It is often believed that employees on probation can be asked to leave with immediate effect, without informing them of the reasons for the dismissal or given the opportunity to improve. However, the case of Employee V Employer [2021 IECA 37] is an important reminder that dismissals during a probationary period are not risk free and must be carried out in line with the requirements of natural justice. While the Unfair Dismissals Acts 1977 – 2015 provides protection for employee’s employment after one year’s continuous service, employees on probation do have protection and can take a claim for unfair dismissal under the Industrial Relations Acts 1946 – 2015, Safety Heath and Welfare at Work Act 2005 or Employment Equality Acts 1998 – 2015.
In the case of Employee V Employer, the employee had been appointed as Chief Financial Officer (CFO) with a probationary clause which stated: “During this probationary period your work performance will be assessed and, if it is satisfactory, your employment will continue. However, if your performance is not up to the required standard, we may either take remedial action or terminate your employment”.
Five months into employment the employee was met and informed by the CEO that their performance was substandard. The CEO acknowledged that the employee’s employment was terminated with immediate effect with one month’s pay in lieu of notice.
The employee lodged an appeal against the decision with the company’s CEO which was not heard due to the employee’s inability to make themselves available for the hearing.
The company received a letter from the employee’s solicitor requesting the company to withdraw all allegations of misconduct and to reinstate the employee. The company responded to the letter acknowledging their reasons for termination being performance and not misconduct.
The employee brought a wrongful dismissal claim before the High Court alleging that the decision to terminate his employment and the subsequent decision to deem his appeal withdrawn were in breach of his right to fair procedures and he sought an injunction preventing their dismissal pending the full hearing of the wrongful dismissal claim.
The High Court ruled that the dismissal was on the grounds of performance and not misconduct, however they should have afforded the employee some form of fair procedures. While an employee with less than 12 months service is not entitled to bring a claim under the Unfair Dismissals Acts, an employer is still obliged to offer some form of fair procedures especially in the cases of alleged misconduct.
The High Court found in favour of the CFO and granted an injunction limiting their dismissal, requiring the company to pay the employee’s full salary and benefits for a period of six months, but it permitted the company to replace the CFO role and to place the CFO on a leave of absence during the six-month period. The injunction was granted on the basis that the CFO, had a right to fair procedures in the assessment of their performance during their probationary period the company was in breach of these rights.
Previously, unsuccessful employers have been ordered to pay an employee their full salary, benefits, the costs of both parties up to and including the full hearing, and compensation. This case is a helpful precedent in the settlement of injunction proceedings as it limits the circumstances in which a court will likely grant an injunction and adds a greater degree of predictability on liability and costs for termination during probation.
Employers should proceed with care when dismissing an employee during a probation period. Where there is a contractual clause around performance or process for dismissal, these need to be adhered to carefully and fair procedures cannot be disregarded.
There is currently no legislation in Ireland that expressly governs probationary periods. An employee’s probationary period is governed by the wording of the contract of employment. Employers often seek to conclude probationary periods before an employee accrues twelve months’ continuous service. Ireland is expected to introduce legislation capping probationary periods at six months (or proportionate to the term of the contract) this year to ensure compliance with the Directive on Transparent and Predictable Working Conditions in the EU.
If you have a question probationary periods, please visit the SFA website or contact Emma at SFA on 01 605 1668 / firstname.lastname@example.org.