Are employees in Ireland entitled to an appeal in a redundancy process?

In the decision, Kevin Foley v Digital River Ireland Limited, the WRC ordered a US multinational software firm to pay an award of nearly €170,000 to a senior Irish executive after finding that, despite there being a genuine redundancy situation, he had been unfairly dismissed. Key to this finding was the way in the appeal of the decision to make the complainant redundant was conducted by the organisation. In this article, we look at what employers’ obligations are under Irish legislation when it comes to appeals in a redundancy process, and the importance of following fair procedures at all stages of a redundancy process. 

Background

The complainant held the position of Senior Director of Sales for EMEA with the organisation from 31 May 2021 until his dismissal on 19 October 2022. He claimed that the decision to dismiss him was made in a “sham” process.

Redundancies were announced in the employer group in July 2022, but the complainant was not part of that collective redundancy process and was not ‘put at risk’ of redundancy at that time. He was, in fact, assured by his manager that there would be no further redundancies taking place and he signed a retention bonus agreement on 1 September 2022 which provided for a payment if he remained in employment until 31 March 2023 and met the criteria set out in the retention agreement.

However, on 22 September 2022, the complainant was informed in a meeting that his role was ‘at risk’ of redundancy. Without providing any explanation for the change in circumstances in such a short timeframe, or without explaining why only his role was at risk, and not that of the only other Head of Sales based in the US, he was simply informed that there was a re-evaluation of the sales structure, and a decision had been made to centralise the US and EMEA sales function on a global basis.

Three consultation meetings were held with him over the course of a few weeks, following which he received a letter stating that his employment was being terminated with immediate effect and noting he had a right to appeal. While an appeal was offered to the complainant, it was the manner of the appeal that was one of the key issues in this case - it was in writing only and the complainant was not afforded an opportunity to be heard and to explain his grounds of appeal before it was decided upon. The organisation also failed to inform him that he would not get such an opportunity even though he had referred to it in his letter outlining his grounds of appeal.

The complainant submitted his appeal in writing on 24 October 2022 arguing that it was not a genuine redundancy, the company had failed to properly consider his proposal and to consider alternative roles and that the decision was pre-determined and flawed.

Importance of the appeal process

The Adjudicator noted that all policies in the organisation’s Employee Handbook outlining an appeals process contained a clause entitling the employee to be accompanied at such an appeal, which implies that a hearing into the matter will take place, and that the employee may be accompanied at such a meeting by a colleague or trade union official. In this case, the complainant was denied that right to a hearing.

Furthermore, the company’s US based General Legal Counsel was appointed to hear the appeal, despite him being more junior to those who had made the decision to make the complainant’s position redundant. The Adjudicator noted that this was also unusual, noting that the Employee Handbook stated that appeals would be heard by a more senior manager.

When the company’s US based General Legal Counsel was asked at the WRC hearing which appeal process he had followed from the Employee Handbook, he stated he thought none were appropriate. He also admitted that he had not checked if there was any national legislation on this subject or what the local rules were.

The Adjudicator accepted the complainant’s dismissal was a genuine redundancy situation. However, he found that the employer’s failure to conduct an appeal hearing with the employee at which he could be accompanied constituted a serious flaw and a breach of their own procedures and policies, such that he found the unfair dismissal complaint to be well founded and awarded the complainant nearly €170,000.

The importance of affording an employee an appeal in a redundancy process is not necessarily new and has been highlighted in WRC cases previously. For example, in Lorraine Manton v Palomar Ltd t/s McSwiggans (ADJ-00031076), the failure to offer the complainant an appeal of the decision to make her redundant was criticised, with the Adjudicator noting that:

“A lawful redundancy process requires the genuine consideration of suitable alternative employment within the organisation, including any suggestions the employee brings to the table. It requires the employee to be afforded a right of appeal.”  

There have also been previous cases (for example, in Mackey v Resource Facilities Support Limited UD56/2009 and Fennell v Resource Support Services Limited UD57/2009) where the failure to inform the employees of their right to appeal the redundancy decision was a relevant factor in finding that the redundancy was implemented in an unreasonable and unfair manner.

In this case, we see that offering an appeal in writing only, without an appeal hearing at which the employee can be accompanied if they wish, is unlikely to be sufficient and will generally be deemed to be contrary to fair procedures.  

Implication for Employers

There may be some circumstances where arguably an appeal is not necessary or would be a futile exercise, as was seen in another recent WRC case of Ray Walsh v Econocom Digital Finance (ADJ-00029093). The Adjudicator in that case found that the dismissal was unfair for reasons largely related to the organisation’s failure to consult with the complainant. However, on the specific issue of an appeal not being offered to him as part of the redundancy process, the Adjudicator accepted that any appeal against the decision to make him redundant “was likely to be a wasted exercise”.

However, this seems to be the exception rather than the rule and employers should very carefully consider the particular circumstances before adopting this approach. The importance of an appeal should not be underestimated.

Employers should be mindful to follow fair procedures and their own policies and procedures in a redundancy process and, in general, to afford employees an opportunity to appeal the decision to terminate their employment. It’s worth noting that the award of compensation in this case, nearly €170,000, was quite large considering the complainant’s relatively short service with the company which serves as a stark reminder to employers of the potentially costly consequences of not following proper procedures. This case is also a reminder that multinational companies should ensure that the person(s) chosen to conduct an appeal hearing fully understands and follows the correct local procedure and are aware of the relevant legislation.

For more information or assistance, please contact a member of our team.

Kevin Foley v Digital River Ireland Limited - Link to WRC decision available here.