The Unfair Dismissals Acts clearly specify that an employee may take a claim for unfair dismissal where the employee has resigned but they felt that they had no other option but to do so due to the actions of their employer. This is commonly referred to as a claim of “constructive dismissal”. Here we will review two very interesting cases before the Employment Appeals Tribunal, in which it has been made clear that while the burden of proof lies with the employee to prove it was reasonable for them to terminate their employment, an employer will still always need to ensure that they have acted in a “reasonable manner” in respect of employee relations and working conditions. The two cases reviewed are very interesting and provide a different perspective on a similar type of claim brought by the employees.
Background
In the first case reviewed, An Employee v An Employer (UD1274/2010) the employee RK, was a hotel manager who returned from Maternity Leave to discover that she was being offered one of two options by her manager, PW: she could either take redundancy or else return to work on a part-time basis. The part time work offered was on a “here and there” ad-hoc basis and the manager informed her that these were the only two options available to her as her wage was too high because the company couldn’t afford to keep her on her old hours in addition to the man who had been covering her hours while on maternity leave. RK sought legal advice and upon the intervention of solicitors into the process the company did then scale back on their previous stance and instead informed RK that her old role was still there for her if she wanted. RK, however, rejected the offer of her old role and instead declared that she considered herself constructively dismissed given that she no longer retained any trust in her employer.
The EAT considered all the facts and noted that the employee did not exhaust the company’s internal grievance procedures before terminating her employment. Generally speaking, such a failure will be completely detrimental to an employee’s case for constructive dismissal as it is difficult to argue that you had no other option but to terminate your employment due to your employer’s actions if at first you did not seek to resolve your difficulties at a local level through the company’s own grievance procedure. This requirement to exhaust grievance procedures was clearly set out by the EAT in Conway -v- Ulster Bank (UD 474/1981) and Keogh -v- JTM Jumpstarters Limited (UD 1090/2008). However, in this case the EAT held that the employee could rightly declare herself constructively dismissed, notwithstanding the grievance procedure issue, as the employer had “handled the situation badly” and that the introduction of redundancy terms into the conversation would no doubt have been a massive shock to the employee, particularly as she was just coming off maternity leave. Accordingly, the EAT awarded the employee €31,000 on the basis that she had been constructively unfairly dismissed.
The second case, Ciara Shaughnessy -v- Karen Clince (UD 1448/2010), concerned a manager of one of 11 after school facilities operated by her employer. In March of 2010 the claimant along with all other 19 staff received a letter advising of a 10% pay cut which was to take effect from 12th April 2010. The claimant felt strongly that the business should have looked into other options of reducing costs before considering a pay cut and advised her employer of this in a letter at the beginning of April. Following a general meeting CS was asked to stay behind and told that she had the option of taking the pay reduction or that she may have to move location and have her hours cut. CS refused to take the 10% cut and subsequently was informed that she was being relocated and on reduced working hours in order to achieve the 10% reduction in her wages. CS failed to utilise the company grievance procedures but did revert back to the employer to the effect that she would agree to a 5% pay cut. On 22nd April the claimant furnished her employer with her letter of resignation, some 13 days after she was notified about the pay cut. The employer asked the employee to reconsider and drew her attention to the company’s internal grievance procedure.
The EAT considered all the facts and stated in their determination that “the onus rests with the claimant (employee) to demonstrate to the Tribunal that she has acted reasonably in tendering her resignation”. The Tribunal recognised the difficulties of the employer, who was suffering from a significant downturn in business and a burdensome wage bill, and as such stated that they had no difficulty with an employer faced with such complications enforcing a decision to cut wages, particularly when the burden was being shared evenly across the business. The Tribunal confirmed that “The claimant’s resignation was premature. She had not given the new arrangement a chance and had not triggered the grievance procedures which may have yielded a result.” Accordingly, the employee failed in her claim of constructive dismissal.
Points of Note
In the cases above two vastly different decisions were reached in constructive dismissal circumstances where the employee had failed to utilise the company’s internal grievance procedures following an enforced change to their terms and conditions. Generally speaking, if an employee does not exhaust internal procedures they will find it virtually impossible to argue that they were constructively dismissed. This is particularly the case where the employer had intended to cut hours and then afterwards offers the employee their job back on the same terms, as was the case in the Hotel Manager scenario. Thus, how were two differing outcomes reached? More specifically, how was it the Hotel Manager that was successful when she didn’t use the grievance procedure and was offered her normal terms and job when in the After School case the employer held firm on the reduced terms and conditions but this employee wasn’t successful? It is suggested that these questions can be answered through assessing the three substantial differences between the two cases:
1. In the Hotel Manager case the employee was returning from maternity leave. A very important point for employers to note is that employees are entitled to return to the same role that occupied prior to their period of Maternity Leave.
2. In the After School case the cuts were being applied across the board in a fair and even manner whereas in the Hotel Manager case it was only the Hotel Manager who was suffering a change to their terms and conditions.
3. In the Hotel Manager case the employee was threatened with redundancy. In the After School case the employee was threatened with a reduction in hours and job relocation. Ultimately the After School stance was less severe than the Hotel’s stance.
In essence, the facts surrounding the Hotel Manager resignation were more severe than those that surrounded the After School Centre Manager. These cases are prime examples that the EAT will not simply apply general rules and precedent to an objective overview of the facts as they are far more likely to consider the subjective circumstances of the case before them and whether or not in the circumstances the employee/employer acted reasonably. In the Hotel Manager case the EAT were of the view that the offer of the old role was too little too late and that by the time the offer was made the employment relationship was irretrievable. The lesson to be learned here is if a situation arises such that an employee is resistant to a change to their terms and conditions then the employer ought to immediately enact the grievance procedure. A failure to do so may render the company liable to constructive dismissal.
Conclusion
It is important for employers to be aware of how to act when faced with a situation such as an employee resignation. Given both determinations in the above mentioned cases, it is important to act immediately and to ensure that the employee is offered the use of the company grievance procedure.
Employers should seek advice from Peninsula Business Services when faced with an employee resignation. Please phone the 24 Hour Advice Service on 01 8555050 and one of our experienced advisors will be happy to assist.
