James McGrath v Trintech Technologies Ltd and Trintech Group plcEmployment law - Contract of employment - Terms and conditions - Implied term - Wrongful dismissal - Whether term that plaintiff could not be dismissed in certain circumstances should be implied into employment contract - Whether plaintiff wrongfully dismissed - Damages.
Tort - Personal injuries - Duty of care - Foreseeability - Occupational stress - Damage to health of employee - Whether reasonably foreseeable - Whether breach of duty by employer not to cause stress-related injury to employee - Health, Safety and Welfare at Work Act 1989, sections 6 and 12 - Safety, Health and Welfare at Work (General Application) Regulations 1993 (S.I. No. 44), regulations 5, 8, 9, 10, 11 and 13.
The High Court (before Ms Justice Laffoy) delivered October 29th , 2004.
A term which would be inconsistent with the express terms could not be implied into an employment contract. However, representations which were intended to vary or add to the terms of employment, which were acted on by the employee, gave rise to contractual liability on the part of the employer. Psychiatric harm suffered by an employee due to stress at work had to be reasonably foreseeable by an employer for a breach of statutory duty to give rise to liability therefore. To be liable at common law for such injury, the employer also had to have fallen below the standards of a reasonable and prudent employer.
The High Court so held in awarding the plaintiff €82,526 in damages for breach of contract in failing to retain him for a year after an assignment posting as guaranteed.
Frank Callanan SC and Pauline Walley BL for the plaintiff; Mark Connaughton SC and Michael Howard BL for the defendants.
Ms Justice Laffoy said that the plaintiff was an employee of the defendant on the terms of a written contract of employment. Those terms were augmented when Permanent Health Insurance (PHI) was introduced to its list of benefits. The benefit would cease when either: the attainment of age 65; death; recovery; or termination of employment occurred. It was also provided that the scheme could be amended or discontinued by the defendant at any time. During his first two and a half years with the defendant he suffered bouts of physical ill health. In 2002, he was requested to go on an assignment to Uruguay to work in Sursoft SA, which had been acquired by the defendant, from January until June, 2003. The plaintiff claimed that during this period he was subjected to grave work-related stress which resulted in injury to his psychological health. Following his return from Uruguay, the plaintiff did not return to work, being absent on certified sick leave.
On August 26th, 2003, the plaintiff was informed that he was being made redundant from September 26th, 2003. He was one of 12 out of 130 employees whom the defendant decided to make redundant with the objective of cost-cutting against the background of a sluggish market.
The plaintiff did not accept that the defendant was entitled to make him redundant. He claimed damages for breach of contract, wrongful dismissal, personal injury and breach of trust. He also sought various declarations to the effect that his purported redundancy was void and in breach of express or implied terms of his contract.
The basis on which the plaintiff claimed to be entitled to the declaratory reliefs were: (a) that it was expressly or impliedly provided in his contract of employment that the defendant would not dismiss him without due cause and without reasonable notice or consultation and would adopt fair procedures in any review or selection process for dismissal or redundancy; (b) that there was an express or an implied contractual term that if he was on certified sick leave, reliant on the prospect of permanent health insurance cover, the defendant would not dismiss him in those circumstances thereby depriving him of the benefit of the permanent health insurance; and (c) that it was expressly agreed in January, 2003, that if the plaintiff accepted the assignment in Uruguay, he would be guaranteed 12 months' security of tenure as director of professional services on his return.
In support of the contention that it was an implied term of the plaintiff's contract of employment that the defendant would not make him redundant in circumstances that would deprive him of the benefit of the permanent health insurance, i.e. in the existence of two conditions, namely that he was on certified sick leave and reliant on the prospects of PHI cover, the plaintiff cited a number of British authorities, including: Aspden v Webbs Poultry and Meat Group (Holdings) Ltd IRLR 521; Hill v General Accident IRLR 641; Villella v MFI Furniture Centres Ltd IRLR 468 and; Briscoe v. Lubrizol Ltd. IRLR 607.
The defendant denied that any such terms were part of the contractual relationship between it and the plaintiff. It also contended that whether or not the plaintiff's position was redundant on August 26th, 2003, was irrelevant to the right of the defendant to terminate the plaintiff's contract of employment.
It was submitted that the concept of "redundancy" was a creature of statute, specifically, the Redundancy Payments Act 1967 and the Unfair Dismissals Act 1977, as amended. The legislative scheme prescribed the circumstances in which a redundancy could be challenged and the remedies available and courts only had jurisdiction in the circumstances prescribed by the legislation.
Relying on Parsons v Iarnród Éireann ELR 203, Sheehy v Ryan IEHC 72, Hickey v Eastern Health Board 1 IR 208, Johnson v Unisys Limited UKHL 13, 1 AC 518, Malik v BCCI AC 20 and Orr v Zomax Ltd 1 IR 486, it was submitted that the plaintiff had no right to claim any remedy other than damages at common law and, in particular, had no right to invoke statutory rights or claim declaratory relief in the form sought.
