Author: Claire

Blockchain Interview Series – Part 3

Andrew Tzialli is a partner in the Corporate team and head of the firm’s Cryptocurrency and Blockchain Group.

Andrew’s practice primarily involves working on corporate transactions, including private equity and venture capital investments, mergers and acquisitions, corporate re-structuring, corporate finance and banking. Many of the transactional matters Andrew works on are for clients that are involved in disruptive technologies, including blockchain, cryptocurrencies and eSports.

As part of a series of interviews, Andrew has spoken with a range of businesses and organisations to explore the current blockchain landscape in Ireland and the UK.

In the third instalment, he speaks with Arthur Stolk (Founder and CCO) and Erin Grover (Brand Ambassador) of crypto-asset investment firm, Icoinic Capital about about their experience of the blockchain environment, and the biggest challenges to blockchain adoption.

 

AT: Erin and Arthur, thank you for joining us today. Firstly, can you tell us more about your business, the work you do and the verticals you operate in?

 AS: Icoinic Capital is an investment firm committed to generating exceptional returns for investors. We offer a diversified range of crypto asset exposure through high frequency trading and cryptocurrency fundamentals.

Icoinic Capital is fully registered by the Dutch Authority for the Financial Markets under the AIFMD-light regime.

Our investment products meet the due diligence requirements of traditional funds, including third party auditing and best practices in compliance. This supports investors with trusted exposure with ‘best in class’ investment policies.

AT: Excellent. That must be a really interesting space to be in at the moment.

What makes your business different or unique?

EG: After years of researching crypto funds around the world with the help of my due diligence team, I have backed Icoinic Capital with my reputation and voice in the crypto industry because their attention to the customer experience, compliance, transparency and regulatory standards is as real as their dedication to incredible gains. As a crypto asset advisor, I would not place my clients in most of the crypto funds out there. Thankfully, Iconic Capital does meet the standards of all my investors, including High-net-worth individuals to first-time investors starting with smaller amounts.

AT: Great. It’s really positive to see companies like Icoinic doing things a lot more “by the book” than many others in the crypto sector. That can only be a good thing for the industry.  

On a personal level, what was your first experience of cryptocurrencies or blockchain?

EG: I first saw a hand-written sign on a coffee shop window in Portland, Oregon back in 2009 that said, “Will accept Bitcoin for coffee”. I always wonder how that guy faired in the long-term game.

AS: My first experience with crypto was in 2013 when Bitcoin had a boom. We experienced gains of $30 to $1000 in no time. My interest in crypto disappeared after the market crashed. I picked it up again in 2016 when the market started to rise. This is when I began the journey to create Icoinic Capital.

AT: Excellent.

Erin – it’s amazing to hear that even then there was an appetite for Bitcoin.

Which blockchain platforms are you utilising?

AS: We’re only trading on the top cryptocurrency exchanges.

The future

AT: What are your biggest business challenges in the next 12-18 months?

AS: The biggest hurdle could be when regulation kicks in, and it would be a major leap forward in this industry. We as a company are compliant as we can be, but you just don’t know what regulation will bring. It will not only be a hurdle for us, but for this industry as a whole. Our philosophy from day one was to be the most compliant knowing that regulation is unavoidable. This is why we integrated best practices from traditional finance.

AT: I’d agree with that. Regulation remains somewhat of an unknown for large parts of the entire sector but the likes of the proposed EU Cryptp-Assets Regs (being MiCA) will be all encompassing. Still, as you said, the regulatory hurdles will be much less of a shock to your business as you may well be complying with future regulations to an extent, already.

Going further ahead to say 5 years into the future, how widespread will blockchain be adopted in Europe?

EG: I see the mainstream adoption on the horizon, yet I don’t see full integration of blockchain technology in five years. MiCA, Europe’s proposal for regulating crypto assets, is a step in the right direction. I’m optimistic for its activation within the next two years.

