Redundancy | Employment Rights Ireland

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.

9 Things You Should Know About Being Made Redundant

Are you at risk of being made redundant?

Are you wondering whether there is anything you can do about it?

Or are you just happy to accept the situation and take it on the chin?

Want to know what your options are?

Let’s take a look at the law surrounding redundancy in Ireland. Ready?

Collective versus non collective redundancy

Firstly, you need to understand that there is two types of redundancy situation recognised in Irish law:

A collective redundancy situation
A non collective redundancy

This piece is about a non collective redundancy only. That is, a situation where you, as an individual, are at risk of losing your job by reason of redundancy and it is not a collective redundancy situation.

A collective redundancy is one where the redundancy is of at least 5 in an establishment normally employing more than 20 and less than 50 employees or at least 10 in an establishment normally employing at least 50 but less than 100 employees or at least ten per cent. of the number of employees in an establishment normally employing at least 100 but less than 300 employees, and at least 30 in an establishment normally employing 300 or more employees.

What is a redundancy?

A redundancy will exist if the circumstances fall into one of the 5 definitions set out in the Redundancy Payments act 1967. These are:

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 his 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 sufficiently qualified or trained,

If your termination falls into one of these categories it is a genuine redundancy. If it does not then it may not be a genuine redundancy, it may be a sham.

What then?

2. Claims arising from redundancy

The claim that may arise from a redundancy is a claim that you have been unfairly dismissed by reason of

It was a sham redundancy-that is, not genuine (see the 5 categories above) or
You were unfairly selected for redundancy and someone else should have been chosen before you.

However, a genuine redundancy is a lawful defence to a claim for unfair dismissal.

3. Redundancy payments

To qualify for a redundancy payment you need at least 104 weeks continuous service in the employment. If you qualify you are entitled to 2 weeks’ pay for each year of reckonable service and an extra week’s normal pay, subject to a maximum of €600 per week.

4. Disentitlement to redundancy

You will be disentitled to a redundancy payment if you are dismissed for misconduct or if you refuse to accept alternative employment. This alternative employment must have the same terms and conditions as the previous role.

5. Lay off or short time

A lay off or short time might give rise to a right to the employee serving a notice claiming redundancy. However, the employer can serve a counter notice if he believes he will be able to provide work within 4 weeks of receiving the notice from the employee.

This work must last for at least 13 weeks.

6. Notice of redundancy

The employee is entitled to at least 2 weeks’ notice of the proposed dismissal (section 17 Redundancy Payments Act 1967). This is a statutory minimum and you are entitled to a greater notice period in accordance with your contract of employment, if it is contained in your contract.

7. Employer unable to pay redundancy

There is a scheme run by the Department of Employment Affairs and Social Protection called the Insolvency Payments Scheme. Provided certain criteria are met you may be paid from this fund.

8. Disputes about redundancy terminations

If you have any dispute about your redundancy you must bring your claim to the Workplace Relations Commission.

9. Employer’s conduct during redundancy decision

The employer is obliged to act reasonably in arriving at the decision to terminate the employment by reason of redundancy. He should have given the employee the opportunity to put forward suggestions to save his job or to do alternative work or suggest ways that the business could be run more efficiently to obviate the need for a redundancy.

He should also have used some type of objective criteria by which to decide to make one employee redundant as opposed to another. In essence, if the employer has a choice between more than one employee then the choice of who will be terminated must be made fairly.

The key for the employer is to act fairly and reasonably and look at all options short of redundancy. If he has done this, however, the redundancy decision should be sound and capable of withstanding a claim of unfair dismissal.

There you have it: 9 things you ought to know about a non collective redundancy in Ireland.

Have you a specific issue as an employee?

Unsure about your obligations as an employer?

How to Carry Out a Non Collective Redundancy

Are you an employer who needs to carry out a redundancy?

And you are not sure what to do?

You are afraid you will get it wrong and leave yourself open to a costly claim?

Let me explain what’s involved and some things to avoid to ensure you don’t make a mess of it. (Note: this piece is aimed at small employers making one or two people redundant, not a collective redundancy situation).

What can go wrong?

There are two main claims that an employee can bring arising from a redundancy:

For unfair dismissal, on the basis that it is a “sham” redundancy and not a real one
For unfair dismissal, on the basis that the employee has been unfairly selected, and someone else should have been chosen.

You should apply fair criteria for deciding whose position will be made redundant.

Also, you should not depart from a previously established procedure, unless you have good reason for doing so.

If you have always used last in,first out to choose you need to stick with it or you leave yourself open to an allegation of unfair selection.

The procedure

In a non collective redundancy the procedure, once you have chosen fairly, is straightforward: you need to give the required notice period and pay the statutory redundancy entitlement on the day the person is dismissed.

Ensure that you retain proof of payment of the redundancy payment, if the employee is entitled to one. He will need 104 weeks’ continuous employment to qualify. The employee’s continuous service will not be broken by illness, layoff, statutory leave, and some other limited circumstances.

How to calculate it? The employee is entitled to 2 weeks’ pay for each year of continuous employment over the age of 16 years and an additional one week’s normal earnings.

There is also a redundancy payment calculator on the website of the Department of Social Protection. There is a link on this page and more information about non collective redundancies in Ireland.

However, if the employee refuses a reasonable offer of alternative work he/she may become disentitled to a redundancy payment.