Ms Justice Laffoy noted that the plaintiff had not invoked any statutory provision in support of his claim for wrongful dismissal, his claim being grounded entirely in the common law of contract and tort. Accordingly, the issues for determination on liability were whether the plaintiff had established a claim in contract for wrongful dismissal and other breaches of the terms of his contract and whether he had established a claim in tort for personal injuries.
The pertinent provisions of the plaintiff's statement of terms and conditions of employment were the provisions in relation to sick leave and pay, which provided that salary would be paid for 26 weeks while on certified sick leave, whereupon the PHI benefit would become operative and in relation to termination of employment, where it was provided that one month's notice would be required.
Ms Justice Laffoy said that she was not persuaded by the authorities cited that there should be implied into the plaintiff's contract of employment a term that the defendant would not terminate the contract in the circumstances alluded to. To imply such a term would be inconsistent with the express terms of the contract of employment, in that it was expressly provided that the plaintiff's employment could be terminated on one month's notice and that, even where payment had commenced under the PHI scheme, it would cease on the termination of the employment. She said it would be anomalous that if the plaintiff had the benefit of such an implied term at August 26th, 2003, his employment could not be terminated and he would require to be excluded from the pool of employees from whom persons might be selected for dismissal on the ground of redundancy, which would be grossly disadvantageous to fellow employees who were well at the material time.
Ms Justice Laffoy also said that such protection and remedies as were afforded by statute to the plaintiff could not be pursued at first instance in a plenary action in the High Court. It was clear on the authorities and, in particular, Parsons v Iarnród Éireann ELR 203 that the plaintiff could not challenge the genuineness of the redundancy, any such challenge being a matter for another forum.
However, if there were representations which were intended to vary or add to the terms and conditions of the plaintiff's employment, which were acted on by the plaintiff, they gave rise to contractual liability. The difficulty here was the factual conflict which had arisen between the plaintiff and the defendant. In this respect, Ms Justice Laffoy found the plaintiff to be a precise and consistent witness, unaffected by loss of memory as suggested by the defendant, while there had been lack of candour on the part of the defendant's witnesses. The evidence led to the conclusion that the plaintiff had been given the guarantee, which became a term of his contract, that his employment with the defendant in the role of director of professional services would continue for one year after his return. The purported termination of his contract was in breach of that guarantee.
The plaintiff's claim for damages for personal injuries was grounded on both an alleged breach of the defendant's common law duty of care and breach of statutory duty. It was alleged that his psychological injuries were caused by work-related stress during the plaintiff's secondment to Uruguay and aggravated by the treatment meted to him by the defendant on his return in refusing to allow him to avail of four weeks' leave, terminating his employment and the manner in which the proceedings were defended.
While the Supreme Court in recent years had considered claims for compensation for psychiatric damage alleged to have been negligently inflicted in various contexts, Ms Justice Laffoy, reviewing the authorities, said that, as yet, it did not have to consider directly the circumstances in which occupational stress resulting in psychiatric injury would give rise to liability on the part of an employer. That issue had been considered recently in the United Kingdom in Hatton v Sutherland 2 All ER 1 and Walker v Northumberland County Council 1 All ER 737.
Ms Justice Laffoy said that the only decision of the High Court which had been cited in which damages had been awarded for a psychiatric disorder, independent of any physical injury, caused by stress in an employment context was in McHugh v. Minister for Defence 1 IR 424, where the relevant legal principles applicable in determining whether the employer was liable were outlined in terms which were broadly in line with the authorities from the other jurisdictions.
The effect of the decision in Hatton v. Sutherland 2 All ER 1 was to assimilate the principles governing an employer's liability at common law for physical and psychiatric injury where an employee claimed that the psychiatric injury had resulted from the stress of his working conditions and workload. In the view of Ms Justice Laffoy, there was no reason in law or in principle why a similar approach should not be adopted in this jurisdiction. She considered that the practical propositions summarised in Hatton v. Sutherland were helpful in the application of legal principle in an area which was characterised by difficulty and complexity, subject, however, to the caveat that every case would depend on its own facts.
The claim for breach of statutory duty invoked the provisions in relation to general duties set out in the Safety, Health and Welfare at Work Act 1989 and, in particular, sections 6 and 12. The plaintiff also invoked regulations 5, 8, 9, 10, 11 and 13 of the Safety, Health and Welfare at Work (General Application) Regulations 1993. In the Act of 1989 the expression "personal injury" was defined as including "any disease and any impairment of a person's physical or mental condition" and the general duties imposed by the Act of 1989 extended to the protection of the psychiatric health of employees and comprehended the obligation to provide systems and measures which safeguarded the employee against psychiatric injury induced by the stress of the employee's working conditions and workload.
