Employment

                
                


Seamus Monaghan & Co, Solicitors - Core Issues in Irish Employment Law


This memorandum sets out an overview of the core issues of employment law in Ireland.

Specific advice should be sought on any issue as an in depth treatment of the issues is outside the scope of this memorandum. 



1. Rapid growth in range of employee protection legislation

 

In the period since Ireland’s accession to the European Economic Community in 1973, a large number of legislative measures have been passed seeking to protect the position of employees including legislation in the following areas:

·         minimum notice on termination of employment;
·         remedies for unfair dismissals;
·         equal treatment of men and women in the workplace;
·         equal pay for equal work;
·         provision of holidays;
·         protection of young persons;
·         redundancy payment guarantees;
·         protection of part time workers;
·         maternity protection;
·         terms of employment;
·         payment of wages;
·         provision of minimum wages;
·         parental leave;
·         pension provision;
·         health and safety;
·         management of and consultation in relation to collective redundancies; and
·         provision of information and consultation.

Much of the impetus for change in the area of employment legislation has come from the EU. Nevertheless, other international changes including those emerging from Court decisions in the UK and from other international organisations continue to influence Judicial determinations and public policy in Ireland.


 

2. Unions – are they relevant ?

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Though the Irish Constitution recognises the right of an employee to join a union, it does not oblige the employer to deal with a union.

Outside of the large banks, the civil service and certain semi-state bodies and certain other employers, a large part of economic activity in Ireland now operates without the engagement by the employer with a union acting on behalf of the employees.

This in part reflects the change in perspective on free market economics, the transformation of Ireland into a major base for international industry and the international decline in union membership.

While national partnership/agreements between the Government, the Employers and the Trade Unions apply to wage increases in the large banks, the civil service and the semi- state bodies, the determination of wage levels outside those employers in many cases does not involve any significant role for trade unions or other employee representative bodies.

Indeed, the recent trend reflected in High Court and Supreme Court decisions shows that many employers are to a large extent seeking to ignore trade unions and are having the right to do so recognised at least partially by Judicial determination.

The decline in influence of Trade Unions followed the trend in the UK in the 1980's. 

The Industrial Relations Act, 1990 altered the industrial relations climate significantly. It regulates “trade disputes”, “industrial actions” and “strikes” including providing that a strike or other industrial action shall not take place without a “secret ballot”.

Nevertheless, the industrial relations structure which has evolved in contemplation of an active role for trade unions still provides extensive remedies to deal with trade disputes some of which facilitate a potentially significant role for the trade union whether the employer likes it or not.

The Industrial Relations Act, 2001 regulates the role of the Labour Court in investigating trade disputes. The Labour Court may on the request of a trade union, make a determination which, if it is ignored, may be enforced by the Circuit Court.

Furthermore, though there has been a reduction in the role of unions generally, there are other sources of change which may cause a rebirth for employee representative bodies. In this regard, as Employment law evolves with an increasingly “European input”, the partnership model finds expression in many of the legislative changes which originate in the European Commission.

A recent example of that trend is the Employees (Provision of Information and Consultation ) Act, 2006 which sets out a detailed framework within which employers must consult with their employees on all matters that impact upon their employment. The consultation is not mandatory. It may be triggered by the employer or a certain threshold proportion of the employees.

Furthermore, the consultation obligations apply now to undertakings with 100 or more employees - reducing to undertakings with 50 or more employees in March, 2008. 

It will be very interesting to see how this potentially very important piece of legislation impacts upon industrial relations in Ireland.


3. Pre- contract issues for employers

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PRE-CONTRACT ISSUES 

Employers need to be careful about what is represented or said to employees prior to the offer of employment. Regard has to be had to the terms of the advertisement of positions, the interview for the position and any conditions which an employer sets to be satisfied before the employee takes up the position.

Wording in advertisement for positions of employment should be considered carefully by employers as such wording has been deemed to be part of the contract of employment and should not conflict with any terms of the formal contract of employment.

Similarly, representations or statements made at an interview can take on a greater importance than the employer contemplated if it can be shown that the employee relied upon them. Furthermore, employers should avoid asking any questions at interviews relating to age, marital status or disability.

POST-CONTRACT ISSUES

The termination or expiry of a contract of employment often gives rise to the question of the provision of a reference. Case-law developing in this area particularly in the UK provides some guidance on the expanding scope of employer's obligations.

The leading cases in the UK suggests that employers have a duty to take reasonable care in the preparation of a reference and should ensure that it is fair, true and accurate and could be liable in negligence to the former employee if he suffers economic loss as a consequence of their failure to do so.

On the other hand, employers must be cognisant of the dangers of over-stating the function, diligence, skill or talents of a former employee. It is well established that an employer owes a duty of care to others such as a new employer, prospective employer or recruitment agent who may rely on the reference.

Employers should not give a reference or description of the employee by way of conversation in a manner or content which would diverge from the form of a reference which they would give in writing. 


4. Contracts of employment.

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The Terms of Employment (Information) Act which came into force in May, 1994 provides that employers must furnish employees with certain terms and conditions of an employment contract in writing. The Organisation of Working Time Act, 1997 obliges the employer to set out details of the hours to be worked. Though an employer is obliged to set out in writing for the employee what the terms of employment are within two months after the commencement of employment, there is no obligation for there to be a formal written contract signed by both the employer and employee.

The basic list of terms which the employer is obliged to set out is as follows:

·         The employer’s name and address.

·         The place or places of work for the employee.

·         The job title and function.

·         The date of commencement.

·         The rate or calculation of remuneration.

·         Details of how remuneration is paid.

·         Any terms or conditions relating to hours of work or overtime.

·         Terms and conditions in relation to incapacity.

·         Details of any pension scheme.

·         The periods of notice for the employer and employee.

·         The details of any collective agreement which directly affects the terms and conditions of employment.

·         Details of rest periods or breaks.

·         Terms and conditions in relation to paid leave.

·         In addition any terms providing for sick pay should be provided in writing to the employee.

·         Terms and procedures that may be used against the employee if it is necessary to dismiss him or her.

·         Where the employee is required to work outside the State for a minimum period of one month, certain further details in relation to that work in that territory.

The statement must be signed by or on behalf of the employer.

