A health tech start-up that failed to secure funding must pay a software engineer over €50K for the non-payment of his wages and notice pay, the Workplace Relations Commission has ruled.
The complainant, Per Johansson, was employed as a software engineering manager at CSIS Health Ltd from May 4th, 2022, to December 16th, 2022, when his employment ceased due to non-payment of wages.
The complainant submitted he was due three months’ notice pay, accrued holidays and the balance of unpaid wages from dates in September to December 2022.
Funding efforts
The company told the WRC that while they agreed that Mr Johansson was owed the money, they had no funds to make the payments and said there was little chance of securing such funds in the short term.
CSIS Health Ltd advised the commission that they were a start-up company and had gone through various ways of trying to get grants or shareholder funding for the business. However, despite repeated attempts, they were declined.
In his published decision, adjudicating officer Peter O’Brien said the company had submitted that they had engaged consultants in the UK to assist with their funding efforts and despite their best efforts were unsuccessful in their application.
“This was a major surprise to the respondent as they were confident of funding and of being accepted for an EIC [European Innovation Council] tech grant. They had also engaged with potential investors in the US and were promised investment but, due to Covid, the investors and business opportunity was affected.
“The respondent [CSIS] confirmed the payments sought were due and uncontested,” said Mr O’Brien in his decision, citing breaches of Section 5 (6) Payments of Wages Act 1991.
Lack of funding
Mr O’Brien noted that while the company accepted the payments sought were due to the complainant, CSIS said that “due to the lack of funding for the venture, the company had no funds to pay the amounts due and there was little likelihood in the near future that the funds would exist to make the payments”.
“I find in favour of the complainant in that the wages sought were properly payable to him and were not paid,” Mr O’Brien wrote in his published decision.
Mr O’Brien said that Mr Johansson was to be awarded €3,489 for his September 2022 wages, €8,333.33 each for October and November 2022 and €4,545 for December 2022.
In addition, Mr Johansson was awarded €25,000 gross for the non-payment of his notice and €1,008.06 gross for his holiday entitlement. In total, Mr Johansson was awarded €50,708.72.
“The complainant’s contract of employment contained a three-month notice period in the event of the employer giving notice of termination of the contract,” explained Mr O’Brien, who added that the contract was “silent on what notice the employee had to give on termination”.
“The complainant’s contract was terminated without notice and I deem he was entitled to same [€25,000 gross] and to be paid for the three months,” said the adjudication officer.
