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Kilkenny saga shows what happens when trust fails


Tuesday, July 24, 2018

As published in the Sunday Business Post, July 2018.

The ongoing dispute within the Kilkenny Group has attracted a lot of coverage in recent months. It appears that the parties now intend to allow the courts to resolve the dispute, recent talks apparently having broken down.

The dispute arises from the dismissal of the chief executive’s son, who occupied the role of marketing director for the group for 13 years.

It brings to mind the turmoil that engulfed the Dunne retail dynasty in the early 1990s (although, of course, the facts were very different and the Dunne case wasn’t an employment dispute as such).

Until the Kilkenny case comes to trial, only limited information is likely to be made available in relation to the background to the dispute. However, it appears that the chief executive made the decision to dismiss in 2016 and legal proceedings were initiated in early 2017.

The parties appear to have entered into talks after that – but those talks have apparently now reached an impasse.

Commercial court
Coverage suggests that the dispute is being dealt with in the Commercial Court – typically only cases of a high value or of particular importance are heard in that court. The forum chosen by the parties also means that a hearing date is likely to be more quickly assigned than is the norm.

The case has yet to come to trial but, even at this stage, it demonstrates that businesses in which family members play key roles are no more immune to employment disputes than any other. As far as employment law is concerned, the fact that an employer and employee are in a familial relationship is largely irrelevant.

Legislation does make some, albeit limited, acknowledgement of familial relationships in certain circumstances. By way of example, several key pieces of employment legislation do not apply to certain types of family relationships.

Unfair dismissals protections, for example, don’t apply where one relative employs another in the family home or firm. Such employees are also excluded from redundancy payment legislation, and from the rules governing working time.

Exceptions
Those exceptions can rightly be regarded as limited in scope, and certainly don’t have any application in the Kilkenny case.

They demonstrate, however, that for the most part the full rigours of employment law will apply to any employer-employee relationship irrespective of personal relationships.

In other words, employment law will treat employer and employee in identical fashion irrespective of whether they are siblings, parents, children, or otherwise related.
Families working together in a business are far from uncommon in Ireland – and, sadly, so are disputes arising in such relationships.

While there is no suggestion that it arises in the Kilkenny case, quite often such relationships are treated casually as far as employment law is concerned and the family members may see no need to document the relationship, including putting fit-for-purpose employment contracts in place.
That’s obviously because family members are far more likely to trust each other implicitly – which is all well and good, until an issue arises.

Document
Failure to look beyond the relationship and document it like any other employer-employee arrangement can be a big mistake.

Among other things, it may mean that if there is a dispute at some stage, an added layer of confusion arises on top of an already stressful situation because the parties are related to each other.
Among other things, this can mean that there is a lack of clarity regarding the various parties’ obligations and entitlements and there may be no alternative but for a court to step in and try to resolve the situation (often at significant cost).

Undocumented relationships are a breeding ground for confusion – people may easily make assumptions about the scope of their role and/or what they’re entitled to. In the absence of a written contract, it’s much more difficult to contradict them.

Disputes are going to arise in a business irrespective of whether management are composed of family members, or not. That is simply a fact of life.
The extent to which the dispute can be resolved, among other things, depends on whether the parties have had the foresight to look beyond the fact that they are related and ensure that a “standard” employment law structure is there.

There is going to be an element of heartache whenever familial and business worlds come into conflict; but some pain, at least, can be avoided if a little care is taken at the outset.
However, regardless of how careful the parties are, one fundamental factor is unavoidable. Family members should always remember that, related or not, an employee can always be fired.

Any questions or queries on this topic, please contact head of employment, Patrick Walshe.


Author

Patrick Walshe

PARTNER


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