The Safety, Health and Welfare at Work Act, 2005 imposes obligations on employers to provide such information to employees as ensures their safety when commencing work. This would include the obligation to provide written information where relevant. 


5. Unfair dismissal

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The Unfair Dismissals Act 1977, as amended by the Unfair Dismissals (Amendment) Act 1993, provides that substantial grounds must exist to justify the termination of a contract of employment and also that fair procedures must be followed in effecting the termination. Those Acts afford dismissed employees certain protections and remedies where it can be proved that the employee was dismissed for an unjust cause.

These Acts introduce the concept into Irish Law that a dismissal might be within the terms of a contract of employment and yet still be unfair entitling a dismissed employee to a remedy in law.

Not all employees are entitled to avail of the protections under these Acts. The employee claiming unfair dismissal must have one year’s continuous service, must work for at least 8 hours a week and not have reached the normal retirement age for the employment in question.

Additionally, certain categories of employee are excluded from the provisions of these Acts. Up until 2006, all civil servants were excluded. Now the exclusion applies to a reduced number of civil servants including the Gardai and members of the Defence Forces.

Section 6(4) of the 1977 Act sets out general categories of dismissal that are likely to be regarded to be “fair”. These relate to conduct or redundancy or competence or qualifications or the lack thereof.

Under the Acts, dismissals by reason of membership of a trade union, religious or political opinions, race, colour or sexual orientation, age, membership of the travelling community or because the employee was engaged in legal proceedings against the employer would in each case be deemed to be an unfair dismissal.

Under the Acts, a claim for constructive dismissal can be brought if the employee voluntarily resigns due to unacceptable behaviour of the employer or unacceptable working conditions. Otherwise a claim can only be brought under the Acts if the employee has been dismissed.

A person who succeeds in an unfair dismissal claim may be reinstated, re-engaged or awarded compensation.

Section 7 of the Act provides that the compensation cannot exceed 104 weeks gross pay in respect of the employment from which the employee was dismissed.

Furthermore, various considerations will be taken into account including the behaviour of the employer during the employment and the behaviour of the employee during the employment and since it terminated and whether he has taken any appropriate steps to mitigate his loss.

If he has not mitigated his loss, that will tend to influence the EAT to reduce the award that would otherwise be given.

A claim under the Unfair Dismissals Act is made either to a Rights Commissioner, the Employment Appeals Tribunal or the Circuit Court.

Normally, an employee can bring a claim under the Acts within six months of being dismissed.


6. Wrongful dismissal.

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This is dismissal which is in breach of the contract of employment. A breach may be of express terms and it may be of implied terms which would include constitutional rights to fair procedures.

One of the other terms implied by law is the right to certain notice of termination under the Minimum Notice and Terms of Employment Act of 1973. A court could decide that greater notice than the minimum is appropriate particularly in the case of those holding senior positions.

A summary dismissal for gross misconduct would only be sustainable if the conduct was sufficiently reprehensible to justify summary dismissal. If the conduct was not sufficiently reprehensible to justify the summary dismissal, then the courts will hold the employer to be in breach of contract and liable to pay damages for wrongful dismissal.

A further implied term which is being increasingly recognised by the courts is the implied obligation of mutual trust and confidence on which the employer and employee may each rely and by which each will be bound.

An important area of the law of wrongful dismissal is the option of seeking injunctive relief from the High Court to restrain the dismissal of an employee whose terms of employment are governed by contract. Typically such a remedy is sought by senior executives who cannot afford to wait for a remedy before the Employment Appeals Tribunal. An employee could be waiting in excess of six months before an EAT hearing and over a year for a determination by the EAT.

It is important to note that where the court considers that damages would be an adequate remedy, an injunction will be refused.

The normal procedure is that the applicant seeks an interlocutory ( temporary) injunction pending the full trial of the action when a permanent injunction may be granted.

Where an employee is wrongfully dismissed he is entitled to compensation for loss of remuneration during the period of notice required for the proper termination of the contract or an unexpired fixed period of contractual employment.


7. Constitutional and human rights law and employment law

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Constitutional rights may be infringed by dismissal under the following headings:

  1. Freedom of association – any dismissal for membership of a union is a breach of Art 40.6.1(iii).
  2. Implied right to work – any dismissal which prevents or disqualifies a person from holding a position of employment could be challenged on the ground of an infringement of the implied right to work.
  3. Implied right to fair procedures. The Supreme Court has implied the term of fair procedures in contracts of employment and it is this term which has been one of the basis’ for the court’s willingness to grant injunctions where there has been an absence of fairness in dismissals.
  4. The right to a good name in breach of article 40.3.2 – guaranteeing to protect as best it may from unjust attack and in the case of injustice, to vindicate the good name of every citizen.

Furthermore, the basic principles of natural justice which are also deemed constitutional rights – the right to have both sides of the story heard (audi alteram partem) and that no man can be a judge in his own case (nemo judex in causa sua)– should, to the extent possible, inform any workplace disciplinary or grievance procedures and can be invoked to challenge disciplinary and grievance procedures.

In addition to the Constitution, the European Convention on Human Rights and Fundamental Freedoms as applied by the European Convention on Human Rights Act, 2003 may be invoked in employment law court cases.  


8. Equality of treatment in Employment.

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Article 119 of the Treaty of Rome provides that “Each Member State (of what was then the European Economic Community) shall, during the first stage ensure and subsequently maintain the application of the principle that men and women should receive equal pay for equal work”.

The first steps to implement legislation in the area were the Anti- Discrimination (Pay) Act, 1974 – which dealt only with pay – and the Employment Equality Act, 1977 – which addressed the issues of access to employment, vocational training, promotion and working conditions.

The Employment Equality Act 1998 and the Equality Act 2004, taken together with the Equal Status Act, 2000, provide an extensive legislative framework for regulating equality issues in the workplace and in society at large by promoting equality and prohibiting bullying and sexual harassment and prohibiting discrimination on nine different grounds namely: gender, family status, sexual orientation, religion, age, disability, race and membership of the traveller community.

A person who wishes to make a claim based on discrimination in the workplace does so in the first instance at the Equality Tribunal. The only exception is a claim based on gender discrimination which may, at the option of the claimant, also be made in the Circuit Court.

