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Termination ruling gives ‘clarity’ on probationary contracts

19 Feb 2021 / employment Print

Termination ruling gives ‘clarity’ on probationers

A recent Court of Appeal judgment is being seen as having significant implications for employment law, with a solicitor involved in the case saying that it would give “clarity and certainty” to employers.

The case — Donal O’Donovan v Over-C Technology Limited and Over-C Limited — related to the termination of employment of the chief financial officer of Cork-based technology company Over-C Technology Limited in January 2020.

The company said the contract had been terminated due to poor performance.

Injunction

Mr O’Donovan, who was on a six-month probationary period at the time, successfully applied for an injunction to restrain the company from terminating his contract.

At the Court of Appeal, however, Mr Justice Caroline Costello (small picture) overruled the High Court decision.

Solicitor Pat Mullins of BDM Boylan Solicitors LLP, who represented the company in the case, told Gazette.ie that the High Court judgment had led to a fear that a “new layer” was being added to the law in relation to dismissals.

In the High Court, the judge held that Mr O’Donovan had not established a strong case that he was dismissed for misconduct, but had established a strong case that his dismissal was in breach of his contract of employment on the grounds that the employer had failed to afford him fair procedures.

Misconduct vs poor performance

Solicitor Pat Mullins said the most important thing was that the Court of Appeal had drawn a distinction between a dismissal based on misconduct and a dismissal based on poor performance.

The solicitor said case law was clear that the principles of natural justice applied to an employee dismissed for misconduct, who was entitled to a full investigation.

Where the High Court ruling departed from what was previously understood, however, was in the implication that these principles also applied in cases of dismissal for poor performance.

In its appeal, the company argued that the granting of the injunction to reinstate Mr O’Donovan in his employment, and to pay his six months’ salary on the basis of an implied contractual obligation to fair procedures and natural justice, was an error, as there were no allegations of misconduct and the termination was within the six-month probation period.

Right to fair procedures

In her judgment, Ms Justice Costello said that she did not accept that a court could imply a right to fair procedures in relation to the assessment of an employee’s performance by an employer during the probationary period, as this would negate the whole purpose of a probationary period.

She said that the principles of natural justice applied to cases involving dismissal for misconduct, but not to termination on other grounds.

Weight

Ms Justice Costello said that the High Court had failed to give adequate weight to the fact that the termination occurred during the probationary period, adding that this was “a critical fact” in this case.

“During a period of probation, both parties are – and must be – free to terminate the contract of employment for no reason, or simply because one party forms the view that the intended employment is, for whatever reason, not something with which they wish to continue,” she said.

Performance assessment

Mr Mullins said the Court of Appeal ruling gave certainty to employers and employees, particularly employers who operated probationary contracts. He said the ruling also meant that there was no obligation on the company to involve an employee in the process of performance assessment.

But he said that the judgment did nothing to prevent employees with a grievance from exercising their rights; and did not take away any rights that employees have had up till now.

Nor did the ruling prevent the courts from taking a view on whether misconduct was the reason for dismissal, or granting an injunction to an employee as a result, he said.

Gazette Desk
Gazette.ie is the daily legal news site of the Law Society of Ireland