Nature of Redundancy

Nature of Redundancy

If a particular job or role is redundant, the employer is entitled to dismiss the employee who fills that position. Provided that this is the true reason for dismissal, it is deemed not to be an unfair dismissal. The employee may have an entitlement to a redundancy payment if he or she has more than two continuous years’ service.

It is not sufficient that an employer labels a dismissal as caused by redundancy. There must be a genuine redundancy in relation to the position. Fair procedures must apply in the selection of the employee(s) who are made redundant.

The dismissal must be wholly or mainly because of redundancy.  In an unfair dismissal case, the courts may decide that the redundancy is not the genuine or operative reason for dismissal. In this case, there is likely to be a finding of unfair dismissal, with a consequent award of compensation or order for reinstatement or reengagement.

A central feature of the legislation is that the job or role that it is redundant, rather than the the employee concerned. There is usually a cessation of business or a change in the manner in which it is undertaken. Where the reason for the dismissal relates to the conduct or performance of a particular employee, there is unlikely to be a redundancy. If an employee is not able to do the work, the matter must be treated as arising on the grounds of capability and be investigated accordingly.


Definition of Redundancy

An employee is deemed to be dismissed as a result of redundancy if, for one or more reasons not related to the employee concerned, the dismissal is wholly or mainly attributable to one of the following factors:

  • the fact that his employer has ceased or intends to cease to carry on business for the purposes of which the employee was employed or has ceased or intends to cease, to carry on that business in the place where the employee was so employed;
  • 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 diminished or ceased or are expected to do so;
  • the fact that the employer has decided to carry on business with fewer or no employees, whether by requiring the work for which the employee had been employed to be done by other employees or otherwise;
  • the fact that the employer has decided that the work for which the employee had been employed or had been doing before dismissal should henceforth be done in a different manner for which the employee is not sufficiently qualified or trained;
  • the fact that the employer has decided that the work for which the employee had been employed or had been doing before dismissal should henceforth be done by a person who is also capable of doing other work, for which the employee is not sufficiently qualified or trained.

In ascertaining, for the above purpose, whether an employer has decided to carry on business with fewer or no employees, account shall not be taken of the following members of the employer’s family; father, mother, stepbrother, son, daughter, adopted child, grandson, granddaughter, stepson, stepdaughter, brother, sister, half-brother or half-sister.


Redundancy Circumstances

There is usually a  reduction or expected reduction in business requirements and consequently, in the number of employees required. However, the requirement is that there be a reduction in the number of employees, and not necessarily the level of business. It may be intended to undertake business in a different way.

The expected reduction or diminution must be in the immediate future rather than being prospective, at some future date.

There may be any one or more reasons which lead to the reduction or diminution in the business’ requirements for employees, such as the introduction of technology or new working procedures.  There may be a change in the manner of undertaking the work, which is incompatible with employee’s qualification or training. There may be a requirement that the work be done by a person who is capable of doing other work for which the employee is not suited or sufficiently qualified or trained. “Other” work refers to work of a different type of work


Selection Criteria

Where a redundancy affects a number of employees there must be  fair selection criteria. They must be fairly applied. The selection criteria should be documented. The process of its application should be documented.  In effect, the onus is on the employer to justify the selection if it is challenged.

The employer must act fairly and reasonably and in an open and objective fashion. In the absence of fair selection, an employee may be deemed to be unfairly dismissed.   The selection criteria should reflect any applicable dismissal procedure or code (assuming it to be reasonable by its terms).  It should be possible to justify any departure  from  these criteria.

The process should be recorded in writing. Meetings and the consideration of options should be minuted. There is no obligation as such to offer an alternative job, but the failure to do so may risk a finding of an unfair dismissal in some cases.


Consultation

Where there are proposals which may involve redundancy, the employees’ representatives should usually be consulted regarding how the employer’s requirements can be achieved with as little hardship as possible. In some cases, there is a legal requirement for consultation. Even where this does not apply, failure to consult may lead to a finding of unfair selection with a consequent finding of unfair dismissal.

The employee’s representatives should be invited to but forward alternative proposals, which should be considered. The employer is not bound to follow their proposals and representations but should take them into account. Where possible, the criteria for selection should be agreed with the union or employee representatives.

Although there is no specific obligation to consult an individual employee, there may be  an effective obligation to do so by reason of the duty to act fairly. The proposed redundancies should be discussed with the employees. Consultation is required unless it is reasonable to conclude that it would be utterly futile.

Sufficient warning should be given to employees to enable them to take steps to consider the position and if necessary, find alternative employment. The consultation should consider whether the employee will be willing to work in another department or relocate to work where there is another position. The employer should give sufficient information to allow the employee to evaluate whether to accept the alternative.

Where the  criteria are not agreed with the union or representatives, the employer should establish criteria which do not depend on subjective opinion but on objective criteria in relation to employee qualities which are relevant to the matter.


