No-fault Dismissals: What You Need To Know

• Jurisdiction: Ireland
• Law Firm: RDJ LLP
• Subject Matter: Employment and HR, Contract of Employment, Discrimination, Disability & Sexual Harassment, Unfair/ Wrongful Dismissal
• Author: Mr Alan Devaney
• Published date: 20 September 2023

The High Court has again acknowledged that a no-fault dismissal is permitted in law provided there are no underlying reasons such as misconduct issues and the necessary contractual clauses are in place. Mr Justice Dignam, made the following comments in the recent decision of Buttimer v Oak Fuel Supermaket Ltd [2023] IEHC 126

An employer is free to terminate an employee's employment for no reason during probation and, even where it relates to poor performance, the employer is not obliged to observe fair procedure but where the termination is for misconduct fair procedures must be observed.

The Court found that Ms. Buttimer had been dismissed from her employment due to allegations of misconduct and not for "performance related issues" as contended by her employer. Therefore, she should have been afforded fair procedures as required by the Constitution and the Common Law requires. This is not the case where the termination is for no reason or for poor performance.

This reflects the position taken by the Court of Appeal in the 2021 case of Donal O'Donovan v Over-C Technology Limited, whereby the Court of Appeal overturned an injunction granted to an executive whose employment had been terminated on the basis of poor performance during his probationary period. The Court of Appeal in that case re-stated two clear principles as follows: -

Firstly: that an employer can terminate employment for any reason, or no reason, provided adequate notice is given. This applies whether or not the dismissal occurs during the probationary period.

Secondly: that the principles of natural justice apply to cases involving dismissal for misconduct but not to termination on other grounds.

The above being the case, proceeding to termination on a no-fault basis is not without risk, particularly where there are disciplinary matters or underlying performance issues.

Below I have set out the risks to be considered.

Unfair Dismissal

Generally, an employee cannot bring an unfair dismissal claim unless they have 52 weeks of continuous service. This is subject to certain limited exceptions (for example there is no service threshold for dismissal relating to pregnancy, trade union membership, making a protected disclosures and other grounds). In addition, there is no service threshold to bring a discriminatory dismissal claim on the grounds of their race, sex, sexuality, age or any of the other discrimination grounds.

So we can say that if an employer proceeds to terminate on a no-fault basis, an employee is likely to fall outside of the scope of the Unfair Dismissals Act unless they...