Probationary Dismissal

In 2023 the Labour Court made a non-binding recommendation under the Industrial Relations Acts that a hotel manager be awarded €90,000 in compensation following his dismissal during his probationary period.

This recommendation, though non-binding, serves as a timely reminder to employers that dismissing an employee during a probationary period is not risk-free.

In Beechside Company Limited t/a Park Hotel Kenmare v A Worker, the claimant alleged that he was dismissed “without warning” after just three months in the role, when the managing director of the hotel called him to a meeting, informed him that “this was not working out” and asked him to leave immediately. The hotel argued that the contract of employment unequivocally provided that either party could terminate the contract by giving written notice during the probationary period.

The Labour Court noted that the contract of employment expressly stated that all dismissals would be carried out in accordance with the Company’s disciplinary procedure, which was also incorporated into the contract, and set out a number of procedural protections contained therein.

The Court found that the procedures adopted in terminating the claimant’s employment were seriously flawed, and that he was not afforded fair procedures in accordance with the Code of Practice on Grievance and Disciplinary Procedures (S.I. No. 146 of 2000). While the Court accepted that an employer has the right, during a probationary period, to decide not to retain the employee in employment, it stated that dismissal could only be lawfully carried out where the employer adheres strictly to fair procedures. It noted that this requirement of procedural fairness was rooted in the common law concept of natural justice.

The Court was satisfied that the claimant was not provided with a warning or details of any performance issues, and that he was not afforded an opportunity to be represented, a right to reply or provided with reasons for his dismissal. On these grounds, the Court was satisfied that he was denied natural justice. It recommended the award based on the level of remuneration the claimant was receiving (which was not disclosed in the decision).

Conclusion:

1. While employees typically require 12 months’ service to bring a claim under the Unfair Dismissals Acts, employers should be aware that there is no length of service requirement under Section 20(1) of the Industrial Relations Act 1969. However, the effectiveness of this section as a means of seeking redress is limited by the fact that recommendations issued by the Labour Court are not legally binding on employers.
2. The Labour Court explicitly acknowledged that an employer may decide not to retain an employee during a probation period. However, the recommendation restates the position that dismissals during a probationary period must be carried out in accordance with the requirements of natural justice. This view is in line with previous Labour Court recommendations, which emphasise that the purported “disapplication” of disciplinary procedures during the probation period in a contract of employment does not relieve an employer of the obligation to act fairly during a probation period.
3. The Labour Court had previously recommended relatively low awards (of under €2,000) for probation related dismissals. This award, while non-binding, represents an emphatic departure from previous recommendations, which would not appear to be fully explained by the level of claimant’s remuneration alone, as previous cases also involved senior personnel.
4. Employers should remain conscious of the other risks arising from probationary period dismissals, including wrongful dismissal claims and claims for injunctive relief before the civil courts. Employers should proceed with care in probationary dismissals and apply fair procedures when dealing with employees. Needless to say, if an employer has a Probation Policy, that must be complied with, but it cannot dis-apply fair procedures.

 It seems an employer is free to terminate an employee’s employment for no reason during probation and, even where it relates to poor performance, the employer is not obliged to observe fair procedure but where the termination is for misconduct, fair procedures must be observed. This is the law as it stands. [I can see the law evolving to require that Fair Procedures are followed in All   dismissals during probation.]

 

A no fault dismissal is permitted in law and has been recognised over the years, most recently in the 2021 case of Donal O’Donovan v Over-C Technology Limited, whereby the Court of Appeal overturned an injunction granted to an executive whose employment had been terminated on the basis of poor performance during his probationary period. The Court of Appeal in that case re-stated two clear principles as follows: –

Firstly, that the principles of natural justice apply to cases involving dismissal for misconduct but not to termination on other grounds.{As stated I can see this changing!]

Secondly, that an employer can terminate employment for any reason, or no reason, provided adequate notice is given. This applies whether or not the dismissal occurs during the probationary period.

