REDUNDANCY IN IRELAND:
With the onset of the Covid Pandemic globally in 2020, there has been a significant adverse impact on numerous employee’s job security. It is now more than ever prudent to be aware of your legal entitlements in circumstances whereby your future employment may be concerned. Accordingly, the following are some general fundamental principles in relation to redundancy and the laws relating to same in Ireland.
Length of Service:
Employees with over 104 weeks continuous service after the age of 16 with the employer are entitled to a statutory redundancy payment in the event of redundancy pursuant to section 7, Redundancy Payments Acts.
Statutory Redundancy is calculated as being two weeks of the employee’s normal weekly remuneration for every year of continuous employment from the date on which the employee attained 16 years of age with whom the employee was employed on the date of dismissal, or by whom the employee was employed when the employee gave notice of intention to claim redundancy payment; plus a sum equivalent to the employee’s normal weekly remuneration. The weekly remuneration which may be considered in calculating the redundancy payment is subject to a statutory ceiling of €600.00. i.e. 2 weeks’ pay per year of service plus a bonus week and the weekly salary is capped at €600.00 per week, anything above this is discarded. The statutory amount of the redundancy payment is tax-free.
The employee is entitled to the benefit of the longest period of notice, statutory or contractual. The Act provides that an employee should be given at least 2 weeks’ notice. Notice should be given in writing. The employer should give the employee the Form RP50 at the time of notice of redundancy and/or at the termination date and request the employee to sign it to confirm he/she has received the redundancy payment. If an employee wishes to leave the employment before the expiry of the notice period or the employer opts to pay the employee in lieu of notice, the employee should sign Form RP6 but this requirement is no longer a strict requirement.
Defined by the Protection of Employment Acts: Means dismissals arising from redundancy during any period of 30 consecutive days, where the numbers being made redundant are (i) at least 5 in an establishment normally employing more than 20 and less than 50 employees; (ii) at least 10 in an establishment normally employing at least 50 but less than 100 employees; (iii) at least 10% of the number of employees in an establishment normally employing at least 100 but less than 300 employees; and (iv) at least 30 employees in an establishment normally employing 300 or more employees.
The Legal position where it is permissible for Employers to make Employee’s redundant:
Section 7 of the Redundancy Payment Act 1967, as amended, provides the definition of redundancy:
For the purposes of subsection (1), an employee who is dismissed shall be taken to be dismissed by reason of redundancy if for one or more reasons not related to the employee concerned the dismissal is attributable wholly or mainly to:
(a) the fact that the employer has ceased, or intends to cease, to carry on the business for the purposes of which the employee was employed by him, or has ceased or intends to cease, to carry on that business in the place where the employee was so employed, or
(b) the fact that the requirements of that business for employees to carry out work of a particular kind in the place where he was so employed have ceased or diminished or are expected to cease or diminish, or
(c) the fact that his employer has decided to carry on the business with fewer or no employees, whether by requiring the work for which the employee had been employed (or had been doing before his dismissal) to be done by other employees or otherwise, or
(d) the fact that his employer has decided that the work for which the employee had been employed (or had been doing before his dismissal) should henceforward be done in a different manner for which the employee is not sufficiently qualified or trained; or
(e) the fact that his employer has decided that the work for which the employee had been employed (or had been doing before his dismissal) should henceforward be done by a person who is also capable of doing other work for which the employee is not suitable qualified or trained. The key characteristics of redundancy are impersonality and change.
There are a number of instances where an employee may have a legitimate argument to dispute whether a genuine redundancy situation exists within a particular organisation. The most common claim to challenge redundancy is unfair dismissal on the basis that there was not a valid redundancy withing the relevant organisation or the redundancy was not carried out in a fair manner, and/or correct procedures regarding notice of redundancy/consultation process with the employee were not adhered to, contrary to the Unfair Dismissals Acts.
Other possible claims that may arise are discriminatory dismissal contrary to the Employment Equality Acts (e.g. if selected staff are perhaps being indirectly discriminated against on the grounds of age/race/sex/sexuality/pregnancy etc); and/or a referral of a trade dispute under the Industrial Relations Acts.
Any claims, challenging the legitimacy of a redundancy by an employee should be referred to the Work Place Relations commission within a 6 month timeframe, and the Labour Court on Appeal.
Key Principles for Employers to Ensure Redundancies are Legally Valid:
The employers must ensure that the redundancies are valid, i.e. they fall within the definition of redundancy and that the procedure for implementing the redundancies is fair.
The procedure for selection of specific employees for redundancy must be fair: based on objective criteria which do not contravene the prohibition of discrimination on any of the nine grounds of the Employment Equality Acts. The selection should be made from the appropriate pool of staff. Consultative process should be engaged in with the relevant employees, and all options to avoid redundancy should be taken into consideration.
Selection of employees for redundancy on performance grounds, for example, is a subjective criteria and accordingly the relevant employees’ input must be sought before a final decision is made. The performance criteria must be proven to be necessary for the business. A performance matrix should be set up and the manager should score each of the employees under each indicator and ensure precise explanations are provided for each score. It is important to have different matrices for different categories of staff being affected.
The employers should meet with each member of staff and inform the employees who made alternative proposals, to redundancy why their proposals will not work but highlight that their proposals were considered, then show the staff their own final matrix scores and where they are placed against other scores (which should be without any names beside
the scores) and confirm whether or not they have been selected for redundancy. Those that have been selected should be given an opportunity to consider alternative positions that the employers may have identified which they may be interested in.
Many employers employ a policy of “last in, first out” to determine redundancy. If there is a procedure in place in the workplace to deal with redundancy, the employer will have to evidence that the procedure was used to select each employee subjected to redundancy. Nevertheless, no matter what criteria are used, the employer may well have to objectively justify the decision. It is critical that redundancy procedures are set out in the Company Handbook and are compliant with statute and fair procedures. Any deviation from the procedures would be hugely detrimental to an employer in justifying selection of redundancy.
While the law on redundancy may seem straightforward, the fact that a company has to objectively justify redundancy particularly in collective redundancy situations, can make this area of employment Law quite a contentious one. If you are faced with a redundancy situation either as an employer of employee, please do contact our office and we will do our best to assist you.
Meanwhile we hope you continue to stay safe and stay connected.
About the author: Kevin Sherry is an Associate Solicitor in our Employment Law Unit and can be contacted at firstname.lastname@example.org