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Powerscourt Hotel, Pay Cuts and a Pastry Chef: A Tale of Constructive Dismissal

Updated: Aug 25, 2022

Last week we highlighted a recent constructive dismissal case in which the employee was awarded €58,000. This week, we look at another recent constructive dismissal case in which the employee succeeded in satisfying the Workplace Relations Commission (WRC) that he was effectively forced into resigning by reason of his employer's actions. Our Adrian Twomey highlights the key points to note in the recent decision in Batko v Sugarloaf Ventures Limited, ADJ-00029717.

The Complainant, Mr. Pawel Batko, was a full-time, permanent Executive Pastry Chef employed by Sugarloaf Ventures Limited; a company that operates the Powerscourt Hotel, Resort and Spa. He commenced employment in 2014 and was paid an average weekly sum of €923.08.

In March 2020, Mr. Batko was informed the the hotel was to close and he was to be laid off due to the COVID-19 pandemic. In June of that year he was advised that he was to return to work but that his pay would be reduced by 9.8% for the foreseeable future. Mr. Batko gave evidence that he contacted the HR Manager to object to the unilateral pay-cut and was told that, if he would not agree to the proposed change to his contract, he could resign. The HR Manager denied making that statement and said that the Complainant had instead repeatedly asked that he be made redundant; a proposal that was rejected.

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Mr. Batko remained on lay-off and raised a grievance in August 2020. His grievance was not upheld. He lodged an internal appeal but resigned before the appeal was heard. He was asked to reconsider his resignation but declined to do so, choosing instead to pursue a complaint of constructive dismissal at the WRC.

Mr. Batko's complaint under the Unfair Dismissals Acts was heard by Brian Dolan, Adjudication Officer, in March 2022 and a decision was issued on 2 August of this year.

The Adjudication Officer reviewed previous decisions in cases of alleged constructive dismissal. In particular, the Adjudication Officer noted that:

  1. In Western Excavating (ECC) Ltd v Sharp, [1978] ICR 221, the court stated that if the employer is guilty of conduct which is a significant breach going to the root of the contract of employment, or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract, then the employee is entitled to treat himself as discharged from any further performance.

  2. In A Former Employee -v- A Building Supply Company, ADJ-00022607, it was determined that the correct approach to be taken by an adjudicator in considering whether there has been a constructive dismissal is: whether there has been a repudiatory breach by the employer or, if there has not been a repudiatory breach, whether the employer engaged in conduct which made it reasonable for the employee to terminate his contract.

  3. In Cantor Fitzgerald International v Callaghan, [1999] I.R.L.R. 234, it was held that it is difficult to exaggerate the crucial importance of pay in any contract of employment. In simple terms, the employee offers his skills and efforts in exchange for his pay: that is the understanding at the heart of the contractual arrangement between him and his employer.

  4. In Oaklodge Fostering Limited -v- Lareina Kirwan, UDD 2161, the Labour Court held that a 50% reduction in wages, on foot of a 50% reduction in hours, was deemed to be a “significant breach going to the root of the contract” and on that basis the Complainant was entitled to terminate the contract."

The Adjudication Officer went on to determine that, in light of these decisions, it was reasonable for Mr. Batko to resign from his employment in light of the hotel's efforts to unilaterally cut his pay. Significantly, the Adjudication Officer did not believe that Mr. Batko's failure to exhaust the internal grievance appeal process impacted on his ability to succeed in his constructive dismissal claim. Rather, the Adjudication Officer noted that the Complainant had raised his grievance both formally and informally and received negative responses.

Noting that the Complainant had found alternative employment since his resignation, the WRC awarded him €9,000 in compensation.

The outcome underlines the potential for employees to sue for constructive dismissal when an employer insists on a unilateral pay cut. It is also noteworthy that the failure to exhaust internal grievance procedures was not fatal to the employee's claim.

Those requiring employment law advice or representation before the WRC can contact our Adrian Twomey.


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