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.
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 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.