Case Name and Reference: Kelly v O’ Keefe Insulation Services Limited (UD 987/2009, MN 1005/2009)
Court or Tribunal: Employment Appeals Tribunal (“EAT”)
Legislative Reference: Unfair Dismissals Acts, 1997 to 2007 (the “UD Acts”), Minimum Notice and Terms of Employment Acts, 1973 to 2007 (“MNTEA”)
Jurisdictions/Subject Matter: Purported Performance Dismissal

Facts

The claimant (“employee”) commenced work in January 2003 as a Quantity Surveyor. He was promoted to Contracts Manager after four months and became General Manager of the Dublin office in May 2006.

The employee was called to attend a meeting with the Company’s Director (“employer”) and the General Manager on 8 December 2008 at the head office in Cork. The employer indicated that he was unhappy with the employee’s performance and was going to terminate his contract of employment. The employee felt he had a good relationship with the employer and had no warnings that his contract would be terminated.

Since the dismissal the employee was unemployed for twelve months after applying for numerous positions and attending various courses. In January 2010 he set up as a sole trader.

After the employer’s dismissal he wrote to the company to ask for written confirmation of the reasons for dismissal but received no response.


Determination

The EAT, which was chaired by Mr. M. O’ Connell B.L. in Dublin on 1 April 2010, found that the employee was dismissed without any reasons being given or any proper procedures being adhered to. The Tribunal therefore determined that the employee was unfairly dismissed and awarded the employee €65,000 under the UD Acts and €4,364 under the MNTEA.


Legal Review

This case is striking due to the high level of the award. The employee received an award of €65,000 which was equivalent to over 14 months of salary. This seems to have taken into account the employee’s actual loss only as he was unemployed for one full year and had been working as a sole trader for the three months prior to the hearing date. The Tribunal noted the fact that, as a sole trader, the employee was losing €600 per week on his previous salary.

While the EAT has the power to award reinstatement and re-engagement, compensation is by far the most common form of remedy and frequently preferred by the parties. The maximum monetary compensation awardable under the Acts is two years’ gross remuneration. Remuneration includes base salary as well as any regular bonuses, commission or benefits.

It is unusual for the EAT to award high levels of compensation and this is evidenced by the 2008 EAT Annual Report (the last year for which an annual report of the EAT is available), which outlines that the average award made by the Tribunal in 2008 was €11,476. In only 25 cases was an award made in excess of €25,000. We don’t of course know the salary levels involved but, even so, the figures show a reluctance on behalf of the EAT to make high awards. Therefore compensation of €65,000 represents a sizable return given the recent trend towards low EAT compensation awards.

One of the reasons why EAT compensation awards are so low is that employees have a duty to mitigate their loss. In Kelly the Tribunal was satisfied that the employee sought to mitigate the loss as best he could. The actual loss of the employee will be carefully examined and compensation will only be awarded where there is real loss.

In Coyle v Tipper House Trust Limited UD 904/93 the employee won his unfair dismissal claim but was awarded no compensation under the Acts “as the Tribunal was told that the claimant has been unfit for work since his dismissal and it cannot be said when he will be fit for work, if ever, in the future”. According to the 1993 Act (and after the Coyle decision), if an employee has been held to have been unfairly dismissed and suffered no loss, a basic award of up to four weeks remuneration may be made.

Although they didn’t exercise it in Kelly, the Tribunal has the power to make an award for future losses under s. 7 of the 1977 Act. The Tribunal can therefore speculate as to the employee’s future losses that could be considered attributable to his dismissal. While these calculations are difficult to determine, the Tribunal will look at factors like the ability of the employee to secure employment at a similar wage (Bux v Toohey & Allied Irish Bank, UD 166/1978).