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Employers May Not Always Enjoy the Luck of the Irish

During meetings in Dublin, Ireland, I was reminded that employers in many countries outside the U.S. need to be prepared for injunction cases when terminating employees. I spent the first three months of this year representing an employer that brought an injunction action against a former executive for enforcement of non-compete and confidentiality obligations. It was intense and time consuming, but the company was on the offensive to protect its business interests. Injunction cases are still rare in the U.S., and even less likely to be brought by employees upon termination than by the employer. In places such as Ireland, however, employers might instead find themselves on the defensive in injunction cases. There, employees can bring injunction actions to stop the employer from terminating their employment and require continued payment of the employees’ wages.

The Court of Appeal in Ireland in a decision on March 29th upheld such an injunction against Irish Pride Bakeries. Irish Pride was in receivership when it terminated its Business Development Director, Connor Brennan, and shortly thereafter sold most of its assets. Brennan sought the injunction purportedly to protect his entitlements under the Protection of Employees on Transfer of Undertakings Regulations (commonly referred to as “TUPE”). The effect of the injunction is to continue Brennan’s salary while his claims are pending before the Irish courts, which has been over one and a half years to date.

Ireland is not alone in granting employees the right to such injunctions. Others include India and, in certain limited circumstances, the UK.

This means that, when terminating an employee in jurisdictions where such injunctions may occur, employers need to undertake more extensive planning efforts. Negotiating with an employee for a severance and release agreement before a dispute arises may make greater sense to avoid the expense and inconvenience of these types of legal proceedings.

There are many reasons why it is lucky to do business in Ireland, and a significant number of U.S.-based businesses have substantial operations on the Emerald Isle. These employers need to keep in mind that terminating an employee in Ireland can lead to time-consuming, expensive injunction litigation with an uncertain outcome and potentially high price tag. Without planning ahead, an employer in Ireland may find the luck of the Irish is more with the employees than the employer.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.