Collective Redundancies

Collective Redundancies Definition I

The law on collective redundancies is set out in the Protection of Employment Act 1977 as amended and the Protection of Employment (Exceptional Collective Redundancies and Related Matters) Act 2007.

Special procedures and provisions apply to collective redundancies.  A collective redundancy is one where dismissals are proposed or effected by an employer for one or more reasons not related to the individuals concerned where in any period of 30 consecutive days,

  • at least five dismissals in an establishment normally employing between 20 and 50;
  • at least ten dismissals in an establishment normally employing between 50 and 100;
  • 10% of the number of employees in an establishment normally employing between 100 and 300 employees; and
  • at least 30 dismissals in an establishment normally employing 300 or more employees.

The domestic legislation provides lower figures than required at EU level.


Collective Redundancies Definition II

An establishment is a place with a degree of permanence and stability, which has the workforce, technical means and organisational structure to undertake the relevant business.  The entity concerned need not be a separate entity from a legal perspective.  It need not have its own independent management.

The reference period for computing the number of employees normally employed is the twelve months’ period before the dismissal.  The legislation does not apply to dismissals of

  • fixed term employees;
  • those employed under specified purpose contracts;
  • persons employed by the State, local authorities

It does not apply to dismissal on the death of an employer.


Consultations Required I

The employer who is contemplating collective redundancies must begin consultations with the workers’ representatives in good time with a view to reaching an agreement.  The consultations must at least cover ways and means of avoiding collective redundancies or reducing the number of workers affected and of mitigating the consequences by recourse to accompanying social and other measures aimed amongst other things, at redeploying or retraining workers made redundant.

To enable workers’ representatives, make constructive proposals, the employer must in good time during the course of consultations, supply them with all relevant information.  In any event, the employer must notify them in writing of

  • the reason for the projected redundancies;
  • the number and category of workers to be made redundant;
  • the number and categories of workers normally employed;
  • the period over which the projected redundancies are to be effected;
  • the criteria proposed for the selection of the workers to be made redundant insofar as national legislation or practice confer such power on the employee;
  • the method for calculating any redundancy payments other than those arising out of national legislation or practice.

Consultation Required II

The above provisions apply irrespective of the circumstances of the decision regarding collective redundancies.  The obligation arises, where the employer is drawing up plans for collective redundancy or where a group company or a parent company is preparing plans for such redundancies. If a strategic or commercial decision which requires planning for collective redundancy has been taken, the consultation should commence.

The obligations apply even if the employer lacks the requisite information employers due to the decision being made by a parent company. They apply where there is a decision or where external factors (including insolvency and force majeure) determine the prospect of collective redundancies. The obligation devolves to the liquidator and other insolvency officers.

The consultations must take place while the business is still in being.  Consultations must continue with employees for so long as the entity continues.


Nature of Consultations I

The Irish legislation requires an employer to initiate consultations with employee representatives, with a view to reaching an agreement.  This may be a trade union, excepted body, staff association or other bodies chosen by the employee.  Where there is no staff association, trade union, etc., the representatives are to be chosen by the employees from amongst their numbers to represent them.

The consultation is a collective consultation. Consultations must be initiated with a view to reaching an agreement. It should be meaningful and genuinely address the possibility of avoiding redundancies, reducing numbers or otherwise mitigating the consequences.

The notification must contain the required information on the projected redundancies, the number of workers involved, the numbers normally working and the period over which redundancies are proposed. It must facilitate, and there must follow consultation with workers as provided for in the legislation.


Nature of Consultations II

The employer’s representatives may forward their observations on the notifications. Collective redundancies are not to take effect until 30 days beginning on the date of notification.  Breach is an offence leaving the employer liable to a fine of up to €250,000.  Records of collective redundancy consultations must be kept and retained.

The employer may carry out the collective redundancies prior to the completion of the consultations, provided notification has been given to the relevant state authority.  The employer is obliged to notify the Minister in the above terms, contemplated by the Directive.  Redundancy in this context means a notice of termination of employment rather than the actual termination.

The Minister may request consultations with an authorised officer of his Department to seek solutions. They are entitled to enter the premises, make inquiries in order to ensure that the legislation is being complied with.


General Information Requirements

The Employees (Provision of Information and Consultation) Act 2006 applies without prejudice to the above obligation.    Information and consultation is required in relation to a range of matters in relation to including

  • information on recent and probable development in the undertaking, its activities and economic situation;
  • information on the situation, structure and probable development of employment within the business, or any anticipated measures, in particular, where there is a threat to employment; and
  • information on decisions likely to lead to substantial changes in work, organisation or contractual relations (including those covered by specific legislation on consultation).

