accordance with the existing terms and conditions of employment. Part of those terms were set out in an agreement with trade unions which provided that staff reductions would be achieved only on a voluntary basis. She claimed that she had suffered financial loss as a result of the breach by the defendant of its contractual obligation to provide work for her commensurate with her skills when her secondment ended.

Held by Miss Justice Laffoy in awarding the plaintiff €87,354 that a contractual term of mutual trust and confidence should be implied into each contract of employment by operation of law. The defendant was under a contractual obligation to provide the plaintiff with work so that she would have an opportunity to gain experience, pursue promotion and advance her career, whether as a facet of the obligation to maintain mutual trust and confidence or otherwise, which obligation was breached by the defendant. The same principles should apply to measuring damages for breach by an employer of a contractual obligation to pay commission as in measuring damages for wrongful dismissal. The same principles should apply whether a breach of a contractual obligation arises during the currency of the employment or as a consequence of wrongful dismissal. As the plaintiff's capacity to advance to a position equivalent to account manager had been hindered for two to three years, Eur25,000 was an appropriate award of damages under the heading of loss of chance. Eur50,682 was awarded in respect of commission and arrears of salary and Eur11,672 was awarded in respect of relocation expenses.

Reporter: P.C.

1 Judgment of Miss Justice Laffoy delivered on 25th October, 2006 .

The parties

2 Since 1999 the plaintiff, who is twenty-nine years of age, has been an employee of the defendant, which is a company operating in the telecommunications sector in the State and elsewhere.

3 The historic background to the evolution of the telecommunications business of the defendant and the emergence of the defendant as a corporate entity is of relevance to the issues in this case. Prior to 1984 postal and telecommunication services in the State were operated by a department of state, the Department of Posts and Telegraphs (the Department). Under the Postal and Telecommunications Services Act, 1983the State established a telecommunications company known as Bord Telecom Éireann (Telecom), a limited company, with the principal object of providing a national telecommunications service within the State and between the State and places outside the State. With effect from 1st January, 1984 Telecom took over the operation of telecommunication services from the Department.

4 By the mid-1990s there had been major technological changes in the telecommunications sector. Market liberalisation was ongoing. Against that background an agreement was entered into between Telecom and the trade unions representing the employees of Telecom entitled "The Telecom Partnership — A Framework Agreement for the Transformation of Telecom Éireann into a World Class Telecommunications Business". This agreement, which is commonly referred to as the Blue Book, was finalised on 27th April, 1997. Among the strategies which the Blue Book envisaged was what was described as "a head count reduction of approximately 2,500". However, it was made clear that this was intended to be achieved on a voluntary basis. The Blue Book expressly provided that, to overcome barriers to change, the parties were committed to certain specific safeguards, including continuation of Telecom's existing policy "of effecting staff reductions only on a voluntary basis", which was to apply "to all staff". As I understand the current position, employees of the defendant have security of tenure in their employment. The position was put to the plaintiff very starkly in the course of her cross-examination on the basis that her employment could not be terminated otherwise than for misconduct. The Blue Book envisaged the normalisation of industrial relations procedures, providing, inter alia, for grievance procedures under which either party could refer a matter to a Rights Commissioner or the Labour Court, and for a new disciplinary code.

5 There was further change in July, 1999 with the floatation of eircom plc (the plc) when employees of Telecom, like the plaintiff, became employees of the new public company. Just over two years later in November 2001, the defendant became the employer of the plaintiff and her co-employees when, in common parlance, the public company was taken private. It remains her employer.

6 Throughout the period of the plaintiff's employment with the defendant and its predecessors a strategy of reducing the number of employees was being pursued. This is illustrated by the fact that 11,000 people were employed in the year 2000 but that number has reduced to 7,200 employees in 2006.

The facts underlying the plaintiff's claim

7 The plaintiff's initial employment with Telecom was on the basis of a letter stating the terms and conditions of her employment dated 25th March, 1999, which was accepted by her on 30th March, 1999. She was employed as a "Telesales and Services Representative Grade III", commonly referred to as TSR 3 grade, from 31st March, 1999 at an initial salary of IR£193.19 per week. While the terms and conditions stipulated that the plaintiff's employment might be terminated on notice, as I understand the position, that provision was overridden by the Blue Book.

8 In April, 2000 the plaintiff was seconded to eircom UK Ltd., a subsidiary of the plc, as a "Sales Support Administrator". The terms of her secondment were set out in a letter dated 6th April, 2000, which she accepted on 7th April, 2000 and which provided, inter alia, as follows:

9 • Her secondment would commence on 10th April, 2000 and would continue for a period of two years "with the option of extending the period for a further 1-year".

10 • On the commencement of the secondment she would receive a guaranteed base pay of Stg.£16,000 per annum. Her salary would be reviewed on an annual basis in accordance with assessment of her personal performance and achievements, the first review to take place in June, 2000.

11 • She was to remain an employee of the plc throughout the period of her secondment, and, except as varied by the terms of the letter, her conditions of employment and any further contractual entitlements would remain unchanged. It was expressly provided as follows:

"At the end of your secondment your employment will continue with Eircom Ireland in accordance with your existing terms and conditions of employment."

12 Following her first performance review, the plaintiff's salary was increased from Stg.£16,000 to Stg.£19,000 with effect from 1st June, 2000 and she became eligible for a bonus of up to 15% of her base salary, the bonus being performance related and based on objectives agreed by her line manager, Kevin O'Sullivan, and herself in the review.

13 Later in the year 2000 the plaintiff was offered the role of "Accounts Manager for Irish Accounts", which was, in effect, a promotion. The offer was made in a letter of 21st November, 2000, the terms of which were accepted by the plaintiff. It was provided that in her new role, which was to take effect from 20th November, 2000, the plaintiff would continue to report to Mr. O'Sullivan. By the end of November Mr. O'Sullivan was to speak to the plaintiff to agree details of her objectives for her new role up to 31st March, 2001 and a revised "performance management" form would be submitted to the Human Resources section of eircom UK Ltd. The letter also stipulated as follows:

14 • The plaintiff's salary would increase to Stg.£24,000 with effect from 20th November, 2000.

15 • She would remain on her "current bonus scheme", but this would be reviewed with the intention of introducing a commission structure for her role in April, 2001.

16 • All other terms, conditions and benefits remained unchanged.

17 By letter dated 26th April, 2001 from the Chief Executive Officer of eircom UK Ltd., to the plaintiff, having stated that that company was undergoing dramatic restructuring and that the scale-back of its operations reflected the difficulties being experienced throughout the sector, and having referred to discussions with the plaintiff's then current manager and consultations with herself, she was informed that the business could no longer sustain her secondment as "Account Manager for Irish Accounts" with the company and that she would be repatriated to the plc effective from 31st May, 2001. The letter went on to provide that, in accordance with a secondment letter, in relation to transportation of her personal effects "the cost of up to 15 cubic metres road/sea freight (including the cost of insurance and packing)" would be covered by the employer. That assurance reflected what was provided in the letter of 6th April, 2000 in relation to the transfer of personal effects.

18 In summary, what happened in...