Redundancy for Employees With Less than Two Years’ Service – How Do I Handle It?

Posted in : How Do I Handle It ROI on 15 May 2020
Jennifer Cashman
Ronan Daly Jermyn
Issues covered:

We are unfortunately looking at making some of our staff redundant across our 4 units. The "last-in-first-out" rule will most likely apply. This will mean that majority of staff selected will be those with less than 2 years' service and therefore not entitled to redundancy payment. Are there any complications with dismissing employees with less than two years' service and what procedures do we have to follow?  How do we handle it?

The fact that the staff have less than 104 week's service simply means that they are not entitled to statutory redundancy payments. However, they still have all the same legal rights in terms of their selection and fair procedures being applied in the redundancy process.  They will all presumably have more than one year’s service and could therefore take an unfair dismissal claim against the company on the basis that the redundancy is not a genuine one, which does not appear to be the case here, or that they have not been fairly selected, which again does not appear to be an issue here, or that fair procedures have not been applied to them. It is this last issue that you need to take into account.

Unlike the provisions which apply to collective redundancies there is no statutory obligation to consult in individual redundancies.  However, the case law of the Workplace Relations Commission (“WRC”) has indicated that a two-week consultation period is a matter of best practice in individual redundancies.  It is important to also consider whether your organisation a custom and practice or a collective agreement in place which provides for a longer consultation period. 

In practical terms, employers sometimes consider having a shorter consultation period, where the redundancy is clearly genuine and unavoidable, with no real prospect of alternative employment. In those circumstances, if it is clear that a longer period would serve no benefit to the employee and the redundancy is fairly effected, this can be low risk from a procedural perspective.  

There is an obligation under the Unfair Dismissals Acts 1977-2015 for an employer to show that a dismissal, including a dismissal by reason of redundancy, was effected fairly.  Individuals may bring an unfair dismissal claim before the WRC on the basis the employer did not carry out the redundancy process fairly or reasonably.  The general purpose of the consultation period is to consider any proposals on how to avoid the redundancy, such as a pay cut or reduced working hours, and to examine whether there are any alternative positions within a company.  It is only after the consultation process, that it is confirmed that the position is actually redundant.  Until that point, the approach should be that the position is at risk of, or being considered for, redundancy. 

The purpose of the consultation process is to enable the employer to consider any suggestions made by the employee and the message should be that this is a consultation process, the purpose of which is to consider and discuss whether there are any means of avoiding the redundancy.

The WRC has consistently reinforced the obligation on employers to fully consider all possible alternatives to the termination of employment where a genuine redundancy situation exists.  In other words, while a particular role might be redundant, is there an alternative role available for the employee in question or are there any means of completely avoiding the reduction in numbers?

Practically speaking, this involves consideration by the employer of redeployment opportunities for any employee whose role is redundant along with a consideration of whether it is possible to avoid making a role redundant at all. A failure to consider alternatives will significantly weaken an employer’s defence against a claim for unfair dismissal.

The key to a fair and transparent consultation process is that you build in sufficient opportunities to consult the employee in one to one meetings so that you can explore reasons for his or her selection and