A start-up has been ordered to pay a former senior executive over €88,000 after a tribunal ruled the company’s failure to give him his salary, notice pay or accrued annual leave amounted to an “unlawful” deduction.
David Morris, who was chief medical officer at Cushla Health Systems Ltd, secured a direction against his former employer for the payment from the Workplace Relations Commission (WRC) on foot of a decision under the Payment of Wages Act 1997, published on Wednesday.
Representing himself before the employment tribunal in August, Mr Morris said he was due his €125,000-a-year salary for the first five months of 2024, along with three months’ notice pay and a sum for ten days’ accrued annual leave.
His evidence was that a quarter of his monthly salary payments had been late from July 2022 to December 2023 and that the company failed to pay him at all in 2024.
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The company’s chief executive, Richard Egan, told Mr Morris when he raised non-payment of salary for January that there were “temporary challenges with funding” and continued to assign work, the complainant said.
Mr Morris said he continued to receive such assurances from Mr Egan until March, but came under “significant financial strain” and wrote to his employer demanding payment for all arrears of wages by the end of March this year. He went unpaid again at the end of that month, he added.
The firm told him on April 3rd this year that it could not keep him on full time, Mr Morris said. He told the tribunal he was instructed to stop working – but that there were discussions about providing “ad hoc” services and “no formal notification of termination” was given.
A month later, Mr Morris explained that he looked for an update because he was still waiting for his back pay. He said he considered his work status to be “in limbo” and that his personal finances were by then “critical”.
Mr Egan then presented him with a new contract to sign on April 15th. Mr Morris said he realised at that point that there was nothing in his previous contract providing for a lay-off – and deferred signing the new one “pending further advice”.
He argued that without any formal, mutually agreed changes to his working conditions, his salary and benefits under the old contract “continued to accrue” until he was given formal notice of termination on May 30th this year.
Although the company admitted Mr Morris was owed three months salary and his contractual notice pay, it disputed his entitlement to anything more, arguing the complainant was dismissed on April 3rd and was serving out his notice period after that.
Mr Egan told the tribunal that Mr Morris “sought employment…with the full understanding of the risks of working in a start-up organisation and [the] lack of certainty around ongoing payment”.
The chief executive added that Mr Morris never told the company prior to joining that he “could not tolerate any delays” in payment of salary and that it had been made clear that funding was “always challenging, as expected in an early-stage start-up in this sector”.
Adjudicator Marie Flynn wrote that after considering correspondence between Mr Morris and Mr Egan and minutes of their meetings, she found there had not been a “definitive, unambiguous termination” of Mr Morris’s contract until 30 May.
She noted that Mr Egan had referred to “lay-off” in an email of April 15th, before the chief executive added: “I hope we get on track with funding or revenue very soon to reverse this and I’m continuing to push accordingly.”
“One would have to ask, why, if the complainant was dismissed on April 3rd, 2024 as asserted by the respondent, did the CEO feel the need to formally terminate his employment in writing on May 30th, 2024?” she added.
She concluded on that basis that the firm was liable for Mr Morris’s pay in April and May that year and included these months in her calculation of a “total unlawful deduction” of €88,134 – making a direction to the company to pay the sum to the complainant.
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