Redundancy Issues

Nature of Redundancy

It is central to each of the grounds which constitute redundancy, that the circumstances of redundancy affect the job, and not the person as such.  In each case, there is a change involved in the workplace.  It may range from closure and cessation of the business to a reduction in the need for employees, a change in the method of work or a change in the required qualifications and abilities.

In a claim for redundancy, there is a presumption that the reason for dismissal is redundancy.  It is presumed until the contrary is shown by the employer that the dismissal is on the grounds of redundancy. In an unfair dismissal claim, for which redundancy would be a potential answer / defence, it is presumed that the dismissal was unfair. Accordingly, in this context, the onus is on the employee to prove redundancy.


Definition of Redundancy

The definition of redundancy is important. A dismissal by reason of redundancy occurs where for one or more reasons not related to the employee concerned, the dismissal is attributable wholly or mainly to the fact that the employer

  • has ceased or intends to cease to carry on the business for the purpose of which the employee was employed or
  • intends to cease such business in the place where the employee was employed or
  • the fact that the requirements of the business for employees to carry out work of the particular kind in the place where he has so employed has ceased or diminished or is expected to cease or diminish or
  • the fact that the 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 was doing before his dismissal to be done by other employees or otherwise or
  • the fact that employer has decided that the work for which the employee has been the employed or was doing before his dismissal should be done in a different manner for which the employee is not sufficiently qualified or trained or
  • the fact that employee has decided that the workforce, the employee had been employed was doing before dismissal should be done by a person who is also capable of doing other work for which the employee is not sufficiently qualified or trained.

Typical Circumstances

A reduction or expected reduction in business requirements or a diminution in the number of employees is required.  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, such as the introduction of technology or new working procedures. The requirement is that there be a reduction in the number of employees, not necessarily the level of business

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


Redundancy Payment

Entitlement to a redundancy payment arises whether is a redundancy by reason of dismissal by reason of redundancy. The entitlement to a redundancy payment applies once an employee has 104 continuous weeks of employment covered by social insurance.

Continuity is not affected by interruptions of less than 26 weeks arising from holidays, lay off or other purposes by authorised by the employers. Continuity is not interrupted (regardless of whether or not the employment contract is formally terminated) by

  • service in the Reserve Defence Forces,
  • sickness,
  • adoptive leave, maternity leave, carer’s leave, parental leave, force majeure leave
  • absence during lockout by the employer or because the employee was participating in a strike.

There may be continuity, even where work is seasonal, and there is engagement and re-engagement on a recurrent basis.


Calculation

Schedule III applies to the calculation of the lump sum. The entitlement is to one weeks remuneration at the normal rate and two weeks’ remuneration capped at €600 for each week of service over 16 years.

Remuneration for the purpose of the payment is capped at €600 per week €31,200 per annum. One week is paid at the full rate. T

he employer must make the payment.  The employers could formerly reclaim a rebate from the social insurance fund.

Statutory redundancy payments are exempt from income tax. Some ex gratia payments are subject to favourable taxation treatment.


Lay Off /Short Time I

Where an employee’s employment ceases by reason of his employer being unable to provide the work for which the employee was employed to do, and—

  • it is reasonable in the circumstances for that -employer to believe that the cessation of employment will not be permanent, and
  • the employer gives notice to that effect to the employee prior to the cessation,

that cessation of employment shall be regarded for the purposes of the legislation as a lay-off.

An employee is deemed to be on short time form for the purpose of redundancy legislation where

  • the employee’s remuneration is less than half of his normal weekly remuneration, or where his working hours are reduced to less than one-half of his normal hours,
  • due to a diminution in work provided by the employer, or in work of a kind for which the employee’s contract of employment, employs him to do,
  • it is reasonable for the employer to believe this will not be permanent,
  • the employer gives notice, prior to the reduction in remuneration that the employee is kept on short time for that week

Lay Off/ Short Time II

No specific form of notification of Lay off/ short time work is required. It is based on employer’s belief that the cessation is not permanent.

