Collective Redundancy – an Overview of the LawPosted in : Reddy Made Contracts on 14 April 2020
With the IMF warning “of the worst recession since the Great Depression”, employers are keeping business sustainability under review. While most employers are hoping to avoid redundancies, only time will tell if this hope can be realised as the Covid-19 pandemic continues.
In considering business sustainability measures, employers need to be conscious of the statutory provisions in relation to collective redundancy and whether it applies to the business.
Below is an overview of some of the key elements in the legislation.
What is a Collective Redundancy?
A collective redundancy is a redundancy that involves making a specified number of employees in an establishment redundant within a 30 days consecutive period.
What are the Thresholds?
The specified number of employees varies depending on the size of the employer’s workforce. The statutory thresholds are:-
Threshold Number and Redundancies
5 or more
10 or more
10% or more
300 or more
30 or more
Collective redundancies are governed by the Protection of Employment Act 1977, together with a number of statutory instruments.
If I reduce my workforce below the threshold, can I avoid the application of the legislation?
No. For the purpose of the legislation, the number of employees normally employed is taken as an average number of employees in the 12 months before the date on which the first dismissal takes effect.
What are an employer’s obligations in a Collective Redundancy Situation?
In a collective redundancy situation, an employer is required:
- To supply certain information to the employee’s representatives and to consult with the employee’s representatives;
- To notify the Minister of the proposed collective redundancies and to provide certain information to the Minister.
Who are the employee’s representatives?
Employees’ representatives in relations to the employees who are or are likely to be affected by the proposed collective redundancies means:
- a trade union, staff association or accepted body with which it has been the practice of the employer to conduct collective bargaining negotiations; or
- in the absence of such a trade union, staff association or excepted body, a person or persons chosen (under an arrangement put in place by the employer) by such employees from amongst their number to represent them in negotiations with the employer.
If the first point above does not apply, the employer can decide on the election mechanism to put in place an election mechanism and define constituencies (i.e. classes of affected employees who can appoint their own representative) and the number of representatives for example. Once the election mechanism has been put in place by the employer, it will be up to the potentially affected employees to elect the representatives.
What information must the employer provide to the employee representatives?
The legislation requires the employer to give the employee representatives all relevant information relating to the proposed redundancies. The legislation sets out the specific information that must be given to employees in writing.
The Company is also required to provide copies of all information supplied to the Employee Representative to the Minister as soon as possible.
What about consultation with the employee representatives?
The legislation requires consultation to be “initiated at the earliest opportunity and in any event at least 30 days before the first notice of dismissal is given”.
Accordingly, no notice of dismissal or confirmation of redundancy may be given during the protected consultation period. Effectively, this consultation period acts as a moratorium on the Company giving any notice to dismiss any of the employees.
Consultation must include discussions on:-
- the possibility of avoiding the proposed redundancies, reducing the number of employees affected by them or limiting their consequences by recourse to accompanying social measures aimed, inter alia, as aid for redeploying or retraining employees made redundant;
- the basis on which it will be decided which particular employees will be made redundant (i.e. the selection criteria to be applied).
Unwillingness on the part of the Company to seek agreement (for example, by suggesting that certain decisions are already a fait accompli) can lead to a breach of the requirements.
Once the consultation process has concluded with the employee representatives and the employees at risk of redundancy have been identified (based on fair selection criteria), consultation with the individual employees must occur. Collective consultation is not an adequate substitute for individual consultation. Individual consultation must also be carried out with the at risk employees.
An employer who fails to initiate consultations or fails to provide the information required as set out above shall be guilty of an offence and shall be liable on summary convictions to a fine not exceeding €5,000.
Failure to consult could also result in a complaint to the WRC or potentially an injunction application.
What about notification to the Minister?
An employer is obliged to notify the Minister of Employment Affairs and Social Protection of the proposed redundancies and in any event at least 30 days before the first dismissal takes effect.
Failure to notify the Minister in accordance with the legislation can leave an employer liable to a fine of up to €5,000.
If any collective redundancies take effect before the expiry of the 30 days which begins on the day that notification is given to the Minister, the employer shall be guilty of an offence and liable to conviction on indictment to a fine not exceeding €250,000.
The information that must be provided to the Minister in writing is set out in legislation.
An employer is also required to provide the employee’s representatives with a copy of the notification to the Minister as soon as possible. The employee representatives are entitled, if they think appropriate, to forward any written observations to the Minister in relation to the notification and the redundancies.
The Minister can require the employer to enter into consultation with the Minister or an authorised officer to seek solutions to the problems caused by the proposed redundancies. The employer is obliged to supply the Minister or an authorised officer with any information relating to the proposed redundancies which the Minister or the officer may reasonably require. The authorised officers are entitled to enter into the employer’s premises and make enquiries to be satisfied that the acts have been complied with.
The 30-day mandatory information and consultation process with the employee representatives and the 30 day period for the notification to the Minister may run concurrently. However, since it will not be possible to complete the notification to the Minister until the identity of the employees’ representatives has been established, it is likely that both periods may not be entirely concurrent where the employer has to allow time for the facilitation of the election of employee representatives.
Can an employee on lay off or short time trigger redundancy?
Normally yes, but during the current Covid-19 Pandemic emergency period, no.
Under the Redundancy Payments Act, an employee who is on lay off or short time can trigger redundancy if on lay off or short time for:-
- for 4 or more consecutive weeks; or
- for a series 6 weeks or more within a period of 12 weeks
However, the Emergency Measures in the Public Interest (Covid-19) Act has temporarily suspended an employee’s right to trigger redundancy during the “emergency period”. The “emergency period” is currently defined as ending on the 31 May 2020, but this period may be extended.
Does this provision affect an employer’s right to trigger redundancy?
No, an employer is entitled to trigger redundancy at any time during the Covid-19 emergency provided a redundancy situation exists. Prior to making the decision to implement any redundancies, employers should consider whether the collective redundancy provisions apply. Whether or not they apply a consultation process should be initiated by the employer. Failure to do so may leave an employer open to a successful claim for Unfair Dismissal.
Redundancy law is complex and if the redundancies anticipated are captured by the collective redundancy legislation, additional care is needed in conducting the process.
Read more from the Reddy Made Contracts Series
The information in this article is provided as part of Legal-Island's Employment Law Hub. We regret we are not able to respond to requests for specific legal or HR queries and recommend that professional advice is obtained before relying on information supplied anywhere within this article.