The High Court has laid down a clear marker that it does not consider the employment injunction an appropriate mechanism to deal with complaints arising from a redundancy process. Ms. Justice Mary Laffoy has confirmed that the correct forum for complaints that a redundancy was not legitimate or that the selection process was unfair is the Employment Appeals Tribunal. This should be welcome news to employers currently undergoing redundancy programmes, as the legal costs incurred in defending claims of unfair dismissal are significantly lower than those incurred in defending a High Court application for an employment injunction.
Ms. Justice Laffoy delivered her decision on the 21st January 2009 in the case of Paul Nolan and Emo Oil Services Limited, in which she refused an application by an employee for an injunction restraining the employer from dismissing him by reason of redundancy from the post of credit manager.
The employee argued that a genuine bona fide redundancy did not exist in relation to his position, or alternatively that he was unfairly selected. He argued that he was sidelined due to a dispute with the managing director two years previously and that the MD had sought to replace him with an employee who was in a subordinate role to him. The employer argued that this was a genuine redundancy and part of their second restructuring in 2008, where the employee's role, together with the roles of fifteen others were being made redundant and that his functions would be fulfilled by the MD and the financial controller at no extra cost.
Ms. Justice Laffoy ruled that the employee did not show that he had a strong case and that in any event the claim can only be litigated under the Unfair Dismissals Acts, 1977 to 2008 and that the Employment Appeals Tribunal was the correct forum for deciding the issues complained of. She relied on last year's decision of the Supreme Court in Sheehy -v- Ryan, in concluding that there had been no breach of contract, as the employer was entitled to terminate the employee's position on the giving of reasonable notice and had in fact given three months notice where it was only obliged to give four weeks notice.
It is clear from the Judgment that there will occasionally be cases of purported redundancies where the High Court will grant an injunction restraining the dismissal of an employee and Ms. Justice Laffoy referred to the 1994 case of Shortt -v- Data Packaging Ltd by way of example. In that case, the Plaintiff was a director/ office holder, and his position had been terminated without notice. There had been no decision of the directors in breach of company law requirements and the decision to terminate was therefore ultra vires, and in breach of natural justice. The Court also found that the alleged redundancy was spurious and unsubstantiated and that statutory redundancy requirements had not been observed and the Plaintiff's termination was therefore unlawful.
Whilst employment injunctions remain a risk for employers who do not follow fair procedures and the principles of natural justice in terminating employment for redundancy or performance/ misconduct reasons, this decision is indicative of a reluctance to grant such orders and is perhaps an attempt to prevent a floodgates scenario in light of the current volume of redundancies. Employers undergoing restructuring programmes can only hope that this decision will have the effect of directing aggrieved employees away from the High Court and towards the less costly forum of the Employment Appeals Tribunal.