If the employee is laid off or is put on short time for more than four continuous weeks, or for six or more weeks within a thirteen-week period, he may be entitled to a redundancy payment. The employee may give notice to the employer of his intention to terminate the contract.  He is entitled to notice or pay in lieu of notice.  The employee may choose to terminate his contract by notice under the contract by not less than one week’s notice in writing.

The employer may give counter notice within seven days to the effect that it is able to provide at least 13 weeks’ work commencing within four weeks of receipt of the claim. The employee is not entitled to a redundancy payment in this case. The employer must give counter notice within seven days informing the employee that he will contest liability to pay redundancy payment.


Collective Redundancy

A collective redundancy arises where there are dismissals by an employer, for reasons unconnected with the employee there are within a period of 30 days, is

  • not less than five on the establishment employing between 20 and 50;
  • not less than 10 in an establishment normally employing 200;
  • not less than 10% of the employees in an establishment normally employing at least 100] but not less than 300’ and
  • at least 30 in an establishment employing 300 or more.

The employer must, with a view to reaching agreement initiate consultations with the employees’ representatives. They may be union, staff association or representative body. If there is no such body, the employees may choose a representative to represent them. The procedures must be initiated as soon as possible. It should be at least 30 days before the first notice of dismissal.

The consultations shall include the possibility of avoiding the proposed redundancies, reducing the number of employees affected and mitigating the consequences and the basis on which it was decided that particular employees will be made redundant.


Collective Redundancy Consultations

The employees’ representatives must be given the following information

  • the reason for the redundancies;
  • the number, description and categories of employees proposed to be made redundant;
  • the number of employees
  • description of categories normally employed
  • the period during which it is proposed to affect the redundancies
  • criteria proposed for the selection of employees;
  • the method of calculating redundancy payments.

Information must be revealed that comes to hand where it was not initially available at the start of the process.

If there is a failure to comply with the legislation, the employees or their representatives may complain to the Workplace Relations Commission. The WRC may require compliance. It may award compensation of such amount as is just and equitable in the circumstances but not exceeding four weeks of remuneration.  Failure to comply is an offence.


Collective Redundancy Notice to Department

The employer is obliged to notify the Department of Jobs Innovation and Enterprise

at least 30 days before the first dismissal., Certain information in relation to the company must be supplied to the Department including details of

  • the total number of employed
  • numbers, description, categories of those proposed to be made redundant
  • the period concerned
  • the reasons for proposed redundancies
  • the name and address of trade union. a representative
  • the date when consultations commenced and progress achieved

A copy of the notice must be given to the employees’ representatives.


Exceptional Collective Redundancies

There are rules on exceptional collective redundancies. There are compulsory collective redundancies where the redundant employees are to be replaced by new employees carrying out similar functions, who will enjoy significantly less favourable terms and conditions.

The Redundancy Panel considers whether there is an exceptional collective redundancy. Employer or employee representatives may refer the matter to the Panel. The parties must have

  • sought to resolve the matter by local engagement
  • acted reasonably and not in a manner to frustrate the possibility of an agreement on restructuring and the change necessary to secure the viability of the business and the best level of employment conditions; and
  • not had recourse to industrial action.

Procedures on Exceptional Collective Redundancies

Where the Panel decides that the redundancies are exceptional collective redundancies, it must within seven days request the Minister to seek and obtain from the Labour Court as opinion as to whether the proposal involves an exceptional collective redundancy or inform the Minister that the proposals have not been satisfied.

The Labour Court must hold a hearing as to whether there are exceptional collective redundancies. It may issue an opinion once satisfied the conditions have been satisfied. Where the Labour Court decides that the redundancies are exceptional collective redundancies and the employer decides to proceed with them, the Minister could formerly have refuse the redundancy rebates from the social insurance fund to which the employer would formerly have been entitled to.

No dismissal can take place during the reference period. No dismissal can take until seven days after the panel has received a request the period is extended further if the panel should refer the matter to the Labour Court


Unfair Collective Redundancy

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.


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