The Equality Authority has a broad remit to work towards the elimination of discrimination in relation to employment and to promote equality of opportunity.

It has the power to conduct inquiries and to make recommendations to the Minister for Justice, Equality and Law Reform arising out of those enquiries.

The influence of European Law in this area is particularly suignificant. Additionally, the Irish Courts are at liberty to take into account recommendations of the European Commission and the European Council in the area of the protection of the dignity of women and men at work. 


9. Maternity rights

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The Maternity Protection Act, 1994 and the Maternity Protection (Amendment) Act, 2004 are the principal legislative measures in the area.

The basic provision is that a pregnant employee who commenced maternity leave on or after the 1st of March, 2007 is entitled to a minimum period of 26 consecutive weeks for maternity leave.

Section 14 of the 1994 Act ( as amended by section 5of the 2004 Act) provides for additional unpaid maternity leave up to 16 weeks which is available if the employee notifies the employer of her intention to avail of this leave not later than four weeks before her expected return to work.

The 1994 Act sets out extensive provisions for the protection of pregnant employees including obliging employers to have regard to the safety of employees while they are pregnant. The obligations and rights under the 1994 Act have been extended under the Maternity Protection (Amendment) Act 2004 to include time off for ante-natal classes and other needs of pregnant mothers or mothers of the newly born. 


10. Paternity Leave

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There is no legal entitlement to Paternity Leave other than as may be provided for in a contract of employment. There is no statutory requirement.


11. Bullying.

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The Health and Safety Authority has recently published a code of practice for Employers and Employees on the Prevention and Resolution of Bullying in Work. It came into effect on the 1st of May, 2007.

This provides guidance on identification and investigation of bullying, how to create a “bullying policy” and how to address a problem. If internal procedures fail, the code recommends an appeal to a rights commissioner. A further appeal may be made to the Labour Court.

It is clear that any stress including the stress that might be caused by bullying would come within the risks that the employer is obliged to guard against under the Safety, Health and Welfare at Work Act, 2005. In that regard, the code of practice highlights the legal requirement that employers carry out a risk assessment of bullying and stress.

A bullying policy will typically state that harassment, bullying and intimidation could be grounds for disciplinary action.

In determining the employer's liability in any cases taken on grounds of workplace stress, the issues of forseeability and of the amount of notice the employer had of the risk of injury can be crucial. 


12. Notice periods

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Under case law, an employee is entitled to reasonable notice on termination of employment. What is reasonable depends on the circumstances and in many cases one of the most important factors has been the seniority of the employee.

The more senior the position, the longer the notice entitlement.

However, legislation now provides minimum periods as follows.

Period of service

Minimum notice

13 weeks to 2 years

1 week

2 years to 5 years

2 weeks

5 years to 10 years

4 weeks

10 years to 15 years

6 weeks

15 years and over

8 weeks

Contracts of employment may provide for longer periods.

Summary dismissal is only lawful where there are grounds of such a fundamental nature where the employee has acted in a sufficiently reprehensible manner that the law will deem it not to be wrongful dismissal.


13. Redundancy payments

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The Redundancy Payments Acts 1967 to 2003 provide for payments to me made on the redundancy of the employee who has 104 weeks of continuous employment, the payments to be calculated as follows:

(a) two weeks pay for each year of continuous employment over the age of 16 years;

and

(b) an additional one week’s normal earnings.

Redundancy payments only arise where an employee has been dismissed by reason of the employer not needing the employee for what could be described as business or economic reasons. For example the legislation refers to a the ceasing or changing of the business activity with which the employee was concerned.

Redundancy only applies where the employee has been dismissed. Dismissal for misconduct does not entitle an employee to redundancy.


14. Collective Redundancies

 

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Under the Protection of Employment Acts, 1977 to 2007, employers have additional obligations in relation to consultation in advance of, and in relation to the timeframe of redundancies of groups of employees forming a substantial proportion of the staff of the employer. The 2007 Act arose from the terms of the Social Partnership Agreement for 2006-2016 and provides for the creation of a Redundancy Panel to guide the Minister for Labour.


15. Payment of wages

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This area is governed by the Payment of Wages Act, 1991.

Section 4 obliges employers to supply employees with written statements of wages and deductions at the time of payment.


16. Grievance procedures

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Grievance procedures are an increasingly important part of the terms and conditions of employment which are often set out in the contract of employment or referred to and incorporated by reference into the contract of employment.

They provide mechanisms for the employee to channel his or her dissatisfaction with his or her treatment by the employer or superiors.

The Labour Relations Commission pursuant to section 42 of the Industrial Relations Act, 1990 has produced a Code of Practice for Grievance and Disciplinary Procedures setting out guidelines for best practice and giving effect to such procedures.


17. Disciplinary procedures

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Like Grievance Procedures, Disciplinary Procedures should essentially be fair and the basic principles of natural justice should to the extent possible be reflected in the procedures.

In addition, it has often been argued that legal representation on behalf of the person who is alleged to be in the wrong should be permitted at the disciplinary hearing. There is no strong line of legal precedents to support that contention. Nevertheless, certain recent decisions have indicated a greater willingness to support the right of the “accused” to legal representation. The contract of employment may provide for such representation or the circumstances of the case may be important enough to create an entitlement to legal representation.

Typically, the recommended stages involved in a disciplinary procedure are as follows:-

1. verbal warning/counselling;
2. formal verbal warning;
3. first written warning;
4. final written warning/suspension; and
5. dismissal.


18. Internet and email usage

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This is an area in which employers are seriously exposed in if they do not provide strict guidelines for the use of email and internet.

Defamation claims and bullying and sexual harassment claims can arise from the abuse of email by staff members and employers have a duty of care to protect their employees and customers from emails which they find offensive.


19. Minimum Wage

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Under the National Minimum Wage Act, 2000 most employees are entitled to a minimum wage.

There are other minimum rates of pay in specific types of employment.

Pursuant to the National Minimum Wage Act, 2000, the basic minimum wage for an experienced ( two years employment) adult employee is €8.65 per hour from the 1st of July, 2007.


20. Working time

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The Organisation of Working Time Act, 1997 sets out a number of statutory restrictions and entitlements which apply to the hours that employees work.

