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Former CEO offered ultimatum: work for free or resign, awarded €133,000

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The Workplace Relations Commission recently made its largest payment of the year, totaling €133,000, to the former chief executive of a medical clothing firm. The ex-CEO, Mario Kirstner, claimed that the company’s investors withdrew funding and gave him an ultimatum: either work without pay or immediately leave without compensation.

The tribunal awarded Kirstner a sum of €108,000 for constructive dismissal and an additional €25,800 for “illegal” wage deductions, resulting in the highest compensation ordered under the Unfair Dismissals Act 1977 so far this year.

During the tribunal hearing, which took place in the absence of the respondent company, Kirstner explained that he was put in an impossible position by the owners of Suirsafe Technologies Ltd. They cited a “political/legal situation in China” and claimed they could no longer invest in the Irish company. Despite the company relying heavily on shareholder funding, Kirstner made efforts to keep it running and ensure the salaries of other employees were paid, even though he stopped receiving his own pay after May 2022.

After expressing concerns about insolvency and the need for immediate financial support, the company’s investors demoted Kirstner to chief operating officer and replaced him with one of the investors, Cynthia Ye. They then ordered him to hand over control of the company’s bank accounts to Ye and register her as a director. Although Kirstner opposed the demotion, he complied with the orders in the hope of receiving promised funds that would save the company and his colleagues’ jobs. Unfortunately, no money was transferred, leading to Kirstner’s loss of faith in the shareholders.

Kirstner eventually gave notice of resignation in May 2022, intending to serve the six-month notice period outlined in his contract. However, he received an ultimatum from Cynthia Ye to either work without pay until the company became profitable or leave without the “six-month transition period” mentioned in his contract. This ultimatum effectively meant he had to work for free or depart without compensation, prompting his resignation.

Kirstner’s legal representatives argued that he had been treated in a demeaning and unfair manner, with the company displaying complete disregard for his rights as an employee. Facing the lack of communication from Ye after his resignation, Kirstner filed a pay claim, stating that he received no salary payments from May 1, 2022, until the date of his resignation, which he considered an unlawful wage deduction.

In his decision, WRC adjudicating officer Peter O’Brien ruled that the company had committed a significant breach of the contract by not paying Kirstner during the notice period or expecting him to work without compensation for six months. O’Brien upheld the unfair dismissal claim and awarded Kirstner the full six months’ lost earnings, amounting to €108,000. Furthermore, he deemed the company’s failure to pay Kirstner for six weeks between May 1 and June 13, 2022, as “illegal,” resulting in an additional payment of €25,800 under the Payment of Wages Act 1991.

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Eric
Eric
Eric is a talented writer who has worked as a journalist for 8 years now. With a wealth of experience in journalism, he brings a unique perspective to his work. Eric is known for his ability to write about complex topics in a way that is easy for readers to understand. His articles are insightful and thought-provoking, and he always strives to provide balanced coverage of the news. Eric is dedicated to his craft and spends countless hours researching and fact-checking his stories. When he's not writing, Eric enjoys hiking, reading, and spending time with his family.

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