AS: This is always difficult to forecast. I think blockchain is going to be a technology that will be widely used. Most people who use it will never see the actual technology. For example, with the Internet, you send a message, but you don’t necessarily think about the technology behind what it took to send the message.

AT: Thank you both. Great to hear about Icoinic and your journey through blockchain and crypto.

 

To find out more about Andrew Tzialli and the services offered by Philip Lee please click here.

To learn more about Icoinic Capital, please contact Erin Grover.

Deloitte and CISI Islamic Finance Forum – Climate Change | Creating the better normal

On December 9th and 10th, Deloitte and CISI will host their sixth annual Islamic Finance Forum on ‘Climate Change – Creating the better normal’.

This year’s online forum will explore a number of themes addressing governance practices, environmental, social and corporate governance, and Principles of Responsible Investment in the context of climate change and green finance. Industry policy makers, practitioners, and Islamic finance scholars will share their policy views and valuable practice insights.

Partner Simon O’Neill will be taking part in the first panel discussion on Day 2, on good governance practices, standards and responsible investment.

For further details or to register, click here.

Merger Control Update – Introduction of Simplified Merger Notification Procedure

Partner and head of EU and competition law, Ronan Dunne, was delighted to contribute to the European Competition and Regulatory Law Review journal on the CCPC’s recent introduction of a simplified merger notification regime in Ireland.

Full report available here. (Behind paywall). Published by Lexxion (CoRe 3/2020 Vol. 4).

Philip Lee signs Pro Bono Pledge Ireland

Philip Lee is delighted to be a founding signatory of the new Pro Bono Pledge Ireland launched today by Minister for Justice, Helen McEntee.

The Pledge, which is coordinated by PILA (the Public Interest Law Alliance, a project of FLAC), asks the legal profession to commit to promoting access to justice by providing free legal assistance to those in need.

The Pledge provides a common definition of pro bono legal work, a commitment to a minimum aspirational target of 20 pro bono hours per lawyer per year and a mechanism to benchmark progress through annual reporting of anonymous pro bono data.

The Pledge has over 70 founding signatories, representing more than 2000 legal professionals who have affirmed their commitment to delivering pro bono services in Ireland.

Congratulations to all at FLAC and PILA on this important initiative to help close the justice gap.

Press release available here.

Recent High Court decision – Discovery of wind farm data in the context of s.160 planning injunction proceedings

The High Court has ordered a wind farm operator to make discovery of raw wind farm data and other records to plaintiffs who have alleged in section 160 planning injunction proceedings that the wind farm is causing a nuisance in terms of noise, vibration and shadow-flicker.

In Byrne & Others v ABO Wind Ireland & Others, Mr Justice Sanfey, in a judgment delivered on 20 November 2020, directed that the defendants, who include the operator of the Gibbit Hill Wind Farm in County Wexford, should make discovery of the records to the plaintiffs, who are individuals residing approximately 1,050 metres from the nearest of the six turbines comprising the wind farm.

The plaintiffs initiated section 160 planning injunction proceedings in 2018, alleging that the wind farm is causing noise, vibration, and shadow-flicker to such an extent that it amounts to nuisance, negligence, breach of duty, breach of statutory duty, and breach of the plaintiff’s constitutional rights.

Wind farm data and records

The data and records the wind farm operator has been ordered to discover may be summarised as follows:

(1) Raw SCADA data for the six turbines since the commencement of operations.

(2) Data gathered by or on behalf of the wind farm relating to noise, vibration, and shadow-flicker, including raw unprocessed data used to produce planning compliance reports.

(3) Records relating to the investigation and assessment of the plaintiff’s complaints to the wind farm operator about noise, vibration, and shadow-flicker, including findings of experts engaged by or on behalf of the wind farm.

(4) Records relating to engagement with the planning authority on planning compliance and in relation to complaints about noise, vibration, and shadow-flicker.

Precise sub-categories of these records are described more fully in the written judgment.

