A restaurant chain has been ordered to pay €30,000 for unfairly sacking the son of its founder amid an alleged struggle for control of the business after it left examinership.
The Workplace Relations Commission heard last year the family believed a new investor who took over the firm in February 2020 had "reneged" on a deal when they were presented with a "performance" plan that would see them assigned non-voting share rights.
The adjudicator who decided on the case also criticised the HR firm that handled a subsequent appeal by the manager against the redundancy – saying he "could not overlook" the complainant's concerns about the impartiality of the appeal.
In a decision published this morning, the WRC upheld Philip Hanley’s complaint under the Unfair Dismissals Act 1977 against PBR Restaurants Ltd, trading as Fish Shack Café.
It said the company had been in breach of the Payment of Wages Act too – but refused compensation on the grounds of the impact of the Covid-19 pandemic on the restaurant business at the time.
The restaurant group had been run by the Hanley family until August 2019, when it was placed into examinership, the tribunal was told.
Two of its restaurants were sold off to separate investors, with the firm retaining four café units trading under the Fish Shack brand following the takeover.
Solicitor Dr Gerald Kean, appearing for Mr Hanley, said the investment came through an "offshore company" registered in the British Virgin Islands.
The company’s original owner, the complainant’s father Padraic Hanley, became an employee, while Mr Hanley and his two brothers were retained in employment, Dr Kean said.
Dr Kean said the complainant’s father had agreed a deal with the new investor via a new non-executive director on the family’s position in the company after the examinership.
"The investor subsequently reneged on that deal," he said.
Dr Kean said new terms were put to the Hanleys in February 2020 would have seen them assigned non-voting share rights – and came with a deadline which he said amounted to a "clear threat" to his client’s continuing employment.
He and other family members refused to sign and were placed on unpaid layoff four weeks later, he said.
The layoff continued until the termination of his employment that August, the tribunal heard.
"No other staff members out of a total of 50 were selected for this redundancy process or treated in this manner," Dr Kean said.
The business said it faced a genuine redundancy situation after closing two restaurants and the impact of Covid-19 on its trade.
It argued the dismissal decision was procedurally fair – and that any alleged defects "did not serve to imperil his right to a fair consultation process" on the redundancy.
Lisa Conroy of HR consultancy Peninsula Group Ltd, appearing for the employer, said the company was advised by consultants that it faced a shortfall of "at least €200,000" in 2020.
One the consultants’ proposals was to cut back the head office and delegate responsibilities to restaurant staff.
"Without reduction of fixed costs and aggressive efficiency efforts, the company may need to close," the consultants wrote.
The tribunal heard Mr Hanley was advised his role was at risk in July 2020 and was made redundant at the end of August that year, having applied for a job opening with the company as restaurant operations manager.
Ms Conroy said Mr Hanley "was not the most qualified candidate" for the operations manager job.
The complainant's redundancy was upheld on appeal.
Mr Hanley told the WRC he had raised concerns about the independence of the HR firm conducting the process, Graphite HRM, from the company’s employment advisors, Peninsula Business Services Ireland Ltd.
Mr Hanley said that he knew from his time as a manager at PBR Restaurants that it had used Peninsula in the past and that Graphite HRM "was a part of Peninsula".
He said he wrote to the appeals officer raising concerns about his impartiality, but received no response.
He told the WRC that he repeated his concerns at the appeal hearing in 17 September 2020 and said he "did not believe" the appeal official to be "external and impartial".
"I am part of Graphite; we are independent but yeah look I understand where you are coming from," the appeal official was said to have replied.
The tribunal heard that the appeal official later sent the transcript of the appeal hearing to Mr Hanley from an email address registered under a Peninsula domain name.
Mr Hanley’s position was that he "questions just how often Peninsula roll out this Graphite HRM service to their clients and how many people have been conned by such dubious behaviour in the past".
"It was not Peninsula that held the appeal. The appeal was heard by Graphite HR who are a separate limited company to Peninsula Business Services Ireland Limited. The respondent submits that this further creates a gap of impartiality," Ms Conroy said.
"This was clearly a targeted campaign against the complainant and his family and was never a genuine redundancy situation," Dr Kean told the tribunal in submission.
"The Covid 19 pandemic was used by the directors to lay him off without pay, with no contractual right to do so and drag out a sham redundancy process for as long as they liked at no cost to the company," Dr Kean said.
He said there was a "complete absence of any transparent or fair selection criteria" and that the report cited by the firm as the basis for selection was "never shared" with his client.
He said there had been a "cavalier disregard for due process" by the company who "continued to behave as if employment law does not apply to them".
"I am unable to overlook the comments made by the complainant and his representative in relation to the impartiality of the appeal," wrote adjudicating officer Jim Dolan in his decision.
"I must conclude that the appeal was completed in a manner that I would not consider professional and proper," Mr Dolan wrote.
He wrote that there had been "nothing mentioned" in the independent consultant’s restructuring report about redundancies and that a reference to "lowering head office costs" did not apply to Mr Hanley, who was "not considered as head office staff".
There was "no evidence of any alternatives" having been considered by the firm at a time when there was "no cost" to keeping him in employment on layoff, Mr Dolan added.
Upholding the unfair dismissal complaint, he awarded Mr Hanley €30,000 in compensation.
The complainant had also brought proceedings under the Payment of Wages Act seeking €9,163 in pay for a period between April and August 2020, when he was on layoff.
Mr Dolan found that although the employer was in breach, but that he had to consider recent Labour Court case law on the circumstances of the Covid-19 pandemic.
"I cannot overlook the fact that we were in the midst of a global pandemic and many hundreds of thousands of employees throughout Ireland were on lay off. I believe that an award of no compensation is the correct decision to make," he wrote.