Selection Process

The employer must act reasonably in the selection process, in order to avoid the dismissals being deemed unfair. The selection criteria, should be followed. The selection should be made fairly in accordance with the criteria. Where there is a last in first out basis of redundancy selection, there should be no unlawful discrimination in its application.

The employer must conduct itself reasonably in selecting employees for redundancy. Each employee’s circumstance must examined separately so that proper consideration is givens to the individual application of the selection criteria

The selection should have particular regard to the employee’s abilities, and what he can offer to the organisation.  The relevant selection criteria could include qualifications, training, experience, punctuality, skills, work, the quality and length of service.

Reasonable criteria must be applied and the selection must  be made in accordance with the criteria.  Where the conduct of an employee is taken into account, then the dismissal may be characterised as unfair.

The employee must be made aware of the considerations used in selection.  The employer should not simply assume that an employee meets the relevant criteria. If there is an alternative position, it should offered to the employee, or he should be made aware of it.


Alternative Employment

A dismissal may be unfair because there is a failure to look for alternatives or because another position is not offered.  It might be necessary to consider an offer of employment in an associated company. However, the employer is not obliged to create a position if none exists.

An employee may lose entitlement to a redundancy payment where he refuses unreasonably an alternative position. Employment in the alternative position should  be specifically offered.  The offer may be on different terms in relation to the type of work, hours, etc., total remuneration, the degree of certainty of continued employment. It may be reasonable to refuse an offer of employment that is materially different and at a lower grade, lower pay or with less assurance in relation to salary.

The issue of reasonableness in relation to an alternative offer of employment has been considered in a number of cases.  The offer of an alternative position at a different location may be reasonable, provided that appropriate compensation and travel costs are paid. The terms and conditions must be suitable employment in relation to the employee. The renewal engagement must take effect, but later, not later than four weeks after the date of termination of the earlier contracts.


Refusing Offer I

An employee is not entitled to a redundancy payment if

  • his employer has offered to renew that employee’s contract of employment or to re-engage him under a new contract of employment,
  • the provisions of the contract as renewed, or of the new contract, as to the capacity and place in which he would be employed and as to the other terms and conditions of his employment would not differ from the corresponding provisions of the contract in force immediately before the termination of his contract,
  • the renewal or re-engagement would take effect on or before the date of the termination of his contract, and he has unreasonably refused the offer.

Refusing Offer II

An employee is not entitled to a redundancy payment if

  • his employer has made to him in writing an offer to renew the employee’s contract of employment or to re-engage him under a new contract of employment,
  • the provisions of the contract as renewed, or of the new contract, as to the capacity and place in which he would be employed and as to the other terms and conditions of his employment would differ wholly or in part from the corresponding provisions of his contract in force immediately before the termination of his contract,
  • the offer constitutes an offer of suitable employment in relation to the employee,
  • the renewal or re-engagement would take effect not later than four weeks after the date of the termination of his contract he has unreasonably refused the offer.

Trial Period

Where an employee who has been offered suitable employment and has carried out, for a period of not more than four weeks, the duties of that employment, refuses the offer, the temporary acceptance of that employment shall not solely constitute an unreasonable refusal for the purposes of this section.

Where an employee’s remuneration is reduced substantially but not to less than one half of his normal weekly remuneration, or his hours of work are reduced substantially but not to less than one-half of his normal weekly hours, and the employee temporarily accepts the reduction in remuneration or hours of work and indicates his acceptance to his employer, such a temporary acceptance for a period not exceeding 52 weeks shall not be taken to be an acceptance by the employee of an offer of suitable employment in relation to him.


Deemed Unfair Dismissal

Where the redundancy situation applies to a number of employees who have not been dismissed the selection of the employees who are dismissed, may amount to an unfair dismissal if the selection of the employee resulted wholly or mainly from one of the matters specified below or another matter justifying dismissal;

  • there is a is a contravention of a procedure which has been agreed by on behalf of the employer, employee or a trade union or representative body;
  • there is a custom practice relating to redundancy, and there are no special reasons justifying a departure from the procedure;
  • In other circumstances. where the above procedure does not apply, then the fairness of the selection will be examined.

The selection must not be based on a ground that is prohibited under anti-discrimination legislation.


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

Legislation

Redundancy Payments Act 1967 (21/1967)

Redundancy Payments Act 1971 (20/1971)

Redundancy Payments Act 1973 (11/1973) (not amended)

Redundancy Payments Act 1979 (7/1979)

Protection of Employees (Employer’s Insolvency) Act 1984 (21/1984), s. 12

Social Welfare Act 1990 (5/1990), ss. 26, 27 and 29

Worker Protection (Regular Part-Time Employees) Act 1991 (5/1991),

Social Welfare Act 1991 (7/1991), s. 39 other than subs. (2)

Protection of Employees (Part-Time Work) Act 2001 (45/2001), in so far as it relates to the Redundancy Payments Acts 1967 to 1990

Redundancy Payments Act 2003 (14/2003)

Protection of Employment (Exceptional Collective Redundancies and Related Matters) Act 2007 (27/2007),

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