Section 11 provides that an employee should have a minimum of 11 hours rest in any 24 hours.

Section 12 obliges an employer to provide employees with at least 15 minutes break in any four and a half hour work period.

Section 13 entitles an employee to a “rest period of at least 24 consecutive hours” in each period of 7 days.


21. Health and Safety

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The Safety, Health and Welfare at Work Act, 2005 sets out in a statutory framework wide ranging obligations of employers to provide a safe and healthy place of work for their employees.

Section 8 of that Act sets out extensive obligations of employers in that regard.

Section 9 obliges the employer to provide information to employees.

Section 10 obliges employers to provide training and instructions to employees.

Section 20 obliges employers to prepare a Safety Statement which must involve a prior risk assessment to identify the risks and hazards and set out the protective and preventative measures to be taken and must identify the persons responsible.

In June, 2006, a voluntary code of practice for Health and Safety was launched known as the “Workplace Safety Code”. The code is divided into three parts dealing with the recommended specific actions for employers to put into place a safety management process and for employees to co-operate with employers in carrying out risk assessments, the recommended intervention in the case of injury and recommended rehabilitation approaches.


22. Work permits for non EU nationals

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There are two types of work permits.

The first is the Green Card Permit for occupations where there is a shortage of high level strategic skills. It is a permit issued to the employee and allows his or her employment in Ireland by the named employer in the occupation specified in the permit. It is issued for an initial period of two years and generally speaking will thereafter normally be renewed indefinitely.

The second is an ordinary work permit for those occupations with a salary of €30,000 or more where a Green Card Permit cannot be obtained and, in very limited circumstances, in the salary range below €30,000. Like the Green Card, it is specific to the employee and specific to the occupation. It is issued for two years and can be renewed for a further three years.


23. Restrictive Covenants and confidentiality agreements

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Restrictive covenants and confidentiality clauses/agreements are standard terms in the employment contracts of senior employees and sometimes not so senior employees.

Restrictive covenants limit the freedom of the employer when he/she leaves the employment. For example, the employee might agree not to compete in a certain market for a certain period or agree not to solicit customers or staff for a period in each case prior to and after leaving the job for a period.

The terms of restrictive covenants which are suitable depend greatly on the business of the employer.

Indeed, certain terms which are perfectly appropriate in one industry are completely unenforceable in another.

Confidentiality terms are entirely normal across many types of employment. Indeed, it is well recognised that employees owe a duty of confidentiality to protect the business of their employers. Accordingly, confidentiality could be said to be an implied term of a contract of employment.


24. Transfer of undertakings protections.

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The European Communities (Safeguarding of employees rights on transfer of undertakings) Regulations of 1980 provide that employees of a business or company, which is in the course of or has gone through a change of ownership, are treated as entitled to the same rights from the new owner/employer as if there had been no change of ownership. 


25. Forums for the resolution of employment and industrial relations disputes.

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The core issues of Employment Law are most often brought into the public domain either through strikes and other industrial action or the Courts of Ireland and various bodies which have been established under employment legislation to promote good employment practice, harmonious industrial relations and dispute resolution support.

Depending on the nature of the dispute, the Circuit Court or the High Court can have jurisdiction to hear the matter. However, often the dispute is first  or is determined by one of the bodies established under the terms of employment legislation.

We briefly outline the role and functions of those non-judicial or quasi-judicial bodies below.

The Labour Relations Commission (LRC)

The Labour Relations Commission, based in Haddington Road, Dublin 4, was established under the Industrial Relations Act, 1990 and has the general responsibility for the promotion of good industrial relations through the provision of a range of services. These services include a conciliation service, an advisory and research service, a rights commissioner service, a workplace mediation service and assistance to joint labour committees (which fix minimum wages in certain sectors) and joint industrial councils (bodies operating in certain economic sectors with the objective of promoting harmonious industrial relations) in carrying out their functions. These services are free of charge.

The LRC also prepares voluntary Codes of Practice, publishes a journal and a range of other publications on industrial relations and human resource management topics, conduct, commission and publish industrial relations research, conduct surveys and organise seminars, conferences and workshops on topical human resource management and industrial relations issues.

The Health and Safety Authority (HSA)

The Health and Safety Authority was established under the Safety, Health and Welfare at Work Act, 2005 and has the overall responsibility for the administration and enforcement of health and safety at work in the private and public sector.

Inspectors of the HSA carry out reactive and pro-active inspections of workplaces. Reactive inspections may arise following an accident, incident or complaint. Pro-active inspections may be routine or targeted.

The purpose of an inspection is to assist the HSA in carrying out some of the general functions assigned by Section 34 of the Safety, Health and Welfare at Work Act 2005.

The Safety, Health and Welfare at Work Act 2005 allows the HSA to take actions where statutory contraventions are observed or where there is a risk of serious personal injury. These actions include the using of an Improvement Direction or an Improvement Notice or a Prohibition Notice, the taking of proceedings or the preparation for the initiation of proceedings by the Director of Public Prosecutions.

The HSA also works with various advisory committees and task forces to help develop policies and good workplace practices.

The Equality Tribunal

The Equality Tribunal (also known as the Office of the Director of Equality Investigations) is a body set up to decide upon or mediate complaints under equality legislation.

The head of the Tribunal is Melanie Pine, the Director of Equality Investigations. The staff of the Tribunal also includes Equality Officers, who consider and decide cases brought under equality legislation, and trained mediators.

It is important to note that the Equality Tribunal is a separate body from the Equality Authority.

The Equality Authority is semi-state body set up to work towards the elimination of unlawful discrimination, to promote equality of opportunity and to provide information to the public on equality related legislation.

The Equality Tribunal, on the other hand, is a quasi-judicial body which hears and mediates claims of unlawful discrimination under the equality legislation.

Employment Appeals Tribunal (EAT)

The Employment Appeals Tribunal is an independent, quasi-judicial body set up with the purpose of providing an inexpensive and informal means for individuals seeking remedies for alleged infringements of their statutory rights.

The EAT was originally established under the Redundancy Payments Act 1967. However, its scope and application has been widened by numerous Acts since then.