Exceptional Redundancies

The Protection of Employment (Exceptional Collective Redundancies in Relations Matters) Act provides for a number of matters relevant to redundancy and unfair dismissal. It removes the upper age limit for entitlement to redundancy payments.

The legislation followed the replacement by Irish Ferries of much of its staff by lower paid non-national employees. The legislation provided for consequences, including greatly enhanced compensation entitlements, where there are exceptional collective redundancies, as defined involving the replacement of all or part of a workforce with others on markedly inferior terms.

The legislation provided for the withdrawal of the redundancy rebate in the case of exceptional collective redundancies. However, the employer rebate was abolished entirely from January 1st, 2013. Where the date of dismissal occurred in 2012, the employer rebate was 15%. If the date of dismissal was in 2011 or earlier the employer rebate was 60%.


Collective Redundancy

A collective redundancy is the making redundant within a period of 30 consecutive days, of a certain number of employees. The applicable minimum depends on of the normal size of the establishment’s workforce. The relevant minimum number of proposed redundancies vis-à- vis the size of the overall workforce is as follows:

  • 5 employees in an establishment employing 21-49 employees;
  • 10 employees in an establishment normally employing 50-99 employees;
  • 10% of employees in an establishment normally employing 100-299 employees; or
  • 30 employees in an establishment normally employing 300 or more employees.

Exceptional Collective Redundancy

An exceptional collective redundancy is where

  • the dismissal is one of a number collective redundancies as above;
  • the dismissals concerned were effected on a compulsory basis;
  • 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 other persons who are, or are to be, directly employed by the employer, or) other persons whose services are, or are to be, provided to that employer in pursuance of other arrangements;
  • those other persons perform, or are to perform, essentially the same functions as the dismissed employees, and
  • the terms and conditions of employment of those other persons are or are to be, materially inferior to those of the dismissed employees.

Redundancy Panel

There is provision for the establishment of a Redundancy Panel where exceptional collective redundancies are proposed. The Redundancy Panel consists of the following members:

  • a Chairman appointed, in writing, by the National Implementation Body (being the body of that name established, under the aegis of the Department of the Taoiseach, to oversee the attainment and maintenance of industrial peace and stability);
  • a member appointed, in writing, by the Irish Congress of Trade Unions; and
  • a member appointed, in writing, by the Irish Business and Employers Confederation.

The procedures for appointing members of the Panel and conditions of membership are set out in the legislation.

Cases of exceptional collective redundancies may be referred to the Redundancy Panel by employee representatives or by the employer concerned by notice given in writing to the Chairman of the Panel (care of the Secretary General of the Department of Jobs, Enterprise and Innovation). This must be done in the 30-day period of prior consultation required in respect of collective redundancies.

The Panel informs the Minister and invites affected parties to make submissions in relation to the proposal.  The Panel gives notice in writing to the Minster that either request the Minister to seek an opinion from the Labour Court in relation to the collective redundancies or states that Panel is of the view that the conditions for making such request have not been satisfied.


Statutory Request

The Redundancy Panel may not make a request to the Minister unless it appears that the proposed collective redundancies are exceptional collective redundancies and the Panel is satisfied that in relation to the proposal

  • that the party from whom the reference was received has unsuccessfully sought to resolve the matter through local engagement, whether established dispute-resolution procedures in place or availed of by custom or usual practice, in the employment concerned or ordinary consultative procedures;
  • that the party has acted reasonably and has not acted in a manner that, in the opinion of the Panel, has frustrated the possibility of an agreement in relation to restructuring, or other changes, necessary to secure the viability of the business of the employer and, as a consequence, the best possible levels of employment and conditions, and
  • that the party has not had recourse to industrial action since the proposal was referred to the Panel.

The Minister may, within seven days of receiving a request from the Redundancy Panel to do so, request the Labour Court to issue an opinion as to whether the collective redundancies proposed, constitute exceptional collective redundancies.  He may request the Court on his own initiative if it appears that they are exceptional collective redundancies.  There are different time limits depending on whether the matter has been referred to the Redundancy Panel or not.


Labour Court Opinion

There is provision for a hearing and the rendering of an opinion by the Labour Court.  Within 16 days of receiving the request, it shall hold a hearing into the matter and issue to the Minister, its opinion as to whether the proposed collective redundancies are exceptional collective redundancies or report that it is unable to issue an opinion. It may not issue an opinion unless satisfied the party to which the reference was received, has been unable to resolve the matter through local negotiation, has not frustrated the possibility of agreement and that no industrial action is current.