As the Court noted in the judgment, the dominant consideration in discovery is whether the records sought are relevant and necessary for the fair disposal of the case, or to save costs.

Further, where the resolution of the issues between the parties will depend on the expert evidence adduced by the plaintiffs and the defendants, it is best if those experts are proceeding on the basis of the same raw data and evidence, which in this case is the data as to the manner in which the turbines operate, generate noise, vibration, or shadow-flicker.

Going into the trial, as things stand, that information would be available to the defendants but not to the plaintiffs. In an action in which the respective experts’ evidence will be crucial to the determination of the issues, it seems to me essential for a proper understanding of those issues that the original source data is made available to the plaintiffs. In such circumstances, the experts on both sides would be proceeding from the same information base, which should assist in promoting agreement between the experts, and identifying areas of disagreement between them, which in turn will promote the efficiency of any ultimate trial”.

The Court was mindful in this regard of the Rules of the Superior Courts which encourage cooperation between experts, where possible, and expressed the view that expert witnesses should be encouraged to convene and agree as much as possible, in advance of trial, and that one of the best ways to promote this is to ensure that the experts on both sides have the best information available to them.

Evidence of the wind farm operator’s response to complaints

With respect to the records falling within categories (3) and (4), the Court acknowledged that the plaintiffs would have some knowledge of these matters as they relate to the operator’s response to the plaintiff’s complaints, however the Court held that as the level and quality of engagement with and response to those complaints is a serious issue in the case, records relating to that engagement and response would be both relevant and necessary to the fair disposal of the case at the hearing.

Not disproportionate

The Court held that discovery of the records would not be unduly costly or burdensome on the wind farm operator, or disproportionate to the benefit to be gained from their discovery.

Raymond Byrne And Lorna Moorhead v ABO Wind Ireland Limited, ABO Wind OMS Ireland Limited And Wexwind Limited [2020] IEHC 591, Judgment of Mr. Justice Mark Sanfey delivered 20 November, 2020

 

 

The regulation of crowdfunding in Ireland – An update

Introduction

The regulation of crowdfunding in Ireland, and indeed a unified approach across Europe has been long awaited.

Due to the continued growth and development of crowdfunding across Europe over the past number of years the following pieces of legislation have been brought into effect to provide that much needed unified framework for the regulation of the sector across Europe:

  • Regulation (EU) 2020/1503 (the “Regulation”); and
  • Directive (EU) 202004/1504 (the “MiFID II Amending Directive”).

The Regulation will apply from 10 November 2021, with member states being required to adopt and publish the necessary laws, regulations, and provisions to give effect to the directive by 10 May 2021, and to apply those measures from 10 November 2021.

Crowdfunding Service Providers (“CSPs”) covered by the Crowdfunding Regulation are excluded from the scope of the MiFID II Amending Directive, to simplify the applicable rules for CSPs.

Crowdfunding is not currently regulated in Ireland. Instead, some aspects of a crowdfunding platform services may be caught by various legislative provisions such as MIFID investment services or payment services, the Prospectus Regulations and/or the  Companies Act 2014. The Regulations are a welcomed boost to the sector by providing for key investor protections, increasing investor confidence, and enabling CSPs passport their services across Europe.

Why are the Regulations necessary?

With the absence of a unified set of crowdfunding rules across the EU, this can lead to legal uncertainty and in turn discourage investment in projects. It is also a barrier to crowdfunding service providers offering cross-border services. For companies operating in smaller markets, it has limited their opportunities to benefit from investments by a large number of people.

Who do the Regulations apply to?

  • P2P crowdfunding platforms who facilitate ‘business funding’
  • Investment based crowdfunding platforms in relation to transferrable securities only.

Donation and reward based crowdfunding models are not caught by the new regulations.

It will apply to all CSPs in respect of offers of up to €5,000,000, calculated over a period of 12 months per project owner; offers above that threshold will be regulated by MiFID II and the Prospectus Regulation.