The EAT seeks to resolve disputes between employees and employers. Applications to the EAT can be made under the:

  • ·         Redundancy Payments Acts 1967-2001.
  • ·         Minimum Notice and Terms of Employment Acts 1973-2001.
  • ·         Unfair Dismissals Acts 1977-2001.
  • ·         Protection of Employees Acts (Employers Insolvency) Acts 1984-2001.
  • ·         Organisation of Working Time Act 1997.
  • ·         Adoptive Leave Acts 1995-2005.
  • ·         Terms of Employment (Information) Acts 1984-2001.
  • ·         Maternity Protection Acts 1994-2004.
  • ·         Payment of Wages Act 1991.
  • ·         Protection of Young Persons (Employment) Act 1996.
  • ·         Parental Leave Act 1998.
  • ·         Protection for Persons Reporting Child Abuse Act 1998.
  • ·         EC (safeguarding of Employee’s Rights on transfer of undertakings) (Amendment) Regulations 2000.
  • ·         EC (Protection of Employment) Regulations 2000.
  • ·         Carer’s Leave Act 2001.

 
The Tribunal itself will usually consist of the chairman or a vice-chairman and two members (one of which is drawn from 30 persons nominated by the Irish Congress of Trade Unions and the other of which is drawn from 30 persons nominated by employers’ organisations). The chairperson is usually a qualified solicitor or barrister.

The decision of the EAT can be appealed to either the Circuit Court or the High Court, depending on the nature of the case.

The Labour Court

The Labour Court was established under the Industrial Relations Act, 1946 and provides a free service for the resolution of disputes in areas of industrial relations, equality, organisation of working time, national minimum wage, part time work and fixed term work legislation. It consists of 9 full time members – a Chairman, two Deputy Chairmen and six Ordinary Members, three of whom are employers’ members and three of whom are workers’ members. The Labour Court also has a legal advisor, the Registrar, and is supported by an administrative service staffed by civil service. It is located in Tom Johnson House, Haddington Road, Dublin 4.

It is not a court of law but rather an industrial relations tribunal, hearing both sides of the dispute and then making recommendations on the dispute and any possible settlement. Although these recommendations are generally not binding on the parties, they are obliged to give serious consideration to them. Ultimately the responsibility for settlement lies with the parties to the dispute.

Court of last resort

The role of the Labour Court in dispute resolution is to act as a court of last resort. In other words, local dispute resolution arrangements in the company or organisation, and the other dispute resolution machinery of the State (the Labour Relations Commission; including possibly the Rights Commissioner Service) should have been fully utilised before a case comes before the Labour Court.

Investigation method

The Labour Court investigates disputes by requiring the parties to a dispute to provide it with written submissions of their positions in relation to the dispute, and, subsequently, by holding hearings which both parties attend. The hearings are usually held in private, unless one of the parties requests a public hearing.

In most cases the Labour Court deals with disputes which are referred to it. Occasionally, however, the Labour Court will be pro-active and intervene in an industrial relations dispute and invite the parties to come before it.

Where a case has been heard by a Rights Commissioner and a recommendation has been issued, either party to the dispute may appeal the recommendation to the Labour Court; such appeals must be made to the Labour Court within 6 weeks of the date of the Rights Commissioner’s recommendation. The appeal can be on the basis that one of the parties does not agree with the Rights Commissioners recommendation, or one of the parties seeks to have the recommendation of the Rights Commissioner enforced.

Rights Commissioners

These operate as a service of the Labour Relations Commission but are independent in their functions. They are appointed by the Minister for Enterprise, Trade and Employment on the recommendation of the Labour Relations Commission.  They investigate disputes, grievances and claims that individuals or small groups of workers refer under:

·         Industrial Relations Acts, 1969-1990.

·         Industrial Relations (Miscellaneous Provisions) Act 2004.

·         Unfair Dismissals Acts 1977-2001.

·         Payment of Wages Act 1991.

·         Maternity Protection Acts 1994-2004.

·         Terms of Employment (Information) Act 1994.

·         The Adoptive Leave Acts 1995-2005.

·         The Protection of Young Persons (Employment) Act 1998.

·         The Organisation of Working Time Act 1997.

·         The Parental Leave Act 1998.

·         The Protection of Persons reporting Child Abuse Act 1998.

·         The National Minimum Wage Act 2000.

·         Carers Leave Act 2001.

·         Competition Acts 2002-2006.

·         Protection of Employees (Part Time Work) Act 2001.

·         Protection of Employees (Fixed Term Work) Act 2003.

·         Safety, Health and Welfare at Work Act 2005.

·         Employees (Information and Consultation) Act 2006.

·         Employment Permits Act 2006.

All disputes before a Rights Commissioner are held in private except where the dispute has been referred under the Payment of Wages Act and then it is public. The rights commissioners issue the findings of their investigations in the form of either decisions or non-binding recommendations, depending on the legislation under which the case is referred.

There are two acts under which a party to a dispute may object to a Rights Commissioners investigation – the Industrial Relations Acts 1969-2001 and the Unfair Dismissals Acts 1977-2001. Where such objection is made within the specified time limit, the Rights Commissioner cannot investigate the case. The claimant can instead request the Labour Court, in the case of the Industrial Relations Acts 1969-2001, or the Employment Appeals Tribunal, in the case of the Unfair Dismissals Acts 1977-2001, to hear the case.            

Joint Industrial Councils

The Industrial Relations Act 1946 Act provided for the registration by the Labour Court as "qualified" joint industrial councils of bodies. A "Qualified Joint Industrial Council" is defined as an association of persons (1) which is substantially representative of workers of a particular class, type or group and their employers; (2) which has as its object the promotion of harmonious relations between such employers and such workers; and (3) whose rules provide that if a trade dispute arises between such workers and their employers, a lock-out or strike will not be undertaken in support of the dispute until the dispute has been referred to the association and considered by it.

Three such Councils were registered and still exist though two (Construction and Footwear) have been suspended since 1982 and 1983, respectively, and the third (Dublin Wholesale Fruit and Vegetable Trade) has not met for many years. There are also eleven Joint Industrial Councils which have not sought registration. They are chaired by Industrial Relations Officers of the LRC and an officer of the Labour Court acts as their secretary.

