In this ‘Hot Topics’ article, Niamh Walsh of Crowley Solicitors examines the issue of a breakdown of trust and confidence between an employer and employee. Specifically, Niamh outlines the redress options available to the Workplace Relations Commission (“WRC”) in the event that it is decided that redress is warranted.

Will parties be forced to work together where trust and confidence no longer exists?

It is accepted practice that the Courts will not force parties to work together where the relationship of trust and confidence has broken down. As with many areas of employment law, it may be straightforward to know that an employment relationship has broken down but it is a different matter to demonstrate why, such that natural justice and fairness prevails.

The recent case of An Emergency Service Controller v A Fire Authority (ADJ-00009238), 3 July 2018 reinforces the reluctance of the WRC and the Courts to require parties to work together where trust has broken down.

While the WRC held in favour of the employee in relation to the unfair dismissal complaint as a result of procedural flaws that were “so flagrant that they rendered the decision [to dismiss] (added by Crowley Solicitors) to be flawed”, the employee’s request for reinstatement was refused on the basis that trust and confidence between the parties no longer existed. The WRC instead made an award of compensation of €5,000, taking into account the employee’s contributory conduct to his dismissal.

This case follows well-established case law supporting the principle that parties will not be forced to work together where mutual trust and confidence no longer exists. By way of example, this long standing principle was highlighted by Kelly, J in Reynolds v Molocco [1999] 2 IR 203:

“Normally courts will not grant an injunction to restrain breaches of covenant in a contract of employment if that would amount to indirect specific performance of such contract or would perpetuate a relationship based on mutual trust which no longer exists.”

This unwillingness to order an employment relationship to continue where the relationship has completely deteriorated was also demonstrated by the Employment Appeals Tribunal in the case of Sheehan v Continental Administration Co. Limited [UD858/1999]. It was held that neither reinstatement nor reengagement were appropriate remedies where such relief had the potential of creating “future friction, disharmony and possibly an acrimonious relationship.”

What constitutes a breakdown of trust and confidence?

A mere assertion on the part of an employer or an employee that trust and confidence has broken down at the hearing of a case before the WRC or the Courts in an effort to avoid reinstatement or reengagement will not be sufficient.  Neutral, objective and ideally independently verified evidence that is contemporaneous with events prior to dismissal is required to best position an employer to meet the fair procedure tests.

In the case of A Banker v A Bank (ADJ-00001266), 26 March 2018, the appropriateness of reinstatement as a remedy was considered by the WRC.

The employer submitted that reinstatement was not appropriate as mutual trust and confidence had broken down.

In considering the redress options, the WRC noted that:

• there was no reasonable basis for the finding of gross misconduct;
• there was an absence of any contemporaneous evidence to support the alleged breakdown of trust and confidence;
• there was an absence of evidence to support the respondent’s fear of “future friction, disharmony and possibly an acrimonious relationship”.

The WRC also noted that the employee was a popular and successful employee, he progressed well in his career, held a regulated position and complied with regulatory requirements. The fact that his dismissal had terminated his career in banking was also considered.

The following factors were taken into account by the WRC in rejecting the employer’s argument:

• The employee’s last appraisal was positive and highlighted him as an excellent team player;
•  There was evidence that he had a good working relationship with senior management;
•  A previous issue was ironed out and resolved informally.

As in its view, reinstatement would not lead to friction, disharmony or acrimony, the WRC ordered that the employee be reinstated to the position he held prior to his dismissal. Reinstatement also means that all financial loss accrued by the employee since the termination date accrues to the employee.

The reasoning, in this case, provides helpful guidance as to what should be considered when assessing the status quo regarding mutual trust and confidence in the context of not only an unfair dismissal case but also during internal processes.

Redress options under the Unfair Dismissals Acts 1977-2015

Recap: WRC Adjudication Officers and the Labour Court have discretion as to the redress to be applied and are not limited to awarding the option selected by the Complainant in their Complaint Form.

Section 7 of the Unfair Dismissals Acts 1977-2015 provides for three forms of redress in the case of an unfair dismissal:

• Compensation
• Reinstatement
• Reengagement

Compensation is by far the most popular form of redress. Reinstatement and reengagement are also awarded from time to time, where appropriate.

Compensation is awarded more often as reinstatement and reengagement are often inappropriate if there has been an irretrievable breakdown in trust and confidence between the parties. Compensation is also typically the most appropriate remedy available to the WRC or the Labour Court in the event that an employee has taken up alternative employment or if reinstatement or reengagement are impractical solutions.

Key takeaways

• Appropriate redress is very much fact specific and based on the state of the relationship between the parties in question.
• In addition to considering trust and confidence, the WRC and the Courts will consider other factors including the views of the parties involved, the practicalities of the situation and the impact that reinstatement or reengagement will have on both parties from a compensation/losses point of view.
• If a breakdown in trust and confidence is an objective reason for a serious disciplinary sanction, such as a dismissal, this fact should be recorded in writing at the time of the breakdown in trust and confidence. The employee must be given a fair opportunity to reply to the fact that the employer is of the view that trust and confidence has broken down, prior to dismissal taking effect.
• If dismissal is a potential outcome from a disciplinary process, the employee must be given the right to independent representation.
• It is useful to involve an independent third party expert in any case involving a breakdown in trust and confidence in order to:
  • (i) assess the case for a reconciliation and/or
  • (ii) confirm objectively why the relationship has broken down
  • (iii) confirm the fact of and reasons for the breakdown of trust and confidence noting, where appropriate and possible, that both the employer and employee acknowledge and accept this fact.

• The definition of serious or gross misconduct in an employer’s disciplinary policy ought to call out that an (irreconcilable) breakdown of trust and confidence for reasons of the employee’s conduct may amount to serious/gross misconduct which can attract a sanction of up to and including dismissal.
•  Employers are advised that it is unsafe to proceed to dismiss on the basis of a breakdown of trust and confidence alone.