Employment lawyers have long considered the no-fault termination on notice to be the “backstop” option when dismissing employees. If a disciplinary procedure was flawed, for example, the employer could always rely on the backstop option of terminating the employee in accordance with their contract on notice. Traditionally, it was considered that a decision to terminate in this way could be made for a good reason, no reason or even a bad reason.
Before Christmas, two employment injunctions were heard by the High Court seeking urgent relief restraining dismissal in circumstances where an earlier purported dismissal was abandoned in favour of a no-fault termination on notice (the “backstop” option). These two cases were that of Grenet v Electronic Arts Ireland Limited IEHC 786 (“Grenet” case) and Whooley v Merck Millipore Limited and Merck KGaA IEHC 725 (“Whooley” case). In the first case an injunction was granted; in the second it was denied.
The test for injunctive relief in employment law cases
The legal test for an interlocutory injunction in employment law matters is more robust than the usual American Cyanamid/ Campus Oil principles. In the Supreme Court case of Maha Lingham v Health Service Executive, Fennelly J stated that ” it is necessary for the applicant to show that at least he has a strong case that he is likely to succeed at the hearing of the action.” Since the decision of Clarke J in Bergin v Galway Clinic Doughiska Ltd, the courts have perceived most employment injunctions as being mandatory in nature and therefore requiring the higher threshold of a strong case. As such, the three-bar test in such cases has become:
- Whether damages are an adequate remedy.
- Where the balance of convenience lies between the parties.
- Whether there is a strong case to be tried at the hearing of the action.
A court is also entitled to have regard to the underlying facts and circumstances.
In this case, the plaintiff was in the first instance “deemed to have resigned“. Solicitors for the plaintiff argued that there was no such concept in Irish law as a deemed resignation. The company responded by terminating Ms Whooley’s contract on notice on a no-fault basis. Pilkington J. relied heavily on the later no-fault termination in denying the reliefs sought. Pilkington J states “Were nothing further to have occurred… …then, in my view, she may well have satisfied the criteria of exhibiting a strong case for the grant of interlocutory relief. However, events did proceed; her contract was terminated…”
In this case, the plaintiff contended that the later no-fault dismissal was simply the earlier dismissal dressed in “new and relatively see-through clothes”. The plaintiff argued that it was open to him to challenge the dismissal “which was dressed up to avoid unlawful conduct such as a breach of contract or a breach of constitutional right to vindicate one’s good name.”
O’Connor J. agreed with the ‘see-through clothes’ argument and noted the decision of the defendant to “gloss over” the potential damage the dismissal may have to the plaintiff’s reputation. He held that on the balance of probabilities, the no-fault termination was “a cynical contrivance”. The Court held that the plaintiff had established a prima facie case that his constitutional rights for a proper investigatory, disciplinary and appeal process were compromised.
The Grenet decision seems to have applied the lesser test of “serious issues to be tried” in contrast to the “strong case to be tried” test applied in the Whooley case.
It is clear that the judgments of Pilkington J. and O’Connor J. differ on whether the backstop is available as an option to the employer in circumstances where there is an earlier ‘faulty’ purported termination. It will have to be seen how the case law develops from here and we would welcome some clarity on the issue from the Courts.
If the Grenet decision is followed, this would signal a new era in employment law and would make it very difficult for employers to dismiss employees where they don’t have a very good reason backed up with strong procedures and policies which were followed to the letter.
Contributed by Lisa Shannon