Court of Appeal Overturns Probationary Dismissal

16 March 2021 Useful Articles

On 16th February 2021, the Court of Appeal decided upon the fair procedures in relation to employees at risk of dismissal due to poor performance whilst in the probationary period.

 

Background

Mr O’Donovan was employed as the Chief Financial Officer of Over-C Technologies Limited in August 2019 and was subject to an initial six-month probationary period. His contract set out that his performance would be assessed during this period and if he was to satisfy this condition he would continue to enjoy employment with the Company. The contract also included references to disciplinary rules and procedures, highlighting that further detail on these were contained within the employee handbook. One of those provisions providing a right of appeal against disciplinary sanctions imposed.

In January 2020, Mr O’Donovan was informed that he was being dismissed on the grounds of poor performance. Following this Mr. O’Donavon had some communication with the Company mainly to log his dissatisfaction and to attempt the setting up of an appeal hearing.  He was then offered a hearing but conveyed that he couldn’t attend on the date specified. The Company then wrote to him outlining that their view was that this was a withdrawal from the appeals process and a close to the matter. It was at this point Mr O’Donavon then instituted High Court proceedings claiming that his dismissal was for matters relating to misconduct and was, therefore, a breach of the terms of his contract. His argument was that his dismissal did not afford him his right to natural and constitutional justice under the implied terms of the disciplinary procedures set out in his contract.

 

High Court Decision

On 12 June 2020, the High Court found Mr O’Donovan had made a strong case in relation to his implied contractual right to fair procedures when dealing with performance during his probationary period. The judgement concluded that this was breached surrounding his dismissal. The Court did not agree with Mr O’Donovan’s claim that he was dismissed on the grounds of misconduct. However, the decision of the Court held that the Company had an obligation to afford an employee fair procedure in relation to poor performance as well as for misconduct.  The Court granted an order preventing Over-C Technologies Limited from proceeding with Mr O’Donovan’s dismissal pending the trial. They were also ordered to pay Mr O’Donovan’s salary for a period of six months from the end of January 2020.

 

Court of Appeal Decision

In February 2021, the Court of Appeal agreed that Mr O’Donovan had not established a strong case that his dismissal was on grounds of misconduct. The Court also held that the High Court failed to give adequate weight to the fact that the termination occurred during Mr O’Donovan’s probationary period.  Vacating the order of the High Court, the Court of Appeal did not accept that Mr Donovan’s rights to natural justice had been breached in the matter of dealing with poor performance stating, "There is no suggestion that the principles of natural justice must be applied where an employer terminates the employment contract of an employee on the grounds of poor performance.’’ The Court of Appeal also held that as Mr. O’Donovan was dismissed under an express contractual term within his set out probationary period and was paid his contractual entitlement in lieu of notice, he had no claim under common law.

 

Key Message for Employers

Although this decision may seem like a victory for employers when handling employees on probation. We must remember that poor performance and misconduct issues can easily overlap. This means that everything in terms of fair procedures, natural justice and following contractual terms of the employment contract are still a necessity for reducing risk in this space.

 

Update to Illness Benefit

From 1st March 2021, the Government reduced the waiting time for payment of Illness Benefit from 6 days to 3 days.  This means that any qualifying employee who is claiming the benefit will now be paid from the fourth day of certified illness rather than the seventh day.

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