A CSP may also be required to be separately authorised under the Payment Services Directive (“PSD”) where it is carrying out payment service in the course of providing the crowdfunding platform, unless the payment service will be performed by an appropriately authorised third party provider.

Does this mean additional protections for investors?

The introduction of the legislation will require CSPs to give investors clear information about any potential financial risks associated with a given project.. The legislation will ensure key investment information relating to the project will be provided by the project owner or the platform providing the service.

Authorisation and supervision of CSPs

A legal person who intends to provide crowdfunding services shall apply to the competent authority in the Member State where it is established for authorisation as a CSP as set out in Article 12 of the Regulation. CSPs will be required to provide their name, legal form, programme of operations, constitutional documents, description of their governance policies in relation to risk assessment, complaints procedure and business continuity. The CSP must also furnish details of the appointed management.

A fully reasoned decision must be provided by the relevant competent authority within three months of the application. Any authorisations must be recorded with the European Securities and Markets Authority (ESMA) who will maintain a public register of all CSPs. Once authorised, CSPs will be supervised by the relevant authority on an ongoing basis and will be required to produce an annual report of their work to the relevant authority. If the CSP no longer meets the conditions for authorisation or is no longer providing services, authorisation can be withdrawn.

The Regulation also details the investigative and supervisory powers of Competent Authorities in relation to CSPs.

Operational requirements of Crowd Funding Service Providers

  • CSPs shall act honestly, fairly, and professionally in accordance with the best interests of their clients.
  • Effectively employ risk assessment and risk management procedures and policies in a prudent manner.
  • In the interest of avoiding conflicts of interest, CSPs should operate as neutral intermediaries between clients on their crowdfunding platform.
  • CSPs shall undertake at least a minimum level of due diligence in respect of project owners that propose their projects to be funded through the crowdfunding platform of the CSP.
  • CSPs shall have in place effective and transparent procedures for the prompt, fair and consistent handling of complaints received from clients and shall publish descriptions of those procedures.

Investor protection

All information, including marketing communications as from CSPs to clients about themselves, about the costs, financial risks and charges related to crowdfunding services or investments, about the crowdfunding project selection criteria, and about the nature of, and risks associated with, their crowdfunding services shall be fair, clear and not misleading.

CSPs shall inform their clients that their crowdfunding services are not covered by the deposit guarantee scheme established in accordance with Directive 2014/49/EU and that transferable securities or admitted instruments for crowdfunding purposes acquired through their crowdfunding platform are not covered by the investor compensation scheme established in accordance with Directive 97/9/EC.

If CSPs apply credit scores to crowdfunding projects or suggest the pricing of crowdfunding offers on their crowdfunding platform, they shall make available a description of the method used to calculate such credit scores or prices. If the calculation is based on accounts that are not audited, that shall be clearly disclosed in the description of the method.

It is notable that the Regulation provides for specific protection for “sophisticated” and “non-sophisticated investors”, including whereby, the latter must undergo a suitability assessment by the CSP. The Regulation recognises that a sophisticated investor (e.g. an investment firm, institutional investors, large corporates etc) is aware of the risks associated with investments in crowdfunding projects, and therefore the barriers or checks that are applicable to non-sophisticated investors are not required. Such barriers or checks include a loss simulation exercise to show a non-sophisticated investor can withstand a 10% loss to their net worth (to be reviewed by the CSP annually).

The introduction of a pre-contractual “reflection period” may prove problematic in practice or require revisions to existing platforms, where non-sophisticated investors may revoke any offer to invest within 4 days of making an offer.

The requirement for a company raising funds (i.e. the “Project Owner”) to prepare an investment information sheet was to be expected and is good practice.  The CSP must verify the accuracy of this information and where there are inaccuracies that are not addressed properly, the CSP must take steps to cancel the crowdfunding offer.

Administrative penalties

Member States shall, in accordance with their national law, ensure that competent authorities have the power to impose administrative penalties and other administrative measures including fines of up to at least €500,000 and take any other suitable measures for infringements of certain provisions of the Regulation.