Joint Labour Committees (JLCs)

Joint Labour Committees are bodies established under the Industrial Relations Act 1946 to provide machinery for fixing statutory minimum rates of pay and conditions of employment. They may be set up by the Labour Court on the application of the Minister for Enterprise, Trade and Employment, a trade union, or any organisation claiming to be representative of the workers or the employers involved.

Their functions are to draw up proposals for fixing minimum rates of pay and conditions of employment for the workers involved. When proposals submitted by a JLC are confirmed by the Labour Court in the form of an Employment Regulation Order, they become the statutory minimum pay and conditions of employment for the workers concerned. If the minimum wage rate laid down in an Employment Regulation Order for a certain sector is less than the National Minimum Wage as set by the government, then the National Minimum Wage must be paid. If, on the other hand, the Employment Regulation Order provides for a higher wage rate, the higher rate will apply.

An employer of workers to whom an Employment Regulation Order applies must keep records of wages and payments and must retain these records for three years. Employment Regulation Orders are enforced by the Labour Inspectors of the Department of Enterprise, Trade and Employment.


Five Common Employment Law Hazards For Start-Ups

Emerging, venture capital-backed companies typically face a host of legal considerations but have limited personnel and monetary resources to address all of them comprehensively. Often lacking in-house human resources and legal expertise, many emerging companies employ a "band-aid" approach to HR-related issues, addressing problems only as they arise. There are, however, a few common employment law issues as to which a bit of advanced understanding and planning can do a great deal to minimize the downstream risks of expensive legal headaches.

Distilled here are five employment law hazard areas that managers at early-stage companies often encounter. These areas, I have found, are where employment-related disputes most consistently arise at venture-backed start-ups.

1. Exposure To Liability In The Hiring Process

The movement of talent between companies – particularly but not exclusively competitors – is fertile ground for legal problems, including litigation. Again and again we see emerging companies unwittingly getting into legal trouble in the hiring process, both because of the existence of restrictive agreements between new hires and their previous employers and because of problematic conduct engaged in by these individuals as they leave their previous employers. Small, VC-backed companies often are in a permanent recruiting mode, and they are anxious to bring in talent. A lack of careful management of the hiring process can result in vexing legal problems.

A common scenario is a new hire that is subject to a restrictive covenant that the hiring employer does not know about. This could be a non-competition agreement, or it could be some other sort of a restrictive covenant, such as an employee or customer non-solicitation agreement. In the latter example, if the new hire has already solicited his old customers or co-workers, the hiring company may be exposed to legal claims even without knowing the hire was subject to this restriction.

Start-up companies need to be proactive and organized about finding out about precisely what restrictions their hires are already subject to, and should involve legal counsel to give them guidance as to what impact the hiring may have. The hiring company should not simply take the candidate's word that he or she is not subject to a restrictive covenant. Indeed, simply asking a candidate whether he signed a non-compete may not be sufficient to obtain relevant information. The situation is not so straightforward because terminology in this area is not precise, and employees often do not understand what they have signed in the past. Hiring companies should ask detailed, direct questions to discover what existing restrictions may be in place. Specifically, hiring companies should inquire about pre-existing non-disclosure agreements, agreements concerning developments and assignment of inventions, non-competition agreements, and non-solicitation agreements. Companies also should ask whether any of these sorts of restrictive covenants are included in a candidate's equity-related agreements (option or restricted stock agreements), or in bonus plans and/or commission arrangements. If there is any question about the existence of post-employment restrictions in such documents, hiring companies need to obtain and review the documents, rather than accepting a candidate's assurances that, for example, he only signed a non-disclosure agreement.

Once in hand, restrictive covenants should be reviewed to determine whether the company can hire the employee despite the existence of post-employment restrictions. Typically, this will involve an assessment of the legal risks, if any, posed by the potential hire. Careful consideration of the applicable state law as applied to the particular candidate's circumstances is key.

Once a decision is made to hire a candidate subject to post-employment restrictions, the company should document precisely its understanding and expectations in an offer letter or employment contract. In particular, the company should state its understanding that the individual is subject to a specific agreement and is required to abide by it. If the individual has represented that he or she is not subject to a restrictive agreement, that fact also should be stated in the hiring documents. This may help insulate the company from liability in the event that the employee's representation was false.

Whether or not the candidate is subject to post-employment restrictions, hiring companies need to be especially vigilant about ensuring that they do not unwittingly find themselves named as defendants in lawsuits alleging misappropriation of trade secrets and confidential information. The last decade has seen a notable increase in claims in this area, largely stemming from the evolution of technology in the workplace and, in particular, companies' ability to track the computer-related activities of departing employees.

Many companies now look at employees' computer activities when they receive notice of a departure, in some instances using sophisticated forensic tools to uncover activities that employees may have believed could not be detected. Because of these practices, hiring companies should take a careful and strategic approach to the hiring process, particularly where employees are moving within the same industry.

This means managing the hiring process from the outset. Candidates should be given clear instructions about what they can and cannot do prior to starting with the new company. Ideally, they should be advised in writing not to take, delete or destroy any documents, including electronic information, and to return all of their prior company's property immediately upon termination. In addition, candidates should be given clear instructions about what contact, if any, they are permitted to have with customers and co-workers about the departure before they leave. Also, communications about the hiring should never be made on the prior employer's time or equipment, even if using a personal e-mail account. Such conduct can only raise suspicions about improper conduct. Ultimately, a hiring company may be exposed to several possible claims, even absent a non-compete agreement, such as misappropriation of trade secrets, breach of fiduciary duty, tortious interference with advantageous relationships and violation of federal and state computer fraud statutes.

2. Failure To Adequately Document Terms And Conditions Of Employment.

A related problem in the hiring process is the failure to adequately document basic terms and conditions of employment. Many start-ups begin with verbal agreements and hand-shakes. Ideally, early on such arrangements should be formalized with basic documentation. That documentation – whether it takes the form of an offer letter, employment contract and/or other documentation – should accomplish some specific things. First, assuming the company's intention is to retain employees on an at will basis, an offer letter or initial employment agreement should clearly document that fact. The following language typically will suffice: "You will be employed on an at will basis, meaning that either party may terminate the employment relationship at any time for any reason, with or without notice." Second, the hiring document – generally an offer letter – should spell out any contingencies, such as the fact that the hiring is contingent on specific funding becoming available, or the fact that the hiring is contingent on the employee's execution of a non-disclosure/non-competition agreement. Third, the individual's rights to stock or stock options should be spelled out clearly. The failure to adequately spell out equity rights – including vesting terms, exercise price, rights at termination, and change-of-control contingencies – is a particularly common source of disputes within start-ups. Many early-stage companies are sued as a result of some conversation that never gets properly documented, or a set of e-mails that never really become a concrete agreement.