That being said, proceeding to termination on a no-fault basis is not without risk, particularly where there are disciplinary matters or underlying performance issues. Below I have set out the risks to be considered.

Unfair Dismissal

Generally, an employee cannot bring an unfair dismissal claim unless they have 52 weeks of continuous service. This is subject to certain limited exceptions (for example there is no service threshold for dismissal relating to pregnancy, trade union membership, making a protected disclosures and other grounds). In addition, there is no service threshold to bring a discriminatory dismissal claim on the grounds of their race, sex, sexuality, age or any of the other discrimination grounds.

So we can say that if an employer proceeds to terminate on a no-fault basis, an employee is likely to fall outside of the scope of the Unfair Dismissals Act unless they have 52 weeks of continuous service or one of the above exceptions apply. To mitigate the risk of a discrimination claim, it would be best to document the non-discriminative, objective basis for the no fault dismissal.

Where the employee has in excess of 52 weeks service and they are dismissed on a no-fault basis, they will be afforded the protections of the Unfair Dismissal legislation. In that situation, it will be difficult for an employer to stand over this type of dismissal in the absence of fair procedures and natural justice. In fact, the burden will be on the employer to prove the dismissal was fair. It is important to be aware the maximum compensation which can be award for an Unfair Dismissal claim is 2 years remuneration and 5 years where it relates to a Protected Disclosure.

Recommendations

An employee dismissed on a no-fault basis can seek a non-binding Recommendation from the Workplace Relations Commission “WRC” under the Industrial Relations Act, 1969. This is the route usually taken when they fail to meet the service requirement under the Unfair Dismissals Acts. An employee can ask the WRC/Labour Court to examine their case and determine (by way of a non-binding recommendation) whether they were fairly dismissed or not. The approach of the WRC/Labour Court tends to focus on fair procedures – such as whether the employee had the right to fair procedures before they were dismissed. Typically, the WRC/Labour court find that they do – but where the employer objects in a timely manner, to being bound by the decision, the ruling will be non-binding. In certain sectors (e.g. public sector organisations) there may be a tendency to observe WRC/Labour Court rulings, but this is not obligatory.

Wrongful dismissal / Injunctive relief

Lastly, there is a claim for wrongful dismissal, which means dismissal in breach of contract – and can only be litigated in the Courts (the Workplace Relations Commission has no jurisdiction). An employee can in theory bring a wrongful dismissal claim even during the first year – but such claims are difficult for employees to succeed in (and may become more difficult because of the O’Donovan decision – mentioned above). They tend to be confined to high-level executive roles with high salaries. An employee typically brings a wrongful dismissal claim in the first year, if they can establish that (i) they were entitled to fair procedures prior to dismissal (such as within a disciplinary process) but (ii) the employer did not afford them those fair procedures.

Applying to the Courts for injunctive relief for wrongful dismissal is generally a less attractive route for a dismissed employee in view of the time and very significant expense required to take this type of action. The Courts have also shown an unwillingness to grant injunctive relief to restrain a no-fault dismissal. This was the case in Bradshaw v Murphy 2014 where the High Court refused to grant an injunction to restrain a no-fault dismissal of a chef/restauranteur – despite allegations of misconduct which had not been investigated. In that case the employee had failed to meet the high bar required to secure such an injunction, namely he had not established that:

1. there is a serious issue for trial;
2. damages would be an inadequate remedy;
3. the balance of convenience lay in favour of granting the injunction.

An employee will have a greater prospect of being granted injunctive relief where they have grounds to demonstrate that there was a reason for the dismissal such as for poor performance or misconduct.

Essentially, in such a scenario an employee would apply to the Court seeking their rights to fair procedures so that they can address what are in their view the clear unaddressed disciplinary issues prior to any dismissal being affected. It is key that there are no live or ongoing formal disciplinary matters. The cases where employees have secured injunctions for no fault dismissals have tended to involve scenarios where a disciplinary process was started, dropped and then replaced by a no-fault dismissal.