A decision imposing administrative penalties or other administrative measures for infringement of the Regulation shall be published by competent authorities on their official websites immediately after the natural or legal person subject to that decision has been informed of that decision. The publication shall include at least information on the type and nature of the infringement and the identity of the natural or legal persons responsible.

Observations

The Regulations have been a long time coming and are a much-welcomed development for companies small and medium, looking to scale globally.

In August 2017, on foot of an invite from the Department of Finance for submissions for a crowdfunding regulatory framework in Ireland, Philip Lee was the only Irish law firm to address the consultation in full.  Many of the issues identified in the Philip Lee submission and other industry submissions have materialised in the Regulation, including due diligence checks, the applicability of the Prospectus Regulations, suitability assessments for investors, the concept of a key information sheet and robust complaints handling processes.

Crowdfunding platforms that comply with the new rules and become “authorised crowdfunding service providers” may offer their services to potential investors across the EU under the EU passporting regime. This is a significant development for the sector, where Irish based companies using a CSP can have access to the European investment market via crowdfunding, and investors across Europe can have confidence in the sector and the CSP itself, where all players are adhering to the same rulebook.

Ireland is already a world leader in attracting foreign direct investment. To date, some of the most successful CSPs have operated from the UK under local rules. Given Ireland’s prominent position as a destination for doing business, coupled with Brexit and the challenges that local businesses in the UK will have in accessing the European market, the implementation of the Regulation in Ireland has the potential to pave the way for Ireland to be a global hub for the crowdfunding sector.

 

For further information on the above article, please contact Eoghan Doyle.

Article written with the assistance of Daniel Ryan.

 

Celleron Therapeutics

SynOx Therapeutics Ltd, an Irish incorporated clinical stage biopharmaceutical company, has announced the closing of a €37 million Series A financing co-led by HealthCap and Medicxi and joined by investors Forbion and Gimv.

SynOx, a spin out of oncology company Celleron Therapeutics Ltd, secured exclusive world-wide rights for the clinical development, manufacturing and commercialisation of targeted antibody drug emactuzumab under a licence agreement with Roche.

Philip Lee was delighted to provide Irish law advice to Celleron on the spin out of SynOx and the Series A financing.

Further details available here.

Connected Ireland: How subsea fibre optic cables help to drive our social, economic and industrial development

As published in the Engineers Journal, November 13th 2020.

Subsea fibre optic cables transfer 99% of transoceanic data, operating at the speed of light and on a global scale. They are the physical structures which enable international connectivity in virtually all areas of our lives, including internet access, video calls, gaming and content-streaming services, not to mention time-critical transactions, writes Alice Whittaker.

Exceptional data speed and capacity

The demand for these cables is ever-growing as individuals and businesses become increasingly reliant on this method of telecommunication and require exceptional data speed and capacity.

Subsea cables are considered to be more reliable than satellite communication and allow for a larger capacity of data transfer with enhanced levels of security.

The strategic importance of subsea cables for a country like Ireland is highlighted in the government’s public consultation on ‘International Connectivity for Telecommunications’ published on October 19, 2020.

Access to international communications

This consultation document, which invites responses up until November 27, 2020, endorses the value of access to international telecommunications as a “key driver in the growth of social, economic and industrial development”.

Furthermore, the significance of rapid data and communication, which is facilitated by these subsea cables, has been particularly appreciated given the changes introduced to the daily routines of so many by COVID-19, including working from home, reliance on home entertainment services and virtual communications in lieu of travel and socialising in person.

A report published by ComReg in April 2020 observed that 60% of broadband users had seen an increase in usage of their home broadband since the beginning of the pandemic.

Microsoft reported that same month that it recorded more than 4.1 billion minutes of Microsoft Teams meetings in a single day, with Microsoft CEO Satya Nadella reported as saying, “we’ve seen two years’ worth of digital transformation in two months”.

