Category: Redundancy

Categories
Redundancy Unfair Dismissal

Unfair redundancy? Your options and the factors to consider

redundancy claims

Have you been unfairly made redundant?

Perhaps you have a sneaking suspicion that it was not really a genuine redundancy situation and the employer simply took the opportunity presented by the Covid 19 pandemic to get rid of you.

Or maybe the redundancy was genuine but you feel you were unfairly selected, that someone else should have been chosen and it would have made much more sense.

I have met many employees who have found, or find, themselves in this type of situation. The question arises: what can you do about it?

Unfair dismissal

The main cause of action will be a case for unfair dismissal on the grounds that

  1. It is a sham redundancy, not a genuine one or
  2. You have been unfairly selected.

If you can prove that your case falls into one of these categories you may well win your case for unfair dismissal. If you do the remedies open to you, at the discretion of the adjudication officer at the Workplace Relations Commission, will be

  1. Financial compensation
  2. Reinstatement (in your old job)
  3. Reengagement (in a new position in the company)

There is a problem, however. If you have been unfairly dismissed and you prove it was not a genuine redundancy it is almost certain that whatever redundancy payment will have to be offset against your financial loss, as calculated by the provisions of the Unfair Dismissals Act 1977.

This could mean, in effect, that you would be no better off by bringing such a claim. This will depend, however, on two things:

  1. How long you were unemployed after the termination
  2. How much of a redundancy payment you received

Examples

Let’s assume you have been paid €15,000 redundancy and you succeeded getting a new job within a month of being terminated from the old one. Your financial loss in this situation will be only 1 month’s salary, therefore if you are successful with an unfair dismissal claim you will be looking at financial compensation of 1 month’s salary. Factor in legal fees for preparation for and representation at the WRC hearing and you may decide you are better off putting the whole thing behind you and moving on.

On the other hand you may have been paid only statutory redundancy, let’s say €10,000, and you have been unemployed for 9 months after the termination. In this case you will be better off if you are successful with an unfair dismissal claim and remember you could also win reinstatement or reengagement.

Other considerations which arise will be whether you believe the relationship between you and the old employer is totally ruptured and damaged, or would it be convenient for you to get your old job back, or an alternative position.

A further factor needs to be considered: did you sign a settlement/termination agreement? Because if you did, and you had the benefit of legal advice, you may have waived your rights to bring any claims against your former employer.

Conclusion

You will note that you need to give your situation serious thought and consideration and weigh up all the options, taking into account the issues raised above. You may have additional considerations and factor to consider as each case is unique.

Legislation

Redundancy Payments Act 1967

Unfair Dismissals act 1977

Categories
Redundancy

Tax Treatment of Termination of Employment Payments

mployment awards taxation

Certain payments made to you on the termination of your employment may be exempt from tax. Let’s say you have been made redundant and you are being offered a termination/severance package and agreement.

This type of agreement will typically include 4 types of payment:

  1. Statutory redundancy payments  
  2. Ex gratia severance payments from an employer
  3. Notice pay
  4. Holiday pay

Notice pay and holiday pay is fully taxable in the normal way.

i) Statutory Redundancy payments

Statutory redundancy payments are tax free.

Statutory redundancy is calculated as follows

  • Two weeks’ pay for each year of reckonable service between ages of 16 and 66, plus one extra week, subject to a maximum weekly payment of €600.

ii) Ex gratia payments from employers

There is a basic tax free exemption on ex-gratia payments received from the employer. 

The basic exemption starts at €10,160 + €765 for each completed year of service. 

The basic exemption may be increased by €10,000 IF 

(a) the employee has not in the previous ten years claim any benefits under section 201 Tax Consolidation Act 1997 and 

(b) the employee is not a member of a occupational pension scheme, or if a member the employee has irrevocably given up the right to receive a lump sum from the scheme.

Standard Capital Superannuation Benefit (SCSB)

This is an additional benefit an employee may be entitled to and benefits long serving employees with high earnings. It is calculated using the formula 

(A x B) /15 – C

Where 

A = 12 months average of the remuneration from the last three years

B = Number of completed years of service 

C=Any tax free lump sum received or receivable under the employer pension scheme.

Takeaway

If you are receiving a significant sum of money by way of a termination payment arising from the termination of your employment I would strongly recommend that you obtain taxation advice. Failure to do so could lead to an unpleasant surprise and a tax liability.

Categories
Redundancy Unfair Dismissal

Disciplinary Record and Attitude Cannot Be Used in an Objective Selection for Redundancy

redundancy claims
Redundancy selection criteria must be objective

This case involved a man who brought a claim for unfair dismissal arising from his redundancy. His claim was founded on his contention that he was unfairly selected for redundancy and subjective criteria, which are personal to the employee, should not have been considered.

