Significant Court of Appeal decision - Confirmation that redundancy-based unfair dismissal claims belong in the WRC, not the High Court

Speedread

This week the Court of Appeal weighed in on the crucial question of precisely where an employee can legally seek to challenge the redundancy of their role. The Unfair Dismissals legislation provides a statutory framework within which employees can bring such a claim to the Workplace Relations Commission (the WRC). However, in this week's Kearney case, the question asked was whether, notwithstanding this statutory route of redress, an employee could challenge their redundancy before the High Court to secure injunctive relief.

The Court of Appeal has confirmed that it is "entirely satisfied" that it would be "entirely inappropriate" to grant such injunctive relief given the existing statutory route of redress available to employees.

What happened?

The plaintiff, Mr Kearney, was employed from 2006 until his termination of employment in August 2017. Mr Kearney experienced bouts of lengthy certified sickness absence during the course of his employment.  In 2016, during a period of unpaid leave, the employer referred Mr Kearney to an independent medical practitioner to assess his fitness for work. Both Mr Kearney's own psychiatrist and the independent practitioner concluded Mr Kearney was fit to return for work. However, Mr Kearney's requests to return to the office were, Mr Kearney submitted, "ignored".

The employer subsequently wrote to Mr Kearney in August 2017 to advise that Mr Kearney's "previous role is not available and in fact it no longer exists". The letter confirmed that his employer had been "unable to identify another suitable role" and confirmed Mr Kearney was "redundant". He was paid all contractual and statutory entitlements.

Mr Kearney ultimately instituted High Court proceedings against his employer to restrain his dismissal. His employer resisted this application, arguing that "no right of action exists at common law arising from an alleged unfair selection for redundancy and that the cause of action derives from the statutory redress scheme" under the Redundancy Payments legislation and Unfair Dismissals legislation. In turn, Mr Kearney argued that his claim was not "properly characterised" as a claim for statutory unfair dismissal but rather a common law breach of contract claim on the basis his employer had failed to "observe fairness of procedures" before dismissing him.

What did the High Court decide?

The High Court confirmed that "the primary issue in the hearing was one of jurisdiction". In circumstances where Mr Kearney could take an unfair dismissal claim to the "more informal setting" of the WRC, is he barred from seeking injunctive relief before the High Court?

The High Court focused on the 2009 case of Nolan v Emo Oil Services which "had the most similarity" to Mr Kearney's case – i.e. Mr Nolan sought injunctive relief to prevent his dismissal on grounds of redundancy. The High Court in the Nolan case found that it was not for the "courts now to expand a common law principle into the same field and produce an outcome inconsistent with that created by the statutory code". It was held that Mr Nolan's remedy arose under statute and he had "not otherwise acquired a cause of action for breach of contract". Where the Oireachtas provided "specific remedies for unfair dismissal and specific procedures for obtaining such remedies, the common law had no role to play".

The High Court concluded, based on the above, that Mr Kearney had not made out a "strong case that would justify the granting of an injunction". Mr Kearney appealed to the Court of Appeal.

What did the Court of Appeal decide?

As part of his appeal, Mr Kearney argued that his redundancy was a "sham" and, as a result, there had been a breach of an implied term of his employment contract – i.e. breach of mutual trust and good faith. Mr Kearney alleged that the decision by his employer to dismiss him was "capricious and arbitrary" since his position was "demonstrably" not redundant. It was submitted that simply because Mr Kearney's employer "described the dismissal as one based on a redundancy does not mean that this is correct" and asked the Court of Appeal not to be "influenced by the label attached to the dismissal" but rather to "look at the substance of the dismissal". On this basis Mr Kearney asserted that Nolan should be distinguished or even declared to be "wrongly decided".

The employer, in defence, maintained that the Nolan decision was "correct in principle" and a "statutory scheme" had been introduced by the Oireachtas for the "very purpose" of addressing any claim that a redundancy situation was a "sham". The employer submitted that Mr Kearney's attempt to contend there had been a breach of an implied term of trust was "contrived" and was not "sufficient to bring the present case within the now restricted ambit of the common law in employment maters". The employer further contended that to do so would "open the floodgates to many applications for injunctions" of this kind and would "ignore the express and clear intention of the Oireachtas" that such disputes be dealt with under the statutory framework before the WRC.

The Court of Appeal confirmed that the decision in Nolan was an "insuperable obstacle" to Mr Kearney obtaining injunctive relief to restrain his dismissal and have his salary paid in the meantime. He concluded that the High Court decision in Mr Kearney's case was "perfectly correct" and there was no "strong case" to be heard. The Court held that an implied term of trust and good faith does not deprive an employer of the right to terminate the employment contract with proper notice and, for example, where it is based on a redundancy. The Court found that Mr Kearney had not established that the employer had acted in bad faith in reaching a decision to terminate his employment on the basis of a redundancy and, accordingly, Mr Kearney could not "escape the clutches of the decision in Nolan".

The Court of Appeal, accordingly, dismissed Mr Kearney's appeal.

What does this mean for employers in Ireland?

This case is a welcome endorsement of the ten year old High Court decision in Nolan; clarifying that all roads lead to the WRC when it comes to challenging the legitimacy of a redundancy dismissal. The Court of Appeal categorically confirmed that it is "entirely satisfied" that the correct route of redress for such claims (the WRC) has been clearly identified by the legislature and it would be "entirely inappropriate" to ignore this path in favour of knocking on the door of the High Court. This case serves as a salutary lesson for employees of the risks posed when challenging a dismissal outside of the statutory framework.

For more information in relation to this topic, please contact Ailbhe Dennehy, Senior Associate, or any member of the A&L Goodbody Employment team.

Date publihed: 26 July 2019