There is no appeal to the formation of opinion by the Labour Court.  The Minister shall, within seven days of receiving an opinion from the Labour Court notify the affected parties. Where an opinion is issued that the proposed collective redundancies are exceptional collective redundancies, and the employer proceeds with the dismissals on the same basis in the relevant proposal, then when the employer applies to a Minister for a redundancy rebate, the Minister shall have regard to the opinion of the Labour Court in considering the application of rebate.

If the Minister refuses to pay the rebate on the basis of an opinion by the Labour Court the exception from the income tax does not apply to lump-sum payments made by the employer to employees who are dismissed. The rebate has now been abolished so that it is no longer practical sanction.


Consequences

The dismissal of employees is not to be taken to be dismissal by reason of redundancy

  • where the dismissals are collective;
  • are effected on a compulsory basis;
  • the dismissed employees are to be replaced at the same location or elsewhere in the
  • State by other employees who are directly employed by the employer or by persons whose services are to be provided to the employee pursuant to arrangements, where those persons perform or are to perform essentially the same functions as the dismissed employees and
  • the terms and conditions of employment of those other persons are to be materially inferior to those of the dismissed employees.

Where the dismissal is one of a number of dismissals included in the collective redundancy that has determined to be an exceptional collective redundancy, compensation for unfair dismissal payable is in such amount as it is just and equitable, up to 208 weeks for an employee who has not more than 20 years’ continuous service and in the case of employee who has more than 20 years’ service, not more than 260 weeks.

There are dates before which the dismissals may not take place. The employer who dismisses an employee before the expiration of the period below or the period in Protection of Employment Act (on collective redundancies) is guilty of an offence and may be convicted on indictment and fined up to €250,000.


References and Sources

Primary References

Employment Law  Meenan  2014 Ch. 21

Employment Law Supplement Meenan 2016

Employment Law Regan & Murphy  2009  Ch.15( 2nd Ed 2017)

Employment Law in Ireland Cox & Ryan 2009 Ch.22

Other Irish Books

Employment Law Forde & Byrne 2009

Principles of Irish Employment Law         Daly & Doherty   2010

Employment Law Contracts (Book & CD-ROM)        Beauchamps, Solicitors          2011

Periodicals and Reports

Employment Law Yearbook (annual) Arthur Cox

Employment Law Reports

Irish Employment Law Journal

Employment Law Review

Legislation

Dismissal & Redundancy Consolidated Legislation   Barrett, G   2007

Irish Employment legislation (Looseleaf) Kerr  1999-

Employment Rights Legislation (IEL offprint)   Kerr  2006

Dismissal & Redundancy Consolidated Legislation   Barrett, G   2007

Principles of Irish Employment Law         Daly & Doherty   2010

Termination & Redundancy, What is the law?  Hayes, Barry & O’Mara 2005

Termination of Employment Statutes (IEL)       Kerr  2016

Termination of Employment: Practical Guide for Employers        Purdy         2011

Shorter Guides

Employment Law Nutshell    Donovan, D         2016

Employees: Know Your Rights       Eardly        2008

Essentials of Irish Labour Law       Faulkner    2013

Websites

Workplace Relations Commission http://www.lrc.ie/en/

Irish Human Rights and Equality Commission https://www.ihrec.ie/

Health and Safety Authority http://www.hsa.ie/eng/

UK Texts

Textbook on Employment Law, Honeyball, et al. 13th Ed. 2014

Labour Law, Deakin and Morris 5th Ed. 2012

Employment Law, Smith and Wood 13th Ed 2017

Selwyn’s law of Employment Emir A 19 Ed. 2016

Employment law : the essentials. Lewis D Sargeant M and Schwab M 11 Ed.2011

Labour Law Collins H, Ewing K D and McColgan  2012

Industrial relations law reports. (IRLR): Law Section,

Employment law Benny R Jefferson M and Sargent  5th Ed.  2012

Pitt’s Employment Law 10th  Ed. Gwyneth Pitt 2016

CLP Legal Practice Guides: Employment Law 2016 Gillian Phillips, Karen Scott

Cases and Materials on Employment Law 10th  Ed. Richard Painter, Ann E. M. Holmes 2015

Blackstone’s Statutes on Employment Law 2015 – 2016 Richard Kidner

UK Practitioner Services

Tolley’s Employment Handbook 2017 Mrs Justice Slade 2017

Butterworths Employment Law Handbook 2017 Peter Wallington 2017

Blackstone’s Employment Law Practice 2017 Edited by Gavin Mansfield, John Bowers, John Macmillan 2017

UK Periodicals and Reports

The Employment Law Review 8th  Ed.   Erika C. Collins 2017

Industrial Relations Law Reports

Employment Law in Context: Text and Materials 2nd  Ed. David Cabrelli 2016