Background

The employer in this case was funded by a Government Department but funding was only going to continue to be available for 7 supervisors, from 9, into the future. One supervisor took voluntary redundancy and one further redundancy was needed.

A redundancy selection matrix and procedure was adopted but the Complainant was sceptical about the criteria being used. An interview panel was set up and interview meetings, along with an application form which had been completed by all supervisors, was used to arrive at the choice of who would be made redundant.

The Complainant was chosen for redundancy and he appealed this decision. His appeal was unsuccessful and the employer’s position was that the Complainant was chosen for redundancy because he had the lowest score of all the applicants.

He received a redundancy payment of €9,336.

The employer defended the redundancy procedure adopted and pointed out that it involved an external HR consultant and a matrix of criteria which would allow scores to be given to the employees.

The employer argued that the function of the WRC was not to look behind the matrix and procedure adopted unless there was manifest unfairness.

The Complainant argued that he had unfairly received a verbal warning in the course of employment and it was unfair, and that the matrix adopted by the employer was unfair and unbalanced. He also argued that last in first out should have been used,which would have saved his employment.

Moreover, he argued that it was improper to use attendance, disciplinary record and attitude towards colleagues in the matrix because these criteria were linked to the person, not the position that was being cut.

He relied on JBC Europe Limited –v- Jerome Ponisi [2012] 23 E.L.R 70 as authority for the proposition that redundancy cannot be used as a cloak for weeding out employees who are perceived to have competence or health or age-related issues.

The complainant also pointed out that a supervisor with 5 years less service scored higher than him in the matrix adopted, and he disagreed with this.

Findings of the WRC adjudication

The adjudicator pointed out that the redundancy must involve a genuinely fair selection process and the termination must arise from a real redundancy. The burden of proof was on the employer to prove it was genuinely redundancy related and must be able to justify the selection process.

The WRC adjudicator was satisfied that a genuine redundancy existed and this was the reason for dismissal. Regarding selection for redundancy she referred to Boucher v Irish Productivity Centre R92/1992 which held:

“to establish that he acted fairly in the selection of each individual employee for redundancy and that where assessments are clearly involved and used as a means for selection that reasonable criteria are applied to all the employees concerned and that any selection for redundancy of the individual employee in the context of such criteria is fairly made”.

The adjudicator held that selection criteria cannot be based on subjective assessments of employees. The assessment must have independent, objective and verifiable criteria.

She held: In Bunyan v United Dominions Trust (Ireland) Ltd [1982] I.L.R.M. 404 the EAT endorsed and applied the following view quoted from NC Watling Co Ltd v Richardson [1978] IRLR 225 EAT (ICR 1049)

“the fairness or unfairness of dismissal is to be judged by the objective standard of the way in which a reasonable employer in those circumstances in that line of business, would have behaved. The tribunal therefore does not decide the question whether, on the evidence before it, the employee should be dismissed. The decision to dismiss has been taken, and our function is to test such decision against what we consider the reasonable employer would have done and/or concluded.”

The adjudicator held that the Complainant was unfairly dismissed because he was unfairly selected by reason of the use of subjective criteria of disciplinary history, attitude towards his managers and not being a cooperative colleague were taken into consideration and should not have been.

She held that a “fair scoring system” was not in place for selection.

The adjudicator noted that he had not suffered any financial losses because he had received a redundancy payment and had secured new employment but awarded him 4 weeks gross remuneration-that is, €2,688.00-to reflect the finding that he was unfairly selected and therefore unfairly dismissed.
Read the full decision of the Workplace Relations Commission here.

Categories
Redundancy

Lay-off and Short Time and Coronavirus-the Essentials

“Lay-off” and “short time” are phrases that are being bandied about now because of COVID-19. Do you know what they actually mean from an employment law perspective?

“Lay-off” is defined in the Redundancy Payments Acts 1967-2014 and happens when the employer is temporarily unable to provide work for the employee.

“Short time” describes the situation where the employer cuts the wages or hours of the employee to less than 50% of the normal hours or pay.

The employee is supposed to be given notice, although no time period is specified, and the employer must reasonably believe it is only for a temporary period of time. Choosing employees for lay off or short term should be done fairly and in a way that will not give rise to a claim of discrimination.

Pay

The employer cannot, at common law, put an employee on lay-off without pay or place him on short time unless

  1. There is a clause in the contract allowing lay-off or
  2. There is an implied right to do so

The implied right would derive from custom and practice in the industry or in the particular employer’s business.

However, there has been decided cases in the WRC (Workplace Relations Commission) or the Rights Commissioner Service/Employment Appeals Tribunal that held there is an established practice in Ireland that lay-off without pay can be permitted where it can be shown that it is custom and practice in the industry/trade.

