8 July 2024

International Cases

Joseph William Shortt v. Computer World (Ireland) Limited




Dismissal of claimant automatically unfair due to non-completion of statutory dismissal procedure

Present case deals with claim of unfair dismissal. Issue to be determined by tribunal was whether the claimant was an employee of Respondent. In claim form, claimant had described himself as a Director of Respondent. If Claimant was found to be an employee, Tribunal then had to consider whether Respondent had complied with statutory dismissal procedure pursuant to Employment (Northern Ireland) Order 2003 and Employment (Northern Ireland) Order 2003 (Dispute Resolution) Regulations (Northern Ireland) 2004 and therefore whether the dismissal of the claimant was automatically unfair.

Law in relation to employment status of shareholders and directors was considered recently by Northern Ireland Court of Appeal in case of Crawford and Dunlop v Department of Employment and Learning (2014). In its judgement, Court made it clear that, a tribunal considering any such case must conduct an adequate inquiry as to circumstances of formation of any contracts of employment between claimant and company. Further, tribunal must consider terms and conditions of any such contract of employment and conduct of the claimant in the performance of any duties under any claimed contract of employment.

The statutory dismissal procedure introduced by Employment Rights (Northern Ireland) Order ("the 2003 Order") applies in this case. That procedure requires written statement of grounds for action and invitation to meeting - employer must set out in writing the grounds which lead the employer to contemplate dismissing the employee. Meeting must take place before action is taken. The meeting must not take place unless - (a)           the employer has informed the employee what the basis was for including in the statement the grounds given in it, and (b)   the employee has had a reasonable opportunity to consider his response to that information. After meeting, the employer must inform the employee of his decision and notify him/her of the right to appeal against the decision. If the employee informs the employer of his/her wish to appeal, the employer must invite him/her to attend a further meeting. After the appeal meeting, the employer must inform the employee of his final decision. The employee must be afforded the right to be accompanied at any meetings under the statutory dismissal procedure.

By Article 130A (1) of Employment Rights (Northern Ireland) Order 1996, where statutory dismissal procedure is applicable in any case and the employer is responsible for non-completion of that procedure, the dismissal is automatically unfair. A tribunal is required to consider whether the dismissal is automatically unfair under Article 130A even where this issue has not been specifically raised by the claimant. As per Article 17 of The Employment (Northern Ireland) 2003, non-completion of the statutory dismissal procedure was wholly or mainly attributable to the employer, it shall increase any compensatory award made to the employee by 10% and it may, if it considers it just and equitable in all the circumstances to do so, increase the award by a further amount up to 50%.

In this case, claimant had been employed by the respondent as an IT Engineer before buying into the company and becoming a shareholder and director. Claimant did receive a written statement of main terms and conditions of employment at the outset of his employment, but he was unable to produce this to the tribunal as he could not access his former office at the Respondent's premises. It was clear from claimant's evidence that, after he bought into the company, claimant's day to day work for the respondent remained largely unchanged, save that he took on some additional management responsibilities. As far as his earnings were concerned, the claimant continued to earn a fixed amount each month, although he received in addition a share of profits by way of dividend payments in addition to his fixed income. The fixed earnings were taxed at source by way of PAYE deductions and this was confirmed by his P45. It was clear from the claimant's evidence that the claimant considered the majority shareholder to be the "boss" of Respondent company. The tribunal therefore considered that, claimant was subject to the overall control of Mr Gerry McNally and later Mr Brendan McNally.

Tribunal was of view that, after he became a shareholder and director, claimant's employment with Respondent continued much as before, but with additional arrangements relating to his position as a shareholder and director. Tribunal considered that, facts of this case were entirely consistent with the usual indications of a contract of employment. Respondent itself treated the claimant as an employee since a P45 was sent to claimant purporting to confirm termination of his employment.

None of the requirements of statutory dismissal procedure were complied with in this case. In effect, the claimant's employment was terminated by the respondent's actions, that is by sending the claimant a P45 and changing the locks on the premises so that the claimant could not attend for work together with the respondent's failure to pay the claimant's fixed pay after August 2016. This was a clear breach of the statutory dismissal procedure. None of the requirements of the statutory dismissal procedure were complied with in this case. The tribunal was satisfied on the basis of the facts found that the non-completion of the statutory dismissal procedure was wholly attributable to the respondent. The tribunal therefore concluded that, dismissal of the claimant was automatically unfair. Claimant is entitled to compensation for such unfair dismissal. Tribunal orders the respondent to pay to the claimant compensation for unfair dismissal in the total sum of £4303.08.

Tags : Dismissal Statutory Procedure Compensation

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