Tanneron Ltd (Represented by Alan Ledwith, B.L., Instructed by, Ronan, Daly, Jermyn, Solicitors) v Gerard Conolin (Represented by Tiernan Lowey, B.L., Instructed by, Michael Houlihan and Partners, Solicitors)
| Jurisdiction | Ireland |
| Judgment Date | 01 July 2021 |
| Judgment citation (vLex) | [2021] 7 JIEC 0101 |
| Docket Number | FULL RECOMMENDATION ADJ-00018534 CA-00023903 -001 DETERMINATION NO. UDD2151 |
| Court | Labour Court (Ireland) |
FULL RECOMMENDATION
UD/20/88
ADJ-00018534 CA-00023903 -001
DETERMINATION NO. UDD2151
Labour Court
Chairman: Mr Geraghty
Employer Member: Mr Murphy
Worker Member: Ms Treacy
SECTION 8A, UNFAIR DISMISSAL ACTS, 1977 TO 2015
1. Appeal Of Adjudication Officer Decision NoADJ-00018534
2. The Employee appealed the Decision of the Adjudication Officer to the Labour Court on 11 May 2020 in accordance with Section 8A of the Unfair Dismissals Act 1977 to 2015. A Labour Court hearing took place on 23 June 2021. The following is the Determination of the Court.
This is an appeal under the Unfair Dismissals Acts 1977 to 2015, ‘the Acts’.
Mr. Conolin, ‘the Complainant’, was employed by Tanneron Ltd., ‘the Respondent’, as a Principal Consultant offering consultancy to Pharma and Biotech companies on quality control, from January 2008 to July 2018.
The Respondent contends that the Complainant was made redundant. The Complainant contends that he was unfairly dismissed.
The Complainant made a complaint under the Acts to the Workplace Relations Commission, ‘WRC’. The Adjudication Officer, ‘AO’, found that there was a genuine redundancy and that the Complainant had not been unfairly dismissed.
The Complainant appealed to this Court.
The company had cumulative losses from June to December 2017 in the region of €442,000, from January to April 2018 of €217,000 and cumulative losses to end November 2018 of €733,000.
There were various measures taken to deal with the situation including non-payment of bonuses, reduction in telephone costs, cancellation of an IT service contract, reduction of office space through closure of Galway office and closure of the Respondent's office in India.
However, 93% of the costs of the business are employment costs. The Respondent was kept afloat by a series of significant cash injections from its France based parent company, EFESO.
Survivability was paramount and there was no alternative but to have redundancies. Three consultancy positions had to be made redundant and in 2018 head count reduced from 22 to 12.
The Complainant was paid €26,137.34 in accordance with his rights under the Redundancy Payments Act and other statutory entitlements.
BSM USA and BSM India are wholly owned subsidiaries of Tanneron Ltd., while each is incorporated in their own jurisdiction, the companies have always operated as one entity. For that reason, the consolidated accounts are of importance. It is important to note that figures in the Respondent's accounts that appear to show profits of €646,536 for 2017, €348,711 for 2018 and €324,761 for 2019 are, in fact, balance sheet figures that show the total retained earnings of the Respondent from its inception. The actual profit and loss figures for the Respondent company for these years were +€5217 in 2017, -€297,825 in 2018 and -€23,950 in 2019. In consolidated accounts for the three entities, the losses are even greater: -€51,000 in 2017, -€706,000 in 2018 and -€57,000 in 2018.
With the exception of November, every month in 2018 was loss making.
Mr. Tom Reynolds is CEO of the Respondent. At the request of the parent company, EFESO, when it acquired the Respondent in 2015, he provides his services to the Respondent through a company called Greyslate Ltd, of which he is a director and shareholder. He acted at all times with the full authority of the Respondent company. Reference has been made by the Complainant to the remuneration paid to Greyslate Ltd. Mr. Reynolds was subject to ‘earn out’ arrangements, payable upon the achievement of certain targets. Accruals were made in the accounts for these sums. The figure of €314,558 paid to Greyslate Ltd. includes payment for the first ‘earn out’ of €145,000 that related back to the sale of the company in 2015. Mr. Reynolds had no say in this payment that was owed to his company by virtue of contractual arrangements. The second ‘earn out’ was not paid and was reversed in the accounts.
Bank statements and accounts are provided to the Court.
