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Derek McKay, Managing Director at Adare Human Resource Management looks at an interesting ruling by the Court of Appeal to overturn a decision by the High Court last year in relation to the firing of an employee during his probationary period for poor performance. The ruling by the High Court last year raised some issues and concerns for employers who terminated employment during probation given this timeframe has been regarded as relatively low-risk as the normal timeframe for probation is six months, outside the one year needed to bring an unfair dismissal claim.
During the probationary period, it’s important that an employer uses this time wisely to evaluate the performance and conduct of a new employee as well as how they integrate into the organisation and its culture. If, during that time, an employee’s performance is not at the expected standard, an employer may seek to terminate their contract while ensuring they’ve followed fair procedures. These include informing the employee of such concerns, offering the employee a reasonable opportunity and timeframes to improve and/ or assisting or training the employee. Previously given the timeframe for this process is within the 12-month timeframe, it is generally subject to less scrutiny.
However, a High Court injunction last year preventing an employee being dismissed during his probationary period focused on the requirement to ensure full and fair procedures are followed, regardless of whether the employee is on probation or not. The ruling by the High Court, which we have previously covered on Linea and in our newsletters, certainly proved a cautionary one for employers who might be thinking of terminating an employee during probation without due process and consideration.
Last week, the Court of Appeal overturned the High Court’s injunction in what has been referred to as a “landmark” judgement, giving some relief to employers.
Background to the case
In July 2019, the claimant was appointed to the senior position of Chief Financial Officer of a technology company. In January 2020, he was informed that his employment was terminated with immediate effect due to poor performance. The employee claimed that his dismissal was in breach of his contract and his constitutional right to fair procedures. He sought a declaration that the dismissal was unlawful, an injunction to keep him in his role and damages. In particular, he complained that he had been dismissed for “misconduct”, contrary to the principles of natural and constitutional justice and said that he had no prior notice of the allegations of misconduct before he was dismissed. He also stated he was not given the right to speak in his own defence, was not given an opportunity to confront his accusers and was given no representation (legal or otherwise) prior to his dismissal.
At the time, the High Court ordered that the employer pay the claimant his full salary for a period of six months. The Court found that while claimant had not established a strong case that he had been dismissed on the grounds of misconduct, he had demonstrated a solid case that his dismissal was in breach of his contract. The employer appealed to the Court of Appeal arguing the decision to grant an injunction was an error.
Court of Appeal decision
Earlier this month, the Court of Appeal overturned the decision by the High Court stating that the trial judge has failed to give adequate weight to the fact that the claimant was dismissed during the probationary period. This was termed a “critical fact” and the Court of Appeal stated that during the probationary period, both parties must be free to terminate the employment for any or no reason. And, that a court cannot imply a right of fair procedure when assessing an employee’s performance as this would negate the purpose of a probationary period. In other words, the principles of natural justice are not applicable when an employer terminates a contract on the basis of poor performance, which is what the employer stated in its dismissal and not misconduct as claimed by the employee.
What this means for employers?
This decision will be one welcomed by employers in that it provides clarity on dismissals during the probationary period. The original ruling limited an employer’s ability to terminate a contract for poor performance during probation without affording the employee full and fair procedure.
However, we would always advise any employer considering not retaining / dismissing an employee during probation to tread with caution. Dismissing an employee during their probation period is not without risks and the above case should be a reminder that employees with less than 12 month’s service can bring forward claims for wrongful dismissal. We have previously seen numerous claims in front of the Workplace Relations Commission (WRC) and the Labour Court under the Industrial Relations Acts as well as other protected legislations such as the Employment Equality Acts where 12 months service is not required.
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