CFO Awarded €60,000 for Retroactive Redundancy
Background
The Complainant was employed as Chief Financial Officer with the Respondent from December 2022 until April 2024 when she was summarily dismissed.
The Respondent subsequently claimed that the role was redundant following the loss of a multimillion-euro contract.
Summary of Complainant’s Case
The Complainant was employed without incident or performance issue until her dismissal in April 2024.
The Complainant warned the CEO on several occasions of the risks of an investment into a tech project which was not profitable and its viability. She warned that investment into other profitable areas of the business needed priority.
One of the Respondent companies then lost a multimillion-euro contract two to three months before the Complainant’s dismissal took place. In April 2024, without reason or cause, the Complainant was informed she no longer had a job and would be let go. When she asked for a reason for her dismissal, none was forthcoming from the HR Manager or the CEO. No right of appeal was provided. The Complainant’s access to the IT system was revoked a few minutes later.
The Complainant was given no explanation for her dismissal. The Respondent failed to comply with a statutory request under s14 of the Unfair Dismissals Act 1977 for the reasons for her dismissal and to furnish personal data. The Complainant stated her dismissal was unfair and the Respondent did not show that the dismissal was in accordance with S6(4) of the Unfair Dismissals Act 1977 or other substantial grounds. No fair procedures were applied, no best practice was followed, the Complainant was unaccompanied at the meeting, and she did not contribute to her dismissal in any way.
The Complainant commenced looking for other work immediately and applied for one hundred and forty-six roles. She obtained a new role in October 2024, at a reduced salary. Her financial loss was €60,230.00 and was ongoing at the time of the hearing.
Summary of Respondent’s Case
The Respondent submitted that the termination of the Complainant’s employment was due to redundancy which was genuine and legitimate. The Respondent accepted that the manner in which the termination was conducted was flawed. The Complainant was aware that the business was not performing. She was involved in and effected eleven redundancies prior to her own position being made redundant. The Complainant advised the Respondent in a profit and loss account that it was 15% under budget in March and 18% under budget in April 2024 in the EU and 5% under budget in March and 9% under budget in April 2024 in the US.
Since termination of the Complainant’s employment, the Respondent had made seventeen further redundancies and did not replace twenty Employees who left voluntarily. The Respondent also implemented short-term arrangements and salary reductions with a number of Employees to ensure the future viability of the company.
The Respondent did not accept the efforts by the Complainant to mitigate her losses were genuine in nature and challenged the alleged mitigation of losses. The Complainant was Chief Financial Officer of a multinational company previously. The Respondent contended that the Complainant should not have been six months out of work.
Findings and Conclusions
The Complainant was employed as Chief Financial Officer with the Respondent until her dismissal in April 2024.
On the second day of the hearing, the Respondent conceded that the procedure to dismiss the Complainant was unfair under the Unfair Dismissals Act 1977. The remaining issue was the Complainant’s obligation to mitigate her financial loss arising from the dismissal.
The Complainant gave evidence that she spent a number of hours every day applying for new positions from the date she was dismissed. She was a qualified Chartered Accountant. The position with the Respondent was fully remote, and she was prepared to relocate if necessary. She said the fact she was not provided with a reason for her dismissal caused her difficulty for re-employment. There were not many Chief Financial Officer roles available. She searched for Financial Controller and Director roles as well. The Complainant submitted she would take a role with a lesser salary, but not significantly below expectations. The role she held with the Respondent had a salary of €130,000 with benefits.
The Respondent’s representative made submissions that there was a derisory attempt to look for alternative work. The Complainant did not consider roles with salaries of forty or fifty thousand euro with a view to negotiating upwards. He stated that the Complainant stopped making efforts to get roles and took the summer off. No communications from Employers were included in the documents.
The Adjudicator noted S14 (4) which provides that where an Employee is dismissed, the Employer shall, if so requested, furnish to the Employee within 14 days of the request, particulars in writing of the principal grounds for dismissal.
The Complainant was not provided with any reason for her dismissal when she was dismissed nor subsequently when it was requested in writing pursuant to S14 (4) of the Unfair Dismissals Act 1977. A few months earlier following the loss of a contract, the Respondent made eleven Employees redundant, and twenty Employees left voluntarily.
The Respondent claimed that the reason for the dismissal was due to redundancy but did not rely on this reason at the time of the Complainant’s dismissal. The Respondent accepted the procedures to dismiss the Complainant were flawed and she was unfairly dismissed. The Complainant’s role has not since been replaced.
The Adjudicator found that the Respondent had not discharged the onus to provide a ground within S6 (4) of the Unfair Dismissals Act 1977 or other substantial ground for dismissal of the Complainant. The failure to provide any reason was of itself unreasonable and undoubtedly caused difficulty for the Complainant in seeking other employment. The Complainant was unfairly dismissed on substantive and procedural grounds.
The redress sought by the Complainant was reinstatement or compensation. There was evidence of a background of financial difficulties for the Respondent, and reduced terms and conditions for other staff within the Organisation. The Complainant was also employed elsewhere at the time of the hearing. The appropriate redress in this case was therefore compensation.
The Complainant gave sworn evidence that she looked for work for a number of hours each day, apart from holidays. She applied for an extensive amount of roles. The Adjudicator was satisfied that she made reasonable efforts to mitigate her financial loss, she subsequently took up a role in October 2024 with a lesser salary and no comparable benefits.
Decision
The Complainant was unfairly dismissed and the Adjudicator directed compensation of €60,230 be paid by the Respondent to the Complainant.
Recommendations
The Organisation in this claim failed to inform the Employee that redundancy was the reason for dismissal, did not provide the Employee with reasons for her dismissal when requested, and accepted during the hearing that the dismissal procedure was flawed.
Organisations should remember that even where a genuine redundancy situation exists, the redundancy process itself must be conducted fairly and in accordance with the principles of natural justice. A failure to follow fair procedures can render an otherwise genuine redundancy dismissal unfair.
This decision and compensation award of over €60,000 serve as another recent reminder that redundancy is one of the most technical areas of employment law. Organisations should proceed with extreme caution, ensuring both the business rationale and the selection process can stand up to detailed legal scrutiny before confirming redundancy dismissals.