It was submitted by the plaintiff that those provisions imposed virtually an absolute duty on employers in relation to their health and safety obligations and that, therefore, it was not necessary that he should establish blameworthiness on the part of his employer. As authority for that proposition, the plaintiff relied on Everitt v Thorsman Ireland Ltd 1 IR 256 where it was held that the common law duty of an employer was to exercise all reasonable care in relation to his employees.
To determine whether the plaintiff had established a breach of statutory duty in consequence of which he had suffered injury and loss involved summarising the allegations of breach of duty against the factual backdrop of the plaintiff's employment from early 2003 to the commencement of the proceedings, the submissions on foreseeability and then applying the propositions set out in Hatton v Sutherland 2 All ER 1 to the facts.
Giving a summary of the plaintiff's medical and psychiatric history from oral evidence and admitted reports, Ms Justice Laffoy was satisfied that it had been established that the plaintiff had suffered from a recognisable psychiatric illness and that, as a matter of probability, it was attributable, in part at least, to stress at work.
The steps which the plaintiff contended the defendant did not take, but should have taken, were summarised as including: that the defendant should have had a system in place for monitoring stress in the workplace; that the defendant should have had measures in place whereby an employee could access counselling on a confidential basis and; that the defendant did not give adequate support to the plaintiff in dealing with the workload and crises in Uruguay.
The defendant denied that such injury was foreseeable, that there was a breach of duty on its part and that it acted reasonably in the circumstances.
The plaintiff countered the denial of foreseeability of psychological injury by pointing to the defendant's knowledge of his pre-existing physiological vulnerability; an incident in Uruguay in March, 2003, when it was obvious to the defendant that the plaintiff was upset by and concerned about a suggestion that he was being blamed for the strike; the plaintiff's physical appearance on his return to Dublin in June, 2003; and the actual workload itself which should have put the defendant on inquiry. Further, it was submitted that what was characterised as a lack of curiosity on the part of the defendant in relation to the plaintiff's medical condition when he returned suggested either that the defendant was aware that the plaintiff was suffering from work-induced stress, or was indifferent to his state of health. On the evidence, Ms Justice Laffoy did not think it would be proper to draw either inference which the plaintiff had invited the court to draw.
Ms Justice Laffoy's conclusions on the application of the propositions in Hatton v Sutherland 2 All ER 1 to the facts of the case were that:
(a) The defendant did not have any actual knowledge of the plaintiff's vulnerability to psychological injury;
(b) there was no reason why the defendant should not assume that the plaintiff could withstand the stresses of his type of work environment and workload;
(c) the evidence indicated that senior management considered that the plaintiff had the attributes to do the job and it was to be inferred that the plaintiff also believed that he had. While the job proved to be more demanding than might have been anticipated, the crises which arose were unpredictable. All of the personnel involved in trying to manage the crises were under stress which they coped with and the management did not subject the plaintiff to any greater pressure than was assumed by any other member of the team or to unreasonable demands;
(d) insofar as there were signs of vulnerability on the part of the plaintiff and possible harm to his health, these were adequately addressed by the defendant;
(e) the circumstances which the plaintiff contended the defendant's personnel should have taken as signs of his vulnerability were not such as to put a reasonable and prudent employer on further inquiry;
(f) it would have been unreasonable to impute to the defendant knowledge of a vulnerability or condition of which the plaintiff himself was unaware in circumstances in which the defendant had not been apprised of the plaintiff's psychological history and the likelihood of psychological harm had not been ascertained through medical examination.
In Ms Justice Laffoy's view, it could not be said that, as a matter of probability, if the defendant took all of the steps which the plaintiff contended it was statutorily obliged to take, the plaintiff would not have suffered psychological injury.
On that basis, she concluded that the risk of psychological harm to the plaintiff was not reasonably foreseeable. The fundamental test was whether the defendant fell below the standard to be expected of a reasonable and prudent employer, which it did not. Having done what was reasonable in the circumstances, the defendant did not breach its duty of care and had no liability to the plaintiff either in contract or tort. If the submissions made on behalf of the plaintiff were correct, the law would impose a wholly unrealistic burden on employers. Accordingly, the claim for breach of statutory and common law duty failed.
The plaintiff was entitled to damages for the breach of his contract in failing to honour the guarantee of one year's employment following his posting to Uruguay. The measure of the damages was limited to the year's salary and other benefits which the plaintiff would have received but for the breach of contract. The plaintiff was not entitled to damages for loss of opportunity, as was contended on his behalf as, even if the defendant had honoured the guarantee, the defendant would have been entitled to terminate on notice at the end of the period of one year in accordance with the contract, the legal position being that protection against redundancy was not justiciable at common law.
Accordingly damages were measured at €69,026 representing the plaintiff's salary for one year together with a bonus of 30 per cent, which was considered reasonable to assume he would have earned, nett of tax. To that figure, was added, in the case of holidays owing, the sum of €10,500 plus reimbursed expenses measured at €3,000.
Solicitors: Amorys (Dublin) for the plaintiff; Matheson Ormsby Prentice (Dublin) for the defendants.
Paul Christopher, barrister