Redundancy in Ireland
An employer's guide
The current economic downturn, due in a large part to the Covid-19 pandemic, has meant that many employers in Ireland are having to consider letting some of their employees go. In this article we look at the best way to implement redundancy in your business so as to avoid an unfair dismissal claim. The redundancy process in Ireland is not straight forward. There are a number of complex issues which you must navigate first, before considering redundancy. Redundancy should always be a last resort. We will examine redundancy during the Covid-19 pandemic. What alternatives are available under the Coronavirus supports to businesses trying to survive the pandemic? Unfair dismissal claims, if successful , can prove expensive and time consuming.
Advice and support
Our advice is to take the time now and seek professional advice when considering the implementation of the redundancy process. It will save you both time and money in the long term. At Employment Rights Advice we have over thirty five years experience dealing with employment law in Ireland. We can help you through this difficult process.
Definition of redundancy
In the Redundancy Payments Acts,1967 to 2007 (the “Redundancy Acts”). A “redundancy” situation is defined as occurring when there is a dismissal of an employee by an employer, not related to the employee concerned, and the dismissal results “wholly or mainly” from one of the following situations:
(a) Where an employer has ceased, or intends to cease, to carry on the business for the purposes for 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) Where the requirements of that business for an employee 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) Where the 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 employers or otherwise; or
(d) Where an employer has decided that the work for which the employee has been employed (or had been doing before his dismissal), should henceforth be done in a different manner for which the employee is not sufficiently qualified or trained; or
(e) Where an employer has decided that the work for which the employee has been employed (or had been doing before his dismissal) should henceforth be done by a person who is also capable of doing other work for which the employee is not sufficiently qualified or trained.
Essential steps in the redundancy process
1. What is the reason for redundancy?
You must be able to show solid, unbiased economic reasons for redundancy. The law states that all dismissals are deemed to be unfair. The onus is on the employer to prove that any dismissal following on from a redundancy process was fair. You can do this by showing that there was a business based reason for the redundancy. Impersonality and change run through all of the definitions of redundancy.
2. Redundancy should be the last step.
Consider every alternative first. Lay off, short time working, reduced hours. Consider reducing the pay, by agreement only. Examine the Government Covid-19 supports and how they might help.
3. Voluntary redundancy
If you decide to ask for employees to volunteer for redundancy, make sure that you retain the option to refuse the application for voluntary redundancy. This is so as to avoid losing valuable skills which may be necessary for business survival.
4. How many are being made redundant?
Depending on the numbers, you may be in a collective redundancy situation. If so, then slightly different rules apply. Collective redundancy occurs where a defined minimum number of employees are made redundant within a period of 30 consecutive days. The minimum number depends on the size of the workforce.
- 5 employees where 21-49 are employed
- 10 employees where 50-99 are employed
- 10% of the employees where 100-299 are employed
- 30 employees where 300 or more are employed
Under the Protection of Employment Acts 1977-2014, an employer is obliged to enter into consultations with a view to agreement with employee representatives.
You are also obliged to provide the following information in writing to your employees representatives:
- The reasons for the redundancy
- The number and descriptions of the employees affected
- The number and descriptions of employees normally employed
- The period in which the redundancies will happen
- The criteria for selection of employees for redundancy
- The method of calculating any redundancy payment
You must also inform the Minister for Employment Affairs and Social Protection in writing of the proposed redundancies at least 30 days before the occurrence of the first redundancy. SI 140/1977 sets out the information an employer must provide to the Minister.
5. Develop unbiased criteria for selecting an employee for redundancy.
This is the selection matrix. Make sure that the selection process is fair and can stand up to scrutiny. Remember there must be impersonality and change.
6. Consult, consult, consult.
It is important to hold a number of consultations with your staff. This allows them to get used to the idea that change is inevitable. They may provide insight, and recommendations which you may have overlooked. It shows the remaining staff that you are being fair and has the potential to increase loyalty. It also helps the employees who are leaving to understand that you had no alternative and the selection process was fair. This greatly reduces the chances of being sued for unfair dismissal.
7. Implement the redundancies.
Make the parting as frictionless as possible. Offer whatever support you feel is appropriate, e.g. interview coaching etc.
8. Give the correct amount of notice.
An employee who is entitled to redundancy payment (104 weeks) should receive at least two weeks notice. The Minimum Notice and Terms of Employment Act 1973 applies. The amount of notice an emplolyer must give is set out in the act.
If you are paying the redundancy lump sum, you do not have to submit an online application form (previously called the RP50 form). However, you should get proof that you paid the lump sum to the employee and give a copy of the proof of payment to the employee. The redundancy lump sum should be paid on the date employment ends.
See our article on Minimum Notice here
Redundancy - The law
The process you follow as an employer in Ireland, must comply with th Redundancy Payments Acts 1967-2014 and where applicable, the Protection of Employment Acts 1977-2014,
104 weeks continuous service with a company is required in order to qualify for a statutory redundancy payment. A qualifying employee is entitled to two week's pay for each year of service, plus an additional week pay. There is a cap of €600 per week.
Periods of absence can be taken into account.If you are unsure whether or not the proceedure which you have decided on complies with Irish Employment law, please contact us using the orange Yes! Tell Me More button below and one of our experts will discuss it with you in a free time limited consultation.
See related article, Unfair Redundancy Case here
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