Similarly, at many emerging companies, commission and bonus arrangements are a work in progress, as goal setting and expectations about future revenues are constantly in flux. This is an understandable phenomenon, but it also fuels disputes about what is owed to an employee when he or she leaves. One common example of this problem is the situation where the employee leaves after making a sale or profit, but before the revenues are realized. Another variation involves an employee who is terminated close to year end, before bonuses are paid out.

The problem of commission arrangements following employment is a recurring one with many companies. It makes good sense early on to do a little bit of thinking and to document how commissions and bonuses are to be calculated given various contingencies. Such commission and bonus plans need not be complicated, overly legalistic documents. A one or two-page plan, signed by the employee, documenting the appropriate formula, and spelling out what will happen in the event of termination, can help avert disputes about compensation at termination.

3. Misclassification Issues.

In many emerging companies, management is not attentive enough to appropriate classifications of new hires. The most significant areas of risk are (a) the misclassification of workers as independent contractors (rather than employees), and (b) the misclassification of employees as exempt from federal and state minimum wage and overtime laws.

Employee Or Independent Contractor?

Early-stage companies historically have been prone to engage the services of independent contractors rather than employees for a number of reasons tied to the perceived flexibility such an arrangement provides. Some companies prefer to provisionally retain workers as independent contractors as a kind of "probationary period," and then to convert them to employees if the parties desire to continue working together. Other companies utilize the status as a kind of hedge against uncertainty: if the company later cannot afford to pay the contractor or does not have enough work to keep her busy, it is a relatively simple proposition to cut ties by terminating the contract.

Fundamentally, a proper independent contractor classification avoids the panoply of laws governing the employment relationship. One reason companies engage contractors is to avoid these significant legal requirements, including tax withholdings and wage and hour requirements (such as timely payment of wage laws, minimum wage and overtime requirements) and various discrimination laws. In addition, independent contractors typically are not covered by health insurance and other employee benefit plans, lowering the costs of these benefits for companies.

But emerging companies should be extremely careful about classifying their workers as independent contractors. Several years ago employment lawyers referred to this as the "Microsoft" problem, referring to a high-stakes case brought against Microsoft in the 1990s alleging that thousands of workers were misclassified, ultimately resulting in a $97 million settlement. Currently, this might be called the "FedEx" problem, in light of the well-publicized class action cases filed nationwide against FedEx Ground relating to its alleged misclassification of drivers as independent contractors. In that case, significant overtime and other compensation may be due the drivers if they are successful in their claims.

Although the stakes are not going to be as high with a 50-employee company, the risks are still significant under the multiple  laws that hinge on whether a person is considered an employee or an independent contractor. The Revenue Commissioners has issued what is commonly referred to as the "20- factor test" to assist employers in understanding whether they can classify an individual service provider as an independent contractor. Also known as the "control" test, it focuses on the degree to which the company retains the right to direct and control the worker with respect to when, where and how the work is performed. This was developed to address the most basic issue: whether the company would have to withhold payroll taxes. If the company gets that wrong, it can be found liable for back taxes and penalties.

A number of other laws also hinge on this classification, including the Payment of Wages Act (concerning minimum wage and overtime compensation), the employment discrimination laws (concerned with Equality Acts, Disabilities Act, Age Discrimination in Employment Act), the Family and Medical Leave Act, all of which do not cover individuals who are independent contractors.

These laws can affect whether individuals ought to be covered under worker's compensation policies, whether terminated service providers can file for unemployment benefits, and whether individuals are owed wages under state wage and hour laws.

Simply put, in many early-stage companies, workers who are classified as independent contractors are actually misclassified. It is important to be focused on the issue early on, and it is advisable to err on the side of caution. Employers are better off in many instances hiring the person, spelling out the terms and the conditions of his or employment (including provisional, part-time and temporary employment arrangements), and avoiding the misclassification problem altogether.

Exempt Or Non-Exempt?

Akin to the independent contractor/employee problem is the question whether companies are complying with federal law regarding overtime pay. In particular, many emerging tech companies make the mistake of assuming that because their workforces are "white-collar" and all of their employees are paid a salary, they need not worry about overtime issues for any employees. In fact, not all salaried employees working in an office are exempt from the overtime pay requirements of federal law.

The law mandates that companies pay one and one-half times the regular rate of pay to employees for hours worked in excess of 40 during a work week, except for those employees who are "exempt." Many early-stage companies lose sight of the FLSA based on the prevalent misconception that the FLSA applies to factory workers or "blue-collar" workers who fill out a timesheet or punch a clock, not whitecollar workers in a highly skilled, high-salary job.

To be exempt from federal overtime (and minimum wage) law, an employee must satisfy both a salary requirement and a duties test. The salary requirement is twofold: that the employee be paid on a "salary basis," and that the salary be a minimum of $455 per week (except that exempt computer employees may be paid at least $455 per week on a salary basis or on an hourly basis at a rate not less than $27.63 an hour).

Being paid on a "salary basis" means an employee regularly receives a predetermined amount of compensation each pay period on a weekly, or less frequent, basis. The predetermined amount cannot be reduced because of variations in the quality or quantity of the employee's work. Subject to certain exceptions, an exempt employee must receive the full salary for any week in which the employee performs any work, regardless of the number of days or hours worked. If the employer makes impermissible deductions from an employee's predetermined salary – for example, docking an employee's pay because of a partial-day absence – the overtime exemption can be lost. If the employee is ready, willing and able to work, deductions may not be made for time when work is not available.