This was the case in Grenet v Electronic Arts Ireland Limited, whereby Mr. Grenet was dismissed for allegedly making an inappropriate comment on a call with another colleague. The dismissal was subsequently withdrawn, and it was claimed that his employment was validly terminated on a no-fault basis. Mr. Grenet brought a successful injunction restraining his dismissal.

In the O’Donovan case mentioned above, the Court of Appeal overturned the High Court’s decision and limited the circumstances in which the Court will interfere with a dismissal and grant an injunction. In that case the employee’s poor performance was brought to his attention, and the company terminated his employment with immediate effect and confirmed that the employee would be paid in lieu of notice. The employee issued injunctive proceedings in the High Court seeking to be immediately re-instated into his role and preventing the appointment of any other person into his role. The High Court granted an injunction directing that the employee be re-instated.

The Court of Appeal decision overturned that decision and helpfully removed the uncertainty created by the High Court’s original decision. The Court of Appeal acknowledged the following:

1. It was accepted that the dismissal during probation was for poor performance, not misconduct.
2. The contract of employment included an express clause which permitted termination during probation for no reason.
3. The Court refused to imply a right to fair procedures into a contract.
4. The employee was dismissed pursuant to an express contractual term which entitled the employer to dismiss him if his performance was substandard.
5. The employee was appropriately paid his notice.

The Court helpfully commented that the trial Judge had failed to properly consider the fact that termination occurred during the probation period. The Judge commented “During a period of probation, both parties are – and must be – free to terminate the contract of employment for no reason, or simply because one party forms the view that the intended employment is, for whatever reason, not something with which they wish to continue”.

The net result is that the number of employees seeking injunctive relief from the Court will be restricted to circumstances relating to misconduct in which no fair procedures are used. It is also important to point out that this rationale applies whether or not dismissal occurs during the probationary period. Further than that, it is possible to dismiss for poor performance without a requirement to use fair procedures. However, the application of the Unfair Dismissals Acts should always be considered.

Where the dismissal relates to misconduct issues, fair procedures should always be applied.

We would recommend the following be considered when exploring dismissal of a poorly performing employee on a no-fault basis:

1. Where the employee is still within their probationary period or has under 52 weeks service, before moving to a termination, ensure the contract of employment, particularly the probationary clauses contain scope to terminate the contract for no reason.
2. Where the employee has in excess of 52 weeks service or falls into one of the exceptions, a performance improvement plan should be considered in line with company policies and procedures and, depending on the outcome, a dismissal thereafter.
3. Termination in circumstances of misconduct, even during probation, should be conducted in line with the Company’s disciplinary procedures and fair procedures / natural justice. This does not necessarily have to be the full disciplinary policy but can be an abridged version.

In conclusion, while no fault dismissals are possible, they are notoriously difficult to stand over and justify. A lot will depend on the nature of the performance issues and how they have been addressed in the past. Prudent employers will ensure they obtain legal advice in advance of moving towards a no-fault dismissal.

Disciplinary hearings and grievance procedure compliance is essential for employers and managers within employment law. It is important to ensure that the necessary procedures that is place, and that it has been issued to and signed off by all employees, in order to guarantee that you can correctly manage disciplinary issues in the workplace.

Current employment law legislation provides that all employees should have received and signed off on the company disciplinary and grievance procedure within 28 days of commencement of employment.

Having a formal procedure in place will remove any ambiguity or accusations of unfair treatment as, when correctly applied, a disciplinary and grievance procedure allows for all employees to receive the same treatment if a disciplinary issue arises.

Fair Procedures

Section 6 (7) of the Unfair Dismissal Act states that in determining whether the dismissal is fair or unfair it has regard to:

(A) The reasonableness or otherwise of the conduct of the employer in relation to the dismissal, and

(B) the extent, if any, of the compliance or failure in comply with the employer in relation to the employee to the disciplinary procedures or the provisions of the Code of Practice on Disciplinary and Grievance Procedures (Industrial Relations Act 1990) (Code of Practice on Grievance and Disciplinary Procedures) (Declaration) Order 2000.

