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Apparent decision of employee to sign away statutory rights invalid in absence of informed consent

Board of Management of Malahide Community School v Conaty [2019] IEHC 486

Statutory appeal - Section 46 Workplace Relations Commission Act 2015 - Unfair Dismissals Act 1977

 

Judgment of Garrett Simons J, delivered 5 July 2019

The present matter came before the High Court by way of a statutory appeal from the Labour Court on a point of law - the issue at hand being the entitlement, if such exists, of an employer to contract out of the statutory protections provided under the Unfair Dismissals Act 1977 (as amended).

The employee in question had accrued rights under the Unfair Dismissals Act 1977 upon reaching one year of continuous service to the school, who had tried to circumvent this entitlement by offering her an 11-month fixed-term contract which purported to contract out of the rights contained under the Act. The employee was dismissed at the end of this contract.

The employee then successfully challenged her dismissal before the Labour Court (ref: UDD1837), who found an absence of informed consent. She was not aware that, in signing the contract, she was signing away her rights as a permanent employee. The decision of the Labour Court was grounded in a literal interpretation of s 13 of the Act, which effectively prevents employees from contracting out of their rights. 

The school submitted that this is contrary to s 2(2)(b) of the Act, which expressly provides that fixed-term contracts will be outside of the ambit of the Act, and that the Labour Court erred in placing such emphasis on s 13. Moreover, the fact that the employee had over one year of continuous service meant, according to the trial judge, that 'it would be unreal' to treat the new contract as a new, self-contained employment. Further, the judge noted at para 49:

'Put otherwise, the mere fact that the wording of a contractual provision appears to echo a statutory exception or waiver under section 2 is not proof against that contractual provision being voided under section 14. The contractual clause will be invalid if it does not reflect the true employment history.'

Mr Justice Garrett Simons then went on to explain that even though s 13 appears to preclude the possibility of any precluding out of statutory rights contained in employment contracts, the courts have at times taken somewhat of a flexible approach to it because doing so would be impractical in practice and would prevent the courts from giving effect to 'full and final settlement clauses' in circumstances where employers reach financial settlements with former employees. Failing to recognise these clauses would lead to more litigation and thus, would be contrary to the public interest.

As outlined above, the issue of informed consent - and indeed, the lack thereof - was found to be a crucial component of this case. Counsel for the school had submitted that the Labour Court had erred in placing so much emphasis on this requirement. The present judge explained the importance of this requirement at para 73 in the following terms:

'If one assumes for the moment that - contrary to my finding under the previous headings - it is competent for an employee to waive their right of permanent employment by entering into a fixed term contract under s 2(2)(b), it is nevertheless necessary that that waiver be given on the basis of informed consent. There is an implicit obligation on an employer to put an employee on notice that the entering into of a particular contract will entail the loss of statutory rights previously acquired by the employee. A bald statement in the contract to the effect that the Unfair Dismissals Act does not apply to dismissal consisting only of the expiry of the fixed term would not be sufficient. Rather, the contract would have to include an express acknowledgement to the effect that the employee was relinquishing their acquired right to the protection of the Act. The formula of words used in the contract of October 2015 is deficient in this regard. It did not put the teacher on notice of the loss of her statutory rights.'

As such, it was held that the school's reliance on s 2(2)(b) was misplaced and they failed to consider the teacher's employment as a whole. The disapplication of the Unfair Dismissals Act 1977 must be recorded in the contract, so as to enable the employee to make an informed decision. Moreover, the exception cannot apply where the employee has been functioning on a de facto permanent basis.

Accordingly, the appeal was dismissed and the decision of the Labour Court was affirmed. 

 

 

Note: This is intended to be a fair and accurate report of a decision made public by a court of law. Any errors should be notified to the editor and will be dealt with accordingly. For more on this, see Redmond on Dismissal Law (3rd edn, 2017).

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