The Court of Appeal has overturned an injunction that required Over-C Technology Limited and Over-C Limited to continue paying former chief financial officer Donal O’Donovan while his wrongful dismissal case proceeded.
In a judgment delivered on 16 February 2021, the court allowed the companies’ appeal and vacated the High Court order. It held that Mr O’Donovan had not shown a strong case for an injunction because he was dismissed during a six-month probationary period under a contract that allowed termination for substandard performance, with one month’s pay in lieu of notice.
Mr O’Donovan began work as CFO in August 2019. The companies said his performance was inadequate; he disputed their complaints. The Court of Appeal treated the dismissal, for the purpose of the injunction application, as one for poor performance rather than misconduct. It noted that the High Court had found he had not established a strong case that he was dismissed for misconduct, and he did not appeal that finding.
The High Court had concluded that Mr O’Donovan had a strong case that the companies breached an implied contractual right to fair procedures in assessing his performance and handling his appeal. It ordered the companies to pay six months’ salary from the end of January 2020, subject to an undertaking by Mr O’Donovan to perform any CFO duties required. The order did not require the companies to assign him duties and allowed them to appoint a new CFO.
The Court of Appeal held that an employer could terminate employment during probation for no reason or because it did not wish to continue the employment, subject to the contract. It rejected the proposition that fair procedures had to be implied for a poor-performance dismissal in these circumstances. The judgment said fair procedures could apply where dismissal was for misconduct, but that was not the basis on which the appeal proceeded.
The court also gave a separate reason for allowing the appeal: damages were an adequate remedy. It noted that the employment had already ended when proceedings began, and that the parties’ relationship of trust and confidence had irretrievably broken down. It said reinstatement was not available through these wrongful dismissal proceedings in the circumstances described.
The court did not decide the cross-appeal over the terms of the injunction or the High Court costs order. It provisionally considered that the companies were entitled to costs for the appeal and High Court hearing, while allowing Mr O’Donovan 14 days to seek a short hearing on an alternative costs order.