Moving past the "salary basis" requirement, it is the "duties" requirement that is most problematic for employers. The overtime exemption exists only for employees who properly can be classified as "professional," "executive" or "administrative," and for certain "outside sales" and "computer employees." To qualify for one of these exemptions, employees generally must meet certain tests regarding their job duties. Job titles (and even written job descriptions) do not determine exempt status. In order for an exemption to apply, an employee's specific job duties and salary must meet all the requirements of the U.S. Department of Labor's regulations.

Simply put, many positions within small companies do not meet the duties threshold to be considered exempt from overtime requirements. For example, many clerical, administrative and technical employees do not satisfy the relevant tests. Companies that misclassify employees as exempt can be liable for unpaid overtime compensation (additional half-time compensation for hours in excess of 40 during any particular work week) over a two or three-year period. Those damages can be doubled if the violation was willful and a prevailing party is entitled to attorneys' fees.

Rectifying a misclassification situation can be difficult, because management must inform such workers that going forward, they are going to be treated as non-exempt and eligible for overtime. Putting aside the morale issues inherent in these situations, companies must decide whether and how to compensate these employees for previous "overtime" worked.

A start-up should think about this issue not only as it hires employees, but as it expands its workforce and creates new roles. Early on, many start-ups have one or more employees who wear different hats, engaging in multiple tasks (and performing multiple jobs) on a daily basis. As the company grows and roles are more clearly differentiated, companies need to continue to reassess the particular jobs within the company and determine whether individuals in those roles are properly being classified for overtime purposes.

Ideally, start-ups should consider the exemption issue both at hire (for particular jobs) and on a yearly basis (for the workforce as a whole). This is an area in which some proactive planning and legal analysis can avoid significant downstream legal trouble.

4. Failure To Comply With Wage Payment Laws.

Emerging companies should be sensitive about the issue of timely payment of wages and the problem of wage deferrals. In particular, companies should be aware of the varying state laws concerning the frequency and manner of payment of wages to employees. This area generally is not governed by federal law, and state laws differ widely.

In Massachusetts, for example, hourly workers cannot be paid on a monthly or even semi-monthly (twice per month) basis, but rather must be paid no less frequently than bi-weekly. While this may seem like a technicality, getting it wrong is actionable. What is important to understand is that there is little flexibility in the area of statutory wage liability. Employees generally cannot agree in advance to waive their rights in this area, as wage deferral agreements generally are not enforceable in many states.

This issue is particularly a concern for emerging companies, as cash-poor companies waiting for the next round of financing or for a sales-based revenue injection may want to ask their employees to agree to defer their wages temporarily. Such agreements are unenforceable under many states' laws, and liability in this area can be significant. Many states' laws impose multiple damages and attorneys' fees for failure to timely pay wages. In addition, in some states, individual managers, officers, and even directors can be personally liable for failing to pay wages.

5. Inadequate Protection Of Intellectual Property

It has been said that a company's intellectual property walks out the door every day when its employees leave the building. The information that is entrusted to a company's employees is its lifeblood. All too often, however, start-up companies do not do enough to protect their own intellectual property and customer goodwill after their employees leave the company. Unfortunately, some companies take a superficial approach to this crucial issue.

Many emerging companies use a standardized offer letter and intellectual property agreement, focused on non-disclosure of information, assignment of inventions, and in some instances, non-competition and non-solicitation restrictions. As a starting point, this may suffice, but planning and vigilance are necessary to ensure that companies are in an optimal position to enforce such agreements down the road.

A starting point is to recognize that one size does not necessarily fit all, particularly when it comes to non-competition and non-solicitation agreements. Companies should give careful thought to tailoring restrictive agreements to particular employees or job classes, rather than using a boilerplate agreement provided to many categories of employees, as a more focused, narrowly-tailored agreement is more likely to be enforced in court. Similarly, companies should consider defining what they consider to be "competitive" activity rather than simply barring employees from joining any employer that "competes" with the company. And companies should give careful thought to defining what they consider to be confidential, proprietary information, beyond the typical (and important) boilerplate about "inventions and developments, customer lists, business plans etc." Ultimately, when attempting to enforce a restrictive agreement in court, the company will be arguing that its confidential information is at risk based on the former employee's actions; agreements should be drafted to maximize the likelihood that this argument will be accepted.

Companies must consider formulating agreements tailored to the specific laws of the states in which they have employees.

In addition, companies need to be careful about the process by which these agreements are signed. Here is a hypothetical example of a major pitfall encountered by start-ups in this area: Widgetronics, Inc. has a new hire sign an offer letter stating that the offer is conditional on the person signing the company's standard non-competition agreement. However, the company fails to require the individual to sign the non-compete until a week after he starts work. In some states, this lapse may defeat the company's argument that the agreement is supported by adequate legal consideration, and it therefore may undermine the enforceability of the non-compete.

Looking past the hiring and initial documentation process, companies should develop a comprehensive program to protect trade secrets and other confidential information. Ultimately, doing so will significantly improve a company's prospects when seeking enforcement of restrictive covenants and/or claiming theft of such information. This should include the development and regular dissemination of a confidentiality policy, education and training of employees on intellectual property issues, restricting access (via passwords, locks etc.) to sensitive information to those employees who need such access, and labeling confidential documents (both hard copy and electronic).

In addition, companies should develop an exit process that lays the groundwork for the possibility of later enforcement of existing agreements and policies.

A significant component of this process should be the consistent use of termination checklist or exit document that reminds workers of their obligations under existing confidentiality policies and agreements. The exit process should ensure that the company takes steps to obtain immediately whatever company property and information the person has possessed, including laptops, PDAs, storage media (discs, drives) and hard copies of documents. If the company has any suspicions about the outgoing employee's conduct and/ or intentions, immediate consideration should be given to actually investigating the employee's computer-related activities prior to his or her departure. In many instances, retention of a third-party data recovery expert may be advisable both because of the technical challenges involved in investigating electronic activity and because of the need to preserve evidence of that activity. Finally, in some instances an appropriate IP-protection process will involve communicating to the former employee and his new employer about the existence and continued applicability of the employee's restrictive covenants and the company's expectations about compliance with those promises.

Taking all of these steps will significantly improve a company's chances of protecting its intellectual property following a valued employee's departure.

Please contact us at Seamus Monaghan, Solicitors to arrange an initial appointment to discuss your case.


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