Can you fire a worker for 'poor' performance after financial losses?

The Employment Relations Authority (ERA) recently dealt with the case of a worker who said he was wrongfully dismissed after the employer blamed him for its financial losses.

The worker, Enrique Ilano started his employment with Jono Decorators Limited as a painter on 14 November 2022. Jonathan Murillo, the sole director of Jono Decorators, hired him and managed the company's affairs.

The dispute arose in March 2023 when Ilano painted a block of seven (7) units, and the customer was left unsatisfied with his work. Murillo claimed that the company was not paid for the work, leading to a request for Ilano to rectify the job without remuneration.

On 22 March 2023, Murillo informed Ilano via text that his employment would end by 31 March. Subsequently, Murillo asked him to perform additional unpaid work, which Ilano declined. This refusal marked the termination of his employment.

Ilano then filed claims for unjustified dismissal, unpaid wages, unpaid holiday pay, unpaid taxes, and compensation for lost wages and emotional distress resulting from his dismissal. Jono Decorators raised Ilano's subpar workmanship and that it caused financial losses for the company.

Blamed for client’s failure to pay

The Authority said that Murillo "did not sufficiently investigate the allegations against Ilano before dismissing him."

"Murillo had formed the view that Ilano’s workmanship was ‘poor’ and that Ilano was responsible for the client’s failure to pay Jono Decorators for the work done on the 7 units."

"However, Murillo was unable to support this view with any evidence. There were other workers who also worked on that job, and there is no indication of why Murillo blamed Ilano for the alleged poor workmanship or the client’s decision not to pay," the Authority said.

"Murillo [also] did not give Ilano a reasonable opportunity to respond to the allegations of poor workmanship before dismissing him. Ilano had a response to the allegations of poor workmanship, namely that there were several workers who worked on that particular job, but Murillo blamed him alone for the client’s failure to pay."

"Murillo was unable to explain why he laid the blame for the entire matter at Ilano’s feet. Instead, Murillo made it clear, both at the time and in the investigation meeting, that he had decided that Ilano was to perform significant additional unpaid work, and if Ilano was not willing to do this, then [he] would be dismissed," the Authority added.

Employers should ‘manage business risk’

The Authority said that "as an employee," Ilano "is not responsible for the ups and downs of business experienced by Jono Decorators as his employer."

"It is up to the company and to [its director] to manage business risk, and this is not something that can lawfully be passed on to the employee as [the management] has sought to do."

Thus, the Authority said that the worker was unjustifiably dismissed and said that he was entitled to remedies.