All consultants, with the exception of three senior managers, across the three BSM entities were considered for redundancy. BSM India's operations were ceased and the sole employee there left the business. Apart from the 3 consultants made redundant, a further 6 left the business, leaving a total of 12 employed by the Respondent.
On 28 March 2018, Mr. Reynolds wrote to all consultants to advise them of the fall-off in business and a request that all consultants seek to generate more business. On 23 April 2018, he wrote again regarding the challenges and the fact that March was the ‘5 th loss making month in a row’, in which mail he advised of the closure of the India office. On 16 May 2018, he advised of possible redundancies. On 18 May 2018, a presentation was given to all who might be affected by redundancies. They were advised that selection criteria based on fee income and sales over the previous 12 months were being considered to help minimise the risk of future redundancies. The option of ‘last in, first out’ was discounted as one of those with the potential to be made redundant was based in the UK, where this is deemed to amount to indirect age discrimination.
There was no agreed system for selection for redundancy in place and the Respondent was entitled to apply a reasonable and fair process best suited to its business.
Alternative possible opportunities elsewhere within the EFESO group were advised to those affected.
The Complainant raised a concern regarding the selection criteria and Mr. Reynolds met with him and his representative on a number of occasions.
On the basis of the selection criteria, the Complainant was made redundant by letter dated 15 June 2018. He was paid statutory redundancy of €13,236 plus six weeks' notice and outstanding annual leave, totalling €26,564.
The Complainant's claim that he was targeted regarding the allocation of work is absolutely refuted. For him to have been targeted, management would have had to be aware of redundancies 12 months in advance of when they occurred.
The Complainant appealed the decision. His appeal was considered by an EFESO Vice-President in Belgium and the decision was upheld.
The redundancy was performed in line with the requirements of impersonality and change. The Respondent relies on the decision in Boucher v. Irish Productivity Centre 1994 EAT ELR205, that in situations where no previous process was applied, the requirement is to apply criteria fairly and uniformly. Although there is no general right to a hearing prior to dismissal, the Complainant had the benefit of a lengthy consultation process, including the right to be represented at meetings, see Hickey v. Eastern Health Board 1991 SC9ILT DIG 24.
The Respondent acted reasonably. The question for the Court is not whether it would have made the selection but, rather, if a reasonable employer could have made the selection, see British Aerospace Ltd v. Green (1995) IRLR 433 and also Williams v. Compair Maxam Ltd (1982) IRLR82. In the case of Mary Hyland v Templevile Developments Ltd UD 1515/2019, it was determined that it was for the employer to decide on reasonable criteria for redundancy unless there was an agreed procedure already in place.
The dismissal was consistent with s. 6(4) of the Acts and with s. 7(2) of the Redundancy Payments Act 1967.
The survival of the company required redundancies and the Respondent complied with all necessary requirements by consulting with employees and applying a fair and transparent selection process and a right of appeal. There is no legal barrier to a selection for redundancy being based on performance, provided it is impersonal and objective. In this case, the criteria used were related to the continuing viability of the Respondent company. They were impersonal and no individual was identified in advance. Indeed, Mr. Reynolds was surprised to find that, when the criteria were applied, the Complainant was bottom of the list for both fees and sales in the previous 12 months' period.
There is an absence of documentation to support many of the Respondent's assertions. There was not a genuine redundancy situation, the selection process was grossly unfair and the procedure leading to the dismissal was a sham where the pre-determined selection process meant that the Complainant could do nothing to overturn his selection.
In order to prove that the dismissal was fair, the Respondent has to show that it arose wholly or mainly due to redundancy, that the selection process was fair and that the procedures applied were fair. None of these conditions are met.
The Respondent admitted at the WRC hearing that there was no consideration of lay off, salary reductions or voluntary severance and, therefore, failed to consider all alternatives to redundancy.
The AO observed regarding the selection process that ‘I am of the view that a more transparent and comprehensive matrix could have been put in place by the Respondent’.
The AO failed to make any finding regarding the procedural fairness of the dismissal.
For approximately 8–10 months no work was assigned to the Complainant.
After 10.5 years of loyal and diligent service during which the Complainant had an unblemished record and was never the subject of a negative performance appraisal, the Complainant had no reason to believe that his performance would be used against him to justify dismissal, allegedly on redundancy grounds. If the period under consideration had widened to 2 years, the...
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