Is an employee dismissed when an employer refuses to pay that employee?

This firm recently represented an employee who contended that the termination of salary payments clearly and unequivocally conveyed the intention of the employer that the contract between the employer and the employee was at an end, and this left no doubt that dismissal was intended or could reasonably be inferred as having been intended.

While we await the decision of the WRC in our present matter, it is interesting to note a recent decision of that forum (ADJ-00013502), which held that the continued non-payment of wages could be construed by an employee to constitute a dismissal:

“This is a complaint pursuant to the Unfair Dismissals Act. The complainant resigned on the 16th February 2018. She had not been paid for over two months, despite continuing to work. This is a fundamental breach of the contract of employment, where the employee works in order to be remunerated. The non-payment of wages in the circumstances repudiated the contract of employment. The complainant was entitled to consider herself to have been dismissed. The complaint of unfair dismissal is well-founded.”

Mr Desmond Ryan, the author of Redmond on Dismissal states at paragraph 22.13 that “in general, a person is dismissed when the employer informs him clearly and unequivocally that contract is at an end or if the circumstances leading to a dismissal was intended or may reasonably be inferred as having been intended.”

It is our contention that it is the employer’s general obligation not, without good reason, to engage in conduct that may undermine the trust and confidence required if the employer-employee relationship is to continue in a manner that the employment contract implicitly states. It is our further contention, that the behavior of her former employer in not paying salary, amounted to an act of termination in itself, but beyond that, that the conduct of the former employer, could not have been, in any event, tolerated by our client a moment longer.

There are several legal points that a claim for breach of the implied term must satisfy and WRC has to consider in such a case.

A contract is repudiated if either party shows that they are no longer willing to be bound by it for the future. For example, if the employer tells the employees that they will not be paid again or unilaterally reduces wages, then this will usually amount to a repudiation.

As referenced by Anthony Kerr in “Irish Employment Legislation,” the Employment Appeals Tribunal, in the case of McCann v Vantage Wholesale Limited, RP 253/2001, held as follows:

“In terms of the law of contract, the appellant was entitled to treat this action as repudiation of the contract of employment. In other words, the employer had made it clear that it was not going to be continually bound by the existing contract of employment. Given these principles it seems clear to [the Tribunal] that the appellant was “entitled” to treat the employer’s actions as a repudiation, and therefore the case falls within section 9(1)(c) of the Acts.”

Once a breach has occurred, this cannot be “cured” and the employee is entitled to choose whether to treat the breach as terminal even if the employer upholds the employee’s grievance and attempts to make amends. This was affirmed by the English Court of Appeal in Buckland v Bournemouth University, [2010] IRLR 445, confirming the “orthodox” contractual view that it cannot. In the Court’s opinion, to introduce an exception to the general law of contract, whereby an employer could unilaterally make amends for a fundamental breach of contract, would open a multitude of cases to an evaluation of whether the amends constituted an adequate cure of the breach and was not justified.

It is our position that, the actions of an employer, in not paying and refusing to continue paying, an employee, breaches the fundamental principles of the employment relationship to such an extent that, an employee could be deemed to have been dismissed, or would, in any event, have been left with no option but to resign.