The notice period is a minimum of two weeks, but depends on how long the employee is in the employment. Here are the minimum notice periods:

Between 2-5 years: 2 weeks
Between 5-10 years: 4 weeks
Between 10-15 years: 6 weeks
Over 15 years: 8 weeks

Reasonable paid time off

The Redundancy Payments act 1979, section 7 provides that you must give the employee reasonable paid time off to look for another job. This should be taken during the last two weeks prior to termination.

The employee is also entitled to pay in lieu of untaken holidays.

Unable to pay? You need form RP50

If you are not able to pay the redundancy amount you need to fill out a form-RP50-and submit it to Department of Employment Affairs and Social Protection.

You will also need a letter from your accountant or solicitor stating you are unable to pay. You will also need evidence, such as audited accounts supporting your contention.

8 Redundancy/Employer Insolvency Claims to the Workplace Relations Commission (WRC)

If you have lost your job due to redundancy, or your employer has become insolvent-that is, in receivership or liquidation-there are approximately 8 types of claim you can bring to the Workplace Relations Commission.

Let’s take a look:

You did not receive a redundancy payment.

Section 7 of the Redundancy Payment act, 1967 provides for a redundancy payment entitlement. Learn about how you qualify for redundancy here.

You did not receive the correct redundancy payment amount.

You are entitled to 2 weeks’ gross pay for every year of service, subject to a maximum of €600 per week. In addition, you are entitled to 1 bonus week. This is tax free.

Your employer is not able to pay but you have not received proof of his inability to pay.

Your representative was not consulted in relation to a proposed collective redundancy.

Section 9 of the Protection of Employment Act, 1977 requires this consultation.

Your representative was not given all the relevant information concerning the redundancy

Section 10 of the Protection of Employment Act, 1977 provides that the employer must give certain information to your representative.

Your employer did not give a copy of the prescribed information to the Minister (for Labour).

Section 10 (3) of the Protection of Employment Act, 1977 sets out this obligation.

You are unhappy with the amount of redundancy the Deciding Officer has decided on.

Section 39 of the Redundancy Payment Act, 1967 allows you to appeal this decision to the WRC.

You did not receive a payment, under the Insolvency Payments Scheme, or did not receive the full amount, to which you were entitled.

When your employer is insolvent eg in receivership or liquidation, you are entitled to claim from the Insolvency Payments Scheme in respect of arrears of pay, holiday pay, and other statutory entitlements. Section 9 of the Protection of Employees (Employers’ Insolvency) Act, 1984 allows you to make a complaint to the WRC.

Collective Redundancies in Ireland-the Legal Position

The Protection of Employment Acts, 1977 to 2007, applies to employers who normally have more than 20 employees and must be followed by these employers when carrying out a programme of collective redundancies.

The acts, and various regulations, set out the procedure that must be followed by these companies.

Collective redundancies are defined in S.I. No. 370/1996 — Protection of Employment Order 1996 as:

6. (1) For the purpose of this Act, `collective redundancies’ means dismissals effected by an employer for one or more reasons not related to the individual concerned where in any period of 30 consecutive days the number of such dismissals is —
		(a) at least 5 in an establishment normally employing more than 20 and less than 50 employees,
		(b) at least 10 in an establishment normally employing at least 50 but less than 100 employees,
		(c) at least ten per cent. of the number of employees in an establishment normally employing at least 100 but less than 300 employees, and
		(d) at least 30 in an establishment normally employing 300 or more employees.

The Protection of Employment Act, 1977 to 2007 applies to all employees, regardless of the amount of service they have.

Consultation and Notification

If a collective redundancy is to be carried out, the employer must consult employees’ representatives on

The possibility of avoiding redundancies and
How employees will be chosen for redundancy.

The employer must supply the employees or their representatives with all relevant information such as

The reason for redundancies
The number of employees it is proposed to make redundant
The number of employees normally employed
The time period over which it is proposed to carry out the redundancies
The criteria for selection of workers
The method of calculating and redundancy payments.

The employer must also supply this information to the Minister for Enterprise, Trade and Employment and allow at least 30 days to expire before issuing redundancy notices to employees. Failure to abide by this will leave the employer open to criminal prosecution.

The Protection of Employment (Exceptional Collective Redundancies and Related Matters) Act 2007 provides that some dismissals will be considered to be ‘exceptional collective redundancies’ if they fall into the following category:

an employee who is dismissed shall be taken not to be dismissed by reason of redundancy if—
		(a) the dismissal is one of a number of dismissals that, together, constitute collective redundancies as defined in section 6 of the Protection of Employment Act 1977 ,
		(b) the dismissals concerned were effected on a compulsory basis,
		(c) the dismissed employees were, or are to be, replaced, at the same location or elsewhere in the State, (except where the employer has an existing operation with established terms and conditions) by—
		(i) other persons who are, or are to be, directly employed by the employer, or
		(ii) other persons whose services are, or are to be, provided to that employer in pursuance of other arrangements,
		(d) those other persons perform, or are to perform, essentially the same functions as the dismissed employees, and
		(e) the terms and conditions of employment of those other persons are, or are to be, materially inferior to those of the dismissed employees.”.

This act allows for the referring of disputes to a Redundancy Panel which can invite the parties to make submissions in relation to the proposed collective redundancies.

The Redundancy Panel will then make a decision as to whether the proposed redundancies fall within the definition of ‘exceptional collective redundancies’ or not in which case the matter is referred to the Labour Court.