Lack of Procedural Fairness

Mr Stephen Foley vs Claddagh Homecare Services Ltd (10 July 2017, JEDT)
Unfair dismissal

The Applicant filed claims with the Tribunal that the Respondent:

a) unfairly dismissed the Applicant;
b) failed to pay 6 months contractual notice pay to the Applicant
c) failed to pay outstanding wages to the Applicant;
d) failed to pay to the Applicant 8 days’ accrued but untaken holiday pay;
e) failed to provide itemized pay statements to the Applicant (together “Claims”).

The Respondent was incorporated by the Applicant in August 2013 with the purpose of providing personal and administrative care services to the community in Jersey. Until November 2016, the Applicant was the sole shareholder and director of the Respondent. Between August 2013 and November 2016, the Respondent grew significantly and employed approximately 30 employees.

The Applicant explained that the Respondent suffered cash flow problems. During 2016, the Applicant therefore entered into discussions with two potential investors who each purchased a 30% shareholding in the Respondent in November 2016 and were appointed to the Respondent’s board. As a consequence of the sale and purchase negotiations, a second contract of employment (“Second Contract”) was drafted. For the most part, the Second Contract was identical to the First Contract, save that the Applicant’s salary increased and his annual leave decreased.
The Second Contract acknowledged that the Applicant’s continuous employment commenced on 1 August 2013 with the new terms under the Second Contract coming into effect from 1 November 2016.

The Applicant gave evidence that although the Second Contract was unsigned, he considered himself to be working under the terms of the Second Contract; he received his new monthly wage from November 2016 and believed himself to be on 25 days holiday per annum (rather than the 30 days provided in the First Contract). Based on the evidence, the Tribunal accepted that the Second Contract reflected the actual terms of the agreement between the parties.

In early February 2017, the Applicant was signed off sick with work-related stress. The Second Contract provided that the Applicant would be fully paid for all periods of sickness absence.
On 22 February 2017, the other shareholders wrote to the Applicant to advise that, having conducted an emergency board meeting (without having notified the Applicant), they had resolved to dismiss the Applicant immediately as a Director of the Respondent “due to gross misconduct”. They made a number of allegations against the Applicant in a Termination Letter relating to the alleged financial difficulties being experienced by the Respondent. The Respondent did not make any payment in lieu of notice to the Applicant.

In his evidence, the Applicant denied any wrongdoing. He submitted that the Respondent failed to:

a) properly investigate the allegations which, in the Applicant’s view, were based on hearsay and arose out of a lack of understanding of the accounts; and
b) conduct a disciplinary hearing, despite a full procedure being set out in the Employee Handbook.

Having considered all of the evidence provided to me, the Tribunal was satisfied that:

Both the First Contract and the Second Contract required the Applicant to provide personal service to the Respondent. The nature of the role of Managing Director was not such that another individual could simply replace the Applicant at any time.

The Tribunal also concluded that the Applicant’s employment commenced in August 2013 and terminated on 22 February 2017. The Applicant, therefore, had 3 years’ continuous service when his employment was terminated.

Unfair Dismissal
It was unclear to the Tribunal from the evidence whether or not the other shareholders genuinely believed that the Applicant was guilty of gross misconduct. In any event, even if they did hold a genuine belief that the Applicant was guilty of gross misconduct, they failed to conduct a reasonable investigation into their allegations and then failed to conduct a disciplinary hearing. Indeed it was clear from the evidence that the Applicant had no notion that his employment was to be terminated and the Termination Letter came as a complete surprise. Furthermore, the Respondent failed to provide any evidence in support of its decision to dismiss the Applicant, therefore, the Applicant’s evidence was therefore unchallenged.

The Applicant was employed for three years and claims 16 weeks’ pay. The Tribunal considered whether there should be any reduction of that amount pursuant to Article 77F. The Tribunal found no grounds to do so and award the Applicant his full entitlement under the statute

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