Most unfair dismissal cases fall into familiar categories such as misconduct, capability or redundancy. However, employers occasionally encounter situations where there is a genuine and compelling business reason to dismiss, but the circumstances do not sit comfortably within those traditional headings.
In those cases, employers may look to the concept of ‘some other substantial reason’, commonly referred to as ‘SOSR’.
SOSR is expressly recognised in unfair dismissal legislation in both Ireland and the UK, but it has developed very differently in each jurisdiction.
- In the UK, SOSR is a well-established and frequently litigated ground, particularly in cases involving business reorganisations, changes to working arrangements and breakdowns in working relationships
- In Ireland, by contrast, the concept has historically been applied more cautiously and has arisen less frequently. It may be time for a change
A recent decision of the Workplace Relations Commission, Nora Martin v Genesis Psychotherapy & Family Therapy Service Limited (ADJ-00002630), provides a useful illustration of how SOSR may arise in a restructuring context in Ireland, even though the dismissal in that case was ultimately found to be unfair.
We explore SOSR from two perspectives: the more developed position in the UK and the Irish approach, considering the way SOSR has traditionally been applied and what the Nora Martin decision suggests about the potential scope of this ground in restructuring scenarios.
SOSR in the UK: A More Developed Doctrine
SOSR is one of the five potentially fair reasons for dismissal in UK law. Like in Ireland, employers also need to show that dismissing for the “substantial reason” was reasonable in the circumstances, and that a fair dismissal procedure was followed. However, unlike Ireland, the law around SOSR is more established – though it is often neglected as a potentially fair reason for dismissal.
What SOSR means has been left to the courts to develop – the only statutory guidance being that the reason must be “of a kind such as to justify the dismissal of an employee holding the position which the employee held.”
As such, SOSR can be something of a catch all category, and has been found to cover :
- Where there are personality clashes or irreconcilable differences between employees; although dismissal in such circumstances is expected to be a last resort
- Where there is a loss of trust and confidence in the employee
- Where there is a reputational risk to the employer
- Where there is pressure from a third-party to dismiss the employee
- Dismissal due to refusal to comply with a requirement to be vaccinated against COVID-19 (the employees were workers in a care home)
- Potentially, where dismissal was due to underperformance in an “up or out” performance model, where employees who were not demonstrating readiness for promotion were considered to be underperforming
This is not an exhaustive list and SOSR is often used creatively where none of the other four potentially fair reasons for dismissal fit the circumstances well.
SOSR has also successfully been relied upon by employers in the UK in the context of business reorganisations that do not meet the legal test for redundancy. The Nora Martin decision, which we outline below, may be a signal that SOSR is one to watch and potentially could be extended to be recognised in a similar variety of circumstances in Ireland.
SOSR should be relied on with a degree of caution, it is not an easy catch all for UK employers to render fair any reason for dismissal. A tribunal will assess fairness on the facts of a particular case. Although some of the above have been accepted as SOSR by tribunals, they will not always count as a substantial reason. For example, reliance on reputational risk or third-party pressure will be strictly scrutinised by tribunals. In addition, reliance on a loss of trust and confidence as a reason for dismissal has been criticised numerous times by the Employment Appeal Tribunal.
The more expansive interpretation of SOSR in the UK illustrates how this concept has potential to develop in Ireland as a ground to dismiss.
SOSR in Ireland
In Ireland a dismissal is presumed to be ‘unfair’ unless the employer can show that it is substantively ‘fair’ in terms of capability, competence, qualifications, conduct, redundancy or statutory illegality; or that there were “other substantial grounds justifying the dismissal.”
SOSR is intended to capture situations where there is a genuine and substantial reason for dismissal that does not fall within the more commonly invoked categories.
Importantly, establishing a potentially fair reason is only part of the analysis. Even where an employer relies on SOSR, the decision to dismiss must still be shown to be reasonable in all the circumstances, including from a procedural fairness perspective. In Irish case law, SOSR has most commonly arisen in situations involving third-party pressure, such as where a client organisation insists that an employee be removed from a particular site or service.
In those cases, Irish tribunals have tended to emphasise that:
- An employee’s job cannot be placed at risk simply because a third-party requests it
- Employers must investigate the reasons behind the third party’s position
- Employers are expected, where appropriate, to advocate on behalf of the employee
- Employers should consult with the affected employee regarding other roles that might be available within the organisation
Where employers fail to take these steps, dismissals have often been found to be unfair despite the existence of commercial pressure which is outside of the employer’s own control.
The Nora Martin Decision
The Nora Martin case is notable because SOSR was considered in the context of organisational restructuring rather than the more typical third-party pressure scenario.
In this case, the employer contended that it was facing ongoing financial pressures and funding constraints, which required a restructuring of the organisation. Management roles were reorganised and the structure of the service was altered. The employer primarily relied on redundancy but argued that, even if the situation did not meet the statutory definition of redundancy, the dismissal was in any event justified on the basis of SOSR.
The Adjudication Officer (‘AO’) accepted that the organisation was experiencing genuine financial challenges and that the employer was entitled to undertake a restructuring. The decision also recognised, in principle, that a reorganisation could potentially constitute another substantial ground justifying the dismissal, distinct from redundancy.
However, the dismissal was ultimately found to be unfair.
The AO placed significant emphasis on the way in which the process was carried out. In particular, concerns were identified in relation to the extent of consultation, the approach to selection and the influence of issues relating to the complainant that had not been fully addressed through a fair process.
Accordingly, the decisive issue was not the legitimacy of the restructuring, but whether the dismissal process was carried out in a fair and objective manner, with the procedural deficiencies ultimately proving fatal.
What the Nora Martin Decision Does, and Does Not Establish
The Nora Martin decision does not establish clear parameters for the use of SOSR in restructuring cases. Nor does it represent a definitive expansion of this as a ground for termination in Ireland.
However, the decision is significant for two reasons. First, it reflects an acknowledgement that organisational restructuring may, in principle, fall within the scope of “other substantial grounds” where the situation does not fit neatly within redundancy. Secondly, it reinforces a consistent theme that even where an employer has a legitimate business rationale, the fairness of the process will often be decisive.
A Ground to Watch
SOSR has not yet broken new ground for unfair dismissal in Ireland but its broader recognition and application may be overdue. The Nora Martin decision illustrates how the concept may arise in restructuring contexts that fall outside the traditional structures of redundancy.
SOSR may well arise for consideration more often as the pace of modernizing workplaces could well outstrip the current definitions of redundancy. Those definitions do not in every case neatly apply to what are otherwise entirely valid operational needs underpinning reorganisations. It remains a ground that employers should approach with care, but one that may become increasingly relevant, as signalled by the discussions in the Nora Martin decision. Organisations which are planning on navigating structural and operational change should seek advice on the optimum approach.
