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

non collective redundancy ireland

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:

  1. A collective redundancy situation
  2. 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.

  1. 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

  1. It was a sham redundancy-that is, not genuine (see the 5 categories above) or
  2. 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

how to carry out redundancyAre 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:

  1. For unfair dismissal, on the basis that it is a “sham” redundancy and not a real one
  2. 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.

The Statutory Penalties for Breaches of Employment Law in Ireland

Are you aware of the range of penalties that are set down in legislation in Ireland for breaches of employment law?

There is a large number of statutes/acts dealing with all aspects of employment law in Ireland. These acts cover overnighting from unfair dismissal to working time to payment of wages to health and safety to annual leave and rest breaks, etc.

In addition to these penalties and employee can always go to the Civil Courts for common law claims such as breach of contract, personal injury, negligence, health and safety breaches, breach of constitutional rights, etc. That is another day’s work.

This piece is going to look at the penalties and redress for employees as set out in statute, that is, the various acts on the statute book.

Regardless of whether you are an employer or employee, you should find it useful.

Unfair Dismissal/Constructive Dismissal

The redress is set out in section 7, Unfair Dismissals Act, 1977, and in summary comprises

  1. Reinstatement or
  2. Reengagement or
  3. Compensation of up to 104 weeks’ remuneration in respect of the financial loss due to the dismissal.

If there is no financial loss an employee can be awarded 4 weeks’ remuneration.

Working Time/Rest Breaks

The penalties are set out in section 27, Organisation of Working Time Act, 1997:

  1. Require the employer to comply with the relevant provision of the act
  2. Compensation of up to 2 years’ remuneration.

Written Terms of Employment

Failure to provide a written statement of terms and conditions of employment within 2 months of starting can be punished as set out in section 7 of the Terms of Employment (Information) Act, 1994.

The WRC adjudicator can order the employer to give the statement to the employee and can award up to 4 weeks’ remuneration by way of compensation.

Protected Disclosures/Whistleblowing

The Protected Disclosures Act, 2014 provides severe penalties in section 11 for dismissal of an employee for making a protected disclosure:

  • 260 weeks (5 years) remuneration

The employee can also bring a tort action for having suffered detriment as a result of making a protected disclosure, as set out in section 13, Protected Disclosures Act, 2014, and can seek an order from the Circuit Court as set out in section 11 of the act preventing dismissal prior to the determination of a claim for unfair dismissal.

Payment of Wages

Section 6, Payment of Wages act, 1991 sets out the penalties for breaches of the act. These include

  • Compensation of the net amount of the wages which would have been paid the previous week prior to the deduction/non payment or
  • Twice the net amount of wages that would have been paid to the employee in the week immediately preceding the deduction or payment

Minimum Notice

Compensation can be awarded pursuant to Minimum Notice and Terms of Employment Act, 1973: “may award to the employee compensation for any loss sustained by him by reason of the default of the employer.”

Agency Workers

Penalties for breach of Protection of Employees (Temporary Agency Work) Act 2012 are set out in schedule 2 of the Act. It states that the WRC can order rectification of whatever breach of the act is proved, including reengagement or reinstatement, and/or order compensation of up to 2 years’ remuneration be paid to the employee.

Adoptive Leave, Carer’s Leave, Parental Leave

Breach of the adoptive leave provisions of the Adoptive Leave Act, 1995 can see compensation of up to 20 weeks’ remuneration awarded to the employee, or the WRC making whatever directive order it feels is expedient in the circumstances.

Carer’s leave: a WRC adjudicator can award a grant of carer ’ s leave to the employee of such length to be taken at such time or times and in such manner as the adjudication officer may specify, and/or up to 26 weeks’ compensation.(Carer’s Leave Act, 2001).

Parental Leave and Force Majeure Leave:  an adjudicator can award (a) the grant to the employee of parental leave of such length to be taken at such time or times and in such manner as may be so specified, and/or compensation of up to 20 weeks’ remuneration.(Parental Leave Act, 1998).

Maternity leave: breaches of the employees entitlement can lead to an award of compensation of up to 20 weeks’ remuneration and or grant of the leave to which the employee is entitled.(Maternity Protection act, 1994).

Transfer of Undertakings

Complaints about breaches of S.I. No. 131/2003 – European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 can lead to compensation being awarded depending on which regulation has been breached.

The compensation can range from a maximum of 4 weeks’ remuneration to 2 years’ remuneration.

Part Time Workers

The Protection of Employees (Part-Time Work) Act, 2001 is the relevant act for part time workers.

It provides that the WRC adjudicator can require the employer to comply with the relevant provision and/or award 2 years’ remuneration to the employee.

Fixed Term Workers

The Protection of Employees (Fixed-Term Work) Act 2003 is the relevant act for fixed term workers. Section 14 of the revised act provides the WRC adjudicator can:

(b) require the employer to comply with the relevant provision,

(c) require the employer to reinstate or reengage the employee (including on a contract of indefinite duration), or

(d) require the employer to pay to the employee compensation of such amount (if any) as the adjudication officer considers just and equitable having regard to all of the circumstances, but not exceeding 2 years ’ remuneration in respect of the employee ’ s employment.

Redundancy

The Redundancy Payments Act, 1967, section 7 sets out the employee’s right to a redundancy payment. Section 39 allows you to appeal the amount you have been awarded.

The Protection of Employment Act, 1977 also obliges the employer to inform and consult with employees in a collective redundancy situation. Section 11 of the Act sets out the penalties for the employer’s failure to consult and notify: a fine of up to €5,000 on summary conviction in respect of a breach of section 9 or section 10.

Discrimination and Equality Based Claims

Breaches of the Employment Equality Act, 1998 can see redress being ordered pursuant to section 82 of the Employment Equality Act, 1998:

Various orders including for re-engagement, re-instatement or compensation of up to 2 years’ remuneration or €40,000, whichever is the greater.

€13,000 can be awarded in contravention of the law in relation to a discriminatory claim in relation to access to employment.

Equal Status Acts Breaches

Equal status breaches can be penalised in accordance with the Equal Status Act, 2000. This protects you in relation to discrimination in respect of the supply of goods or services.

The maximum amount that can be awarded is the amount of the District Court limit in civil cases in contract (€15,000).

Minimum Wages

The National Minimum Wage Act, 2000 protects employees in relation to minimum wage rates. Complaints can be dealt with under section 26 of the act. The adjudication officer can order that the shortfall be rectified and paid to the employee, and the employee can also be awarded reasonable costs in respect of bringing the claim.

The employer can also be prosecuted in the District Court for breaches of this minimum wage act.

Health and Safety

Breaches of the Safety Health and Welfare Act 2005 can see an adjudication officer awarding compensation of such amount as he feels equitable in the circumstances for breach of section 27 of the act, which protects employees from penalisation or dismissal for making a complaint in respect of health and safety in the workplace.

Conclusion

The list above is not definitive, but certainly covers the most common types of employment law claim that will be brought to the WRC (Workplace Relations Commission), or Labour Court. A WRC adjudicator has a wide range of discretion for breaches of any particular act, so the various acts referred to above set out the maximum awards possible.

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

redundancy claims

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:

  1. 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.

  1. 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.

  1. Your employer is not able to pay but you have not received proof of his inability to pay.
  1. Your representative was not consulted in relation to a proposed collective redundancy.

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

  1. 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.

  1. 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.

  1. 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.

  1. 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.