Notable contribution to Irish economy

Long before the pandemic, the subsea cable industry has been making a notable contribution to the Irish economy across many sectors.

The draft National Marine Planning Framework notes that subsea international networks make Ireland an attractive region for investment for the technology and digital sectors, with international firms choosing to locate in areas with access to cable landing points to avail of connectivity.

The government’s Statement on the Role of Data Centres in Ireland’s Enterprise Strategy identifies Ireland as a location of choice for many different sectors reliant on digital and telecommunications capabilities, all of which in turn rely on subsea cable interconnectivity.

Ireland’s connection with subsea cables goes back even further. The first transatlantic cable was laid between Newfoundland and Valentia Island, Co Kerry, facilitating the first transatlantic communications in 1858.

While that cable connection lasted only three weeks, the subsequent investment in subsea telecommunications infrastructure accelerated international trade and transformed relations between Europe and the USA.

Protect subsea cables

In 1884 the Convention for the Protection of Submarine Telegraph Cables was adopted in Paris. The parties to the convention (including Ireland as part of what was then the United Kingdom of Great Britain and Ireland) agreed to adopt the laws necessary to protect subsea cables from willful or negligent damage.

The convention set out requirements to be followed by those installing and operating subsea cables and those carrying out other marine activities including fishing, to try to ensure that damage would not occur to this valuable new class of critical infrastructure.

Many of the convention’s legal principles were ultimately incorporated into the United Nations Convention on the Law of the Sea (UNCLOS) adopted in 1982.

The UNCLOS put on a legal footing internationally agreed maritime jurisdictions. The territorial sea lies within the 12 nautical mile limit, the continental shelf lies within the 200 nautical mile limit (incorporating the state’s exclusive economic zone, or EEZ) and beyond that lies the High Seas.

While the ‘high seas’ might evoke thoughts of piracy and lawlessness, in fact the UNCLOS granted a right for any party to lay submarine cables on the seabed of the high seas and included provisions to protect those cables from damage.

The UNCLOS provided a similar right for subsea cables within each territory’s EEZ, subject any rules or regulations laid down by the territory consistent with the UNCLOS.

Foreshore Act 1933

Cables within the territorial seas are subject to such regulations as each state may adopt. In Ireland, the laying and operation of cables out to the 12 nautical mile limit is subject to licence under the Foreshore Act 1933, as amended, but beyond the 12 nautical mile limit the Foreshore Act does not apply.

As noted in the draft National Marine Planning Framework, a ‘robust and coherent marine and foreshore planning system is expected to encourage and support future investment in submarine telecommunications’.

In that respect, a Marine Planning and Development Management Bill is in preparation which is expected to provide a new regulatory framework for developments in the marine environment, including subsea cables in the Irish territorial sea.

As the general scheme of the bill acknowledges, the laying of subsea cables in the EEZ and beyond is a right protected under the UNCLOS and therefore the national rules must not conflict with the UNCLOS.

The government consultation on ‘International Connectivity for Telecommunications’ also identifies that a key objective of the new legislation will be to ensure that Ireland ‘remains an attractive location for providers of international connectivity’.

Ireland has proved an attractive location for Aqua Comms, a successful Irish company specialising in the building and operation of subsea fibre optic cable systems.

Aqua Comms has been responsible for the successful delivery and operation of the CeltixConnect cable connecting Ireland with the UK, and the America Europe Connect cable connecting the USA and Ireland.

The ‘AEC2’ cable from the USA to Denmark with a branch to Ireland is soon to be deployed, and when the branch to Ireland is operational will make this the first subsea cable connecting Ireland to mainland Europe via Denmark.

Philip Lee has provided legal support to Aqua Comms since 2012 on the financing and development of its strategically significant infrastructure.

With further investment by Aqua Comms and others, supported by a strong policy and legislative framework, Ireland’s reputation as a strategic telecommunications hub, first established in 1858, will continue to grow in this increasingly interconnected world.

