The Court of Appeal has dismissed Irish Pride Bakeries’ appeal against an order requiring it to continue paying the salary and benefits of its Business Development Director while restraining steps to terminate his employment.
The appeal concerned an interlocutory order made by the High Court on 22 October 2015. The order restrained the company from implementing a purported termination communicated in an 18 August 2015 letter, or terminating the employee except in accordance with his contractual entitlements. It also required continued payment under his employment contract. The Court of Appeal upheld that order.
The employee’s written contract, dated 1 February 2015, provided for three months’ written notice for a “no fault” termination, except in specified circumstances involving summary termination or a formal disciplinary procedure. The Court noted there was no claim that either exception applied. The company had instead told him his role would be made redundant and that his last day would be 21 August 2015, with one week’s notice in lieu.
The company was in receivership while its business was being sold. The receivers said the purchaser did not require a stand-alone executive team and that costs associated with the employee’s role were no longer economically viable. The Court said the receiver acted as the company’s agent in dealing with the employee and that the receivership did not itself alter the existing employment contract.
The Court agreed that the employee had established a strong case at the interlocutory stage that the attempted termination did not comply with his contract. It also upheld the High Court’s conclusion that damages would not be an adequate remedy on the evidence before it, which included the employee’s previous employment position and remuneration package, as well as the potential practical benefit of remaining employed during the proposed business transfer.
The Court separately considered the order to continue salary payments. It said the balance of convenience depends on the circumstances and that a receiver’s appointment could, in another case, be accompanied by evidence that the employer could not pay current salaries. Here, the company continued trading, more than 250 employees remained, and there was no evidence that their wages or salaries were not being paid in full.
The Court therefore found the High Court was entitled to require continued salary payments. It also rejected the argument that the order interfered with statutory creditor priorities: the payments were not a debt due when the receivers were appointed, and the employment had not ended before or because of that appointment.
The judgment addressed the interlocutory order and the circumstances before the High Court. It expressly did not express a view on disputes arising from later steps, including the employee’s asserted entitlements against the purchaser under the transfer-of-undertakings rules.