Employment law solicitor Richard Grogan of Richard Grogan & Associates writes on dismissal by receivers.

The case of Brennan and Irish Pride Bakeries (In Receivership) is a decision of the Court of Appeal given by Ms. Justice Finlay Geoghegan delivered on 29th March 2017 under reference 2017 IECA107.

The contract which the employee had was very specific as to the grounds on which the employee could be dismissed.

The receiver sought bids and received a bid from Pat the Baker which it was deposed as having submitting the most attractive bid. It was agreed with the purchaser that the TUPE Regulations of 2003 would apply to the transfer of the business. A purchaser was not found for the business and assets of the Ballinrobe facility where Mr. Brennan worked. The provisions of Section 437 (2) and (3) (M) of the Companies Act 2014 was referred to which confers a power on a receiver to engage and discharge employees on behalf of the company. It was determined in the decision that it does not confer a power on a receiver to do anything which the company itself could not do. It was held that the employee was entitled to continue in the employment unless terminated in accordance with the terms of his contract.

The employee was dismissed on one weeks’ notice. The employee pointed out that his contract provided for three months’ notice. It was pointed out that the Trial Judge in the case had said there was a potential practical benefit to the employee in restraining a purported termination of employment which was not permissible under the contract. If the employee had remained in employment with the Appellant at the time, it was contended he might have been able to benefit from the TUPE Regulations. Regulation 5 provides that the Transfer of an Undertaking of a business shall not in itself constitute a ground of dismissal. There is an exemption in paragraph (2). The Court pointed out that nevertheless the employee if he continued in employment would have been entitled to certain consultation and information under those Regulations and would have had the opportunity of engaging with the purchaser. This case is important in that it confirms that a receiver is not automatically entitled to terminate an employment in breach of an employment contract and there is no automatic right for a receiver to terminate employments.