 

For further information in relation to the above article, please contact Alice Whittaker.

Article written with the assistance of Fiona McLoughlin.

How to work: Don’t take short cuts when it comes to dismissals

As published in the Business Post, November 15th 2020.

The only safe option for an employer who wants to get rid of a problem employee is to follow a fair procedure.

Ireland has a working population of about 2.4 million people. Given the size of our workforce, it’s a positive sign that the statistics show that registered employment disputes in the Workplace Relations Commission every year measure in the low thousands.

For the most part, Irish employers and employees are able to work in relative harmony. That said, every employer will experience problems of a disciplinary nature at some point or another.

In a minority of cases, there is only one solution: the employer and the employee parting company. In many cases, the employee will take the initiative and resign. In others, however, the employer will have no option but to take steps to terminate the contract of employment.

It’s a problem that most employers will encounter sooner or later: how do I get rid of a problem employee? As everyone knows, the legal regime in Ireland is highly protective. Irish employees benefit from a number of statutory protections.

The most significant is the rule that, once an employee has more than 52 weeks of employment, their dismissal is automatically deemed unfair by law.

If an employer wants to dismiss an employee it is necessary to: a) identify an objective reason justifying the dismissal, and b) follow a fair procedure.

In practice, initiating disciplinary procedures, for misconduct or poor performance to give an example, can be time-consuming, stressful and something most employers wish to avoid.

That said, the only safe route to dismiss an employee is to follow a fair process. This, among other things, must give the employee the opportunity to improve.

Of necessity, any kind of performance management process is going to take time –most likely months. Faced with this, employers often ask if there is a way of truncating the process.

The answer is “maybe”. The only legally safe way to dismiss an employee is to follow the accepted procedural route. That said, an employer who does not want to embark upon a process has some options:

1. First of all, there is nothing to prevent an employer from sitting down with the employee and indicating that, if there is no improvement in performance, the employer will take the disciplinary route.

These conversations have to be handled carefully. There can be no suggestion that the employee is being sanctioned outside of a disciplinary process, for example.

There is nothing to prevent an employer, however, from indicating that the disciplinary route is next in the absence of improvement.

2. Sometimes these conversations can go in a direction favourable to the employer. There is no concept of “off the record” conversations with employees in Ireland.

An employer can’t come straight out and ask the employee to leave. Such a conversation could be cited by the employee in any future claim.

If the employee registers dissatisfaction with the relationship and asks if there is a severance package on the table, however, there is nothing to prevent an employer from engaging in a discussion about the employee leaving.

3. Another option is workplace mediation. If the employer and employee are at loggerheads, there is nothing to prevent an employer from proposing mediation.

This is a process whereby an independent third party attempts to bridge the gap and resolve the dispute.

Very often, an experienced mediator will realise early on in the process that there is no point trying to preserve this relationship and will try to gently point the parties in the direction of termination.

If agreement can be reached in the course of mediation, that will often be a good result.

4. Lastly, every employer has the nuclear option: to simply terminate and take the consequences. Needless to say, the nuclear option should be approached with great care.

An employee who is summarily terminated, without the employer following a process, will have an extremely strong claim in the Workplace Relations Commission.

In such a case, the employer is going to find it difficult to advance any kind of sustainable justification for the dismissal, because no process was followed.

In extreme cases, an employee may be able to secure a High Court injunction restraining their dismissal. Such applications are still relatively rare, however, and tend to be confined to high-level executives.

The nuclear option is one which may be palatable in circumstances where the relationship simply cannot continue any longer and the employer is prepared to pay the price of termination. It is, however, very much a last resort.

All told, while short cuts exist, the only safe option for an employer who wants to get rid of a problem employee is to follow the law.

Ensure there is a sound basis for the dismissal. Where appropriate, give the employee an opportunity to improve. In all cases, follow a fair procedure and don’t try to take short cuts.

 

For further information on the above article, or on other employment law queries, please contact Patrick Walshe.