Employers will be all too familiar with the service prerequisite of one year’s continuous service which applies to employees seeking to bring a claim under the Unfair Dismissals Acts 1977–2015 (‘UD Act’). A jurisdictional issue that arises before Irish employment tribunals is whether an employee can rely on a contractual or statutory notice period to carry them over this minimum service threshold. This highlights a technical but important area of risk for employers managing terminations close to the one-year service threshold. A recent WRC decision in Michael Dodd v St Pauls Garda Medical Aid Society (ADJ-00050822) provides the latest illustration of when notice may operate to extend service for the purposes of the UD Act – and when it will not.
The Dodd Decision
In Dodd, the complainant was dismissed shortly before reaching 12 months’ service and was neither given notice nor paid in lieu at the time of dismissal. His contract provided for three months’ notice and expressly permitted the employer to make a payment in lieu of notice (‘PILON’). The controversy therefore turned on whether the complainant’s notice period carried him over the 12 month eligibility threshold.
The Adjudication Officer (‘AO’) did not accept that the complainant’s contractual notice entitlement could be satisfied by paying it approximately one-year post-dismissal or again around the time of the hearing (some 18 months post-dismissal). The complainant had not accepted the payment and, on the latter occasion, returned the cheque to the employer. The AO held that the society’s contractual right to make a PILON had to be exercised at the time of termination. The requisite three months’ notice (worked or paid in lieu) had therefore not been provided to the complainant, which could not be cured by retrospective attempts to invoke PILON.
The AO applied section 1(b) of the UD Act, holding that where no notice is given, the ‘date of dismissal’ is the date on which the notice would have expired, had it been properly given. On the facts, this extended the dismissal date by three months, bringing the complainant over the one-year threshold. As a result, the WRC had jurisdiction to hear the claim, and the dismissal was found to be both substantively and procedurally unfair, culminating in an award of €85,000.
This outcome was fact-specific, turning on the employer’s failure to invoke the contractual PILON mechanism at the time of dismissal.
The Severino Case
The Dodd case is distinguishable from Salvatore Severino v SEB Life International (ADJ-00032716), another case that turned on whether the complainant’s notice period, in this case two months, brought him over the 12 months eligibility threshold. In this case, the employment contract also contained a valid PILON clause. However, unlike in Dodd, the employer exercised the PILON clause and did so contemporaneously with termination. The AO held that the employer had a clear unilateral contractual entitlement to make a PILON. While the complainant argued he had not consented, there was no evidence that he had specifically contested the exercise of the clause. The AO further noted that, once an employee had accepted a contract containing a PILON clause, the employee could not subsequently, in the AO’s view, dispute or decline a PILON.
On that basis, the AO held that the employee was prevented from relying on his two-month notice period to extend his length of service over the one-year threshold, with the result that the claim failed for lack of the requisite service.
Key Takeaways
The distinction between the Dodd and Severino decisions is instructive: where a contract expressly permits PILON and it is clearly and contemporaneously invoked, the employment will end immediately. Where this is not the case, section 1(b) of the UD Act may operate to extend the dismissal date, with potential jurisdictional consequences. In Dodd the respondent argued that the dismissal was a ‘summary dismissal’. In fact, it was not. It was a dismissal imposed other than in accordance with the contract. In order to demonstrate summary dismissal, an employer must be in a position to clearly identify and substantiate the grounds giving rise to it.
These cases reinforce that the technical definition and contractual machinery regarding ‘date of dismissal’ can have decisive consequences, as can ‘summary dismissal’ and ‘pay in lieu’. Employers should ensure that termination processes align strictly with contractual and statutory notice provisions and that any PILON is exercised at the time of termination, to avoid unintentionally extending employee service and thereby conferring jurisdiction.
