How much compensation do you get for unfair dismissal in Ireland?

Introduction

The recent Workplace Relations Commission (WRC) case of A Sales Executive v A Software Company (ADJ-00027573) examined the issue of the calculation of compensation in unfair dismissals claims. 

A Sales Executive (the Complainant) commenced employment with a Software Company (the Respondent) on 12 December 2016. 

On 17 September 2019, the Complainant was dismissed for serious misconduct. 

The Adjudication Officer held that the Complainant had been unfairly dismissed. 

Section 7 of the Unfair Dismissals Act, 1977 clearly stipulates the redress available to individuals who have been found to be unfairly dismissed. 

What does 'reinstatement' mean in the workplace?

Reinstatement essentially means that the employee will be given back the position which they held immediately prior to their dismissal with the same conditions of employment. 

Re-instatement is not a particularly popular form of redress due to the fact that the relationship between the employer and the employee will generally have been severely damaged. After WRC proceedings have concluded, there is likely to be very little trust and confidence between the parties. Therefore, this is not a remedy that the WRC usually award as they do not want to force the parties back into a toxic relationship or environment. 

However, it does happen. The case of Fionnan Martin v Denis Mahony Limited (ADJ-00030050) which was decided on 31 May 2022, was the first case this year when an order of reinstatement was made by the WRC. 

In this case, the Complainant had actually sought an order of re-instatement. However, the Adjudication Officer refused to award this due to the fact that the Complainant had contributed to his dismissal and that the “working relationship between the parties had irretrievably broken down”. 

What does 're-engagement' mean in the workplace?

An order of re-engagement will mean that the employee is either given back the position which they held immediately prior to their dismissal, or they are placed in another position which it has been deemed is reasonably suitable for them with terms and conditions which, having regard to all the circumstances, are reasonably suitable. 

An example of one of the few cases where an order of re-engagement was made was the 2021 decision of Patient Service Representative v An Oxygen/Gas Supply Company (ADJ-00029366).

How much compensation do you get for unfair dismissal?

Section 7(1)(c) of the Unfair Dismissals Act 1977 stipulates that where an employee has been unfairly dismissed and has suffered financial loss, compensation not exceeding 104 weeks (2 years) remuneration, can be awarded. Compensation by far the most popular remedy awarded by the WRC.  

If the Complainant has not suffered financial loss, then the WRC can only award them a total of 4 weeks pay where it is just and equitable to do so. 

It is important to note that section 7(3) of the Act defines: 

‘Financial Loss’ as including “any actual and any estimated perspective loss of income attributable to the dismissal and the value of any loss or diminution, attributable to the dismissal, of the rights of the employee under the Redundancy Payments Acts, 1967 to 1963, or in relation to superannuation” and;

‘Renumeration’ as including “allowances in the nature of pay and benefits in lieu of or in addition to pay”. 

When calculating the amount of compensation to be awarded, section 7(2) of the 1977 Act states that the Adjudication Officer must consider the following: 

a) the extent (if any) to which the financial loss referred to in that subsection was   attributable to an act, omission or conduct by or on behalf of the employer,

b) the extent (if any) to which the financial loss referred to in that subsection was attributable to an act, omission or conduct by or on behalf of the employee,

c) the measures (if any) adopted by the employee or, as the case may be, his failure to adopt measures, to mitigate the loss aforesaid,

d) the extent (if any) of the compliance or failure to comply by the employer, in relation to the employee, with the procedure referred to in subsection (1) of section 14 of this Act or with the provisions of any code of practice relating to procedures regarding dismissal approved of by the Minister,

e) the extent (if any) of the compliance or failure to comply by the employer, in relation to the employee, with the said section 14,

f) the extent (if any) to which the conduct of the employee (whether by act or omission) contributed to the dismissal.

In the present case, the Adjudication Officer noted that the Complainant had been out of work from the date of his dismissal, 17 September 2019, to 17 July 2021. The Adjudication Officer noted that the Complainant’s new job paid him much less and so his loss was ongoing. Interestingly, the Adjudication Officer accepted that the total losses of the Complainant were well in excess of 2 years renumeration. However, despite this, the Adjudication Officer stated that this was all that he was permitted to award. 

Bonuses

The Adjudication Officer considered which, if any, of the Complainant’s bonus payments could be included in the calculation of the award. 

In doing this, the Adjudication Officer considered the Regulations provided for by section 17 of the Unfair Dismissals Act. These Regulations differentiate between an employee whose renumeration does not fluctuate depending on the amount of work done by him (governed by Regulation 4) and an employee whose renumeration does so fluctuate (governed by Regulation 7). 

In this instance, the Adjudication Officer found that Regulation 7 was applicable to the Complainant as he was paid commission. 

Mitigation of Loss in Unfair Dismissal Claims 

The Adjudication Officer also considered the Respondent’s contention that the Complainant should have secured alternative employment far earlier than 17 July 2021, due to the fact that the job market was very strong at the time and the Complainant had an abundance of experience. 

In response to this, the Complainant had argued that due to the circumstances surrounding his dismissal, it had been next to impossible for him to secure employment. 

In examining this issue, the Adjudication Officer examined the decision of the English Court of Appeal in London Underground v Edwards (No.2) [1998] IRLR 364 where it was held that expert tribunals (similar to the WRC), “do not sit in the blinkers and are entitled to make use of their own knowledge and experience in the industrial field”. This decision was applied by the Labour Court in Benedict McGowan and Ors v The Labour Court and Ors [2010] 21 ELR 277.

The Adjudication Officer noted that he had spent many years working as a Human Resources professional and based on this experience stated that given the circumstances, he was not at all surprised that the Complainant had took so long to find alternative employment. 

The Adjudication Officer stated that after the appeal of his dismissal had failed, the Complainant had made significant efforts to mitigate his loss. However, the Adjudication Officer noted that prior to the appeal he had not made such efforts. In light of this, the Adjudication Officer awarded the Complainant 75% of the maximum compensation which could have been given. 

Compensation in Unfair Dismissal Claims - Key Takeaways

An employee needs to be aware that if they have been unfairly dismissed and have suffered a financial loss as a result of this, the maximum amount that they can be awarded is 2 years salary. The WRC cannot go beyond this, no matter what the circumstances. 

It is also important to note that in the context of compensation, only financial losses are considered. Understandably, many people will feel as though they should be compensated for the emotional suffering and distress that they have suffered as a result of the unfair dismissal. Such compensation cannot and will not be awarded by the WRC. 

Employees should also know that they will likely not be awarded the full 2 years salary. As seen from the above case, issues such as the employees contribution to the dismissal and their efforts to mitigate their loss will be taken into account.