Redundancy

The employee may be entitled to redundancy. If she has been laid off or on short time for 4 or more consecutive weeks or for 6 weeks (not more than 3 consecutive) in a 13 week period the employee can serve a notice on the employer to claim redundancy. The employer, however, can serve a counter-notice denying the redundancy if he can give the employee 13 weeks work without lay off or short time. This work must be available within 4 weeks of the employee’s notice.

Alternatives to lay-off and short time

Alternatives to lay-off and short time include 

  1. Annual leave
  2. Parental leave
  3. Unpaid leave

Both employer and employee need to be flexible at this time.You can learn more about short time, lay-off, and redundancy here.

Categories
Redundancy

Unfair Dismissal Claims Arising from Redundancy-Employer’s Conduct Must Be Reasonable

redundancy procedure
Redundancy procedure must be fair and reasonable

Any decision to make an employee redundant runs the risk of being challenged by the employee with a claim to the Workplace Relations Commission for unfair dismissal.

In a non collective redundancy the employer needs to be absolutely satisfied that

    1. The redundancy is a genuine one, not a sham or a ruse to terminate the employment of an employee who has been targeted
    2. The selection process has been fair with “the selection criteria being used should be objectively applied in a fair manner.”
    3. The procedure in carrying out the redundancy is fair.

Two useful decisions in this connection are ADJ-00001516, a decision issued on 6th December, 2016 in which the employee was awarded €21,750 for unfair dismissal arising from a redundancy and a Labour Court decision, UDD 1638 in which the employee was awarded €35,000 in consequence of the way the employer carried out the redundancy.

The adjudication officer in ADJ-00001516 referred to a previous decision of the Employment Appeals Tribunal in Case No. UD206 / 2011. In that case the EAT held

“When an employer is making an employee redundant, while retaining other employees, the selection criteria being used should be objectively applied in a fair manner.”

The EAT also held that any consultation must be real and substantial, not merely a going through the motions or box ticking exercise.

Right to Appeal

IN the ADJ-00001516 case the adjudication officer also noted that

“I also note that the complainant was not advised of any process by which he could appeal the decision on the termination of his employment.”

The adjudication officer also referred to the following extract from the 2011 EAT case in which the EAT held that

“There was no serious or worthwhile consultation with the claimant prior to making her redundant. The consultation should be real and substantial.

No suitable or substantial consideration was given to alternatives to dismissing the claimant by reason of redundancy.

There was no worthwhile discussion in relation to the criteria used for selecting the claimant. The selection criteria should apply to all employees working in the same area as the claimant but should also consider other positions which the claimant is capable of doing.”

It is reasonable to assume that WRC adjudication officers will judge these types of case applying the above criteria. Therefore if you are an employer you would need to pay attention to this decision.

Labour Court

In a separate case, the Labour Court had to deal with an appeal by an employer against the decision of the WRC in which the employee was awarded €35,000 for unfair dismissal in a ‘redundancy’ situation.

The Labour Court held that there was a genuine redundancy but the conduct of the employer in carrying out the redundancy was not reasonable and varied the award from €35,000 to €20,000. The full decision of the Labour Court in this case ( UDD 1638) can be read here.

The Labour Court held,

It is clear to the Court that the Appellant, in the manner in which it executed the dismissal of the Respondent, engaged in the minimum of consultation and in effect put a decision rather than a proposal to the Respondent at a meeting on 27th and 28th October. The Court notes that some engagement took place as regards alternatives which might exist on 28th October.

It is clear to the Court also that the Appellant made no avenue of appeal available to the Respondent in a situation where the Respondent was dissatisfied with the decision to terminate his employment with the Appellant.

In its decision it also stated

The Court, while finding that the Respondent’s position was redundant also finds that the manner of his dismissal as result was procedurally unfair. The Respondent was not consulted adequately, he was not afforded representation at the meeting on 27th October 2015 and he was denied the opportunity to engage with the Company Board when he requested that facility in a situation where he was not satisfied with the termination of his employment which had been communicated to him at a meeting on 27th and 28th October 2015.

Takeaway for employers

You will note from both of these cases that the WRC and the Labour Court accepted that the redundancies were genuine in each case.

Where things went against the employer and substantial awards to the employee arose, however, were as a consequence of the procedures adopted to give effect to the redundancy.

In short, the conduct of the employer was not held to be reasonable in both cases. Thus, it is not enough that a genuine redundancy situation exists-the procedure used to carry out the termination must be fair and reasonable at each step.

And from the cases referred to above we can assume that the following steps are strongly advisable:

  • Real and substantive consultation
  • Right of representation
  • Right to appeal the decision.