As the employers own disciplinary procedures may be more extensive than the procedures in the Code of Practice, it will be looked to first.

The Rules of Natural Justice for Disciplinary Hearings

Employers who commence disciplinary proceedings against their employees must follow the rules of natural justice. The employee must:

• Be made fully aware of any formal allegation made against them
• Be afforded the opportunity to reply to any formal allegation made against them
• Be afforded the right to representation throughout the disciplinary process
• Receive the right to a full and objective investigation of the allegation
• Receive the right of appeal

Fair Procedures in Disciplinary Hearings Legal Case

Recently, the Employment Appeals Tribunal criticised Dunnes Stores for disregarding the rules of natural justice in the manner they conducted their disciplinary process as they did not provide a checkout operator with an appeal hearing despite her request for one, awarding her €26,000 for being unfairly dismissed. This highlights the importance of adhering to the rules of natural justice.

In another recent case an employee was awarded €1,500 for the unfair dismissal, and a further €2,663 in lieu of four weeks’ minimum notice.

The Tribunal found that the investigative and disciplinary processes in the case “were fundamentally flawed to the extent that the Tribunal considers and holds the claimant to have been unfairly dismissed.” The exclusion of the employee’s union representative and the denial to him of his representative of choice during the process was unfair and a fundamental breach of his contractual entitlements. The Tribunal could not disregard these fundamental flaws, particularly as the firm had the advice of an external consultant in employment procedures available to it.

The recent case of Castolin Eutectic Ireland Limited V Kita [2018] involved an allegation from the complainant that they had been unfairly dismissed following a workplace dispute. During the incident the complainant requested to speak with the operations manager and told another supervisor within the company that they did not trust their supervisor. Following this incident the complainant had taken a number of day’s sick leave. Upon their return to work the complainant was questioned by their manager regarding the incident and they were handed a letter requesting their attendance at an investigation the next day. The complainant was not provided with a copy of the complaint lodged against them and they were denied access to witnesses and notes of the investigation meeting. This was not disputed by the respondent, however, they argued that the complainant’s conduct had amounted to a gross insubordination and thus justified the complainant’s dismissal. The dismissal was upheld by the WRC who held that a gross insubordination had been found.

The Labour Court reversed the decision of the WRC on appeal. The Labour Court held that while the complainant had not followed reasonable instruction, their conduct did not amount to gross insubordination and that the lack of procedural fairness afforded to them further contributed to their dismissal being unfair. No public remedy or re-reengagement was issued in this case; rather the complainant was awarded €10,000 in compensation. This case illustrates the importance of consistency in the treatment of employees pertaining to disciplinary matters and dismissals.

 

Grievances During the Disciplinary Process

Often, during the course of an investigation or disciplinary process, an employee raises a grievance either in relation to the process itself or in relation to some other related or unrelated matter. In this scenario, the first step is for employers to look to their grievance and disciplinary procedure for guidance regarding the policy and custom and practice approach to this issue.

While the UK Code of Practice does not bind Irish employers, in the absence of any Irish legislative or case law guidance on the subject, t is helpful to look at the UK position for some guidance on best practice. The ACAS Code of Practice 2009 provides some guidance on what to do in a similar situation in Ireland. Section 46 states:

“Overlapping grievance and disciplinary cases…where an employee raises a grievance during a disciplinary process the disciplinary process may be temporarily suspended in order to deal with the grievance. Where the grievance and disciplinary cases are related it may be appropriate to deal with both issues concurrently”.

It is clear that there is no legal requirement to suspend a disciplinary process if a grievance has been raised.

However, where the grievance relates to the process of the disciplinary procedure, it could threaten the integrity of the disciplinary procedure. The employer should consider whether the disciplinary procedure should be suspended for a short period of time while the grievance is considered.

The 2009 ACAS Guide suggests that a grievance raised in respect of fair procedures may require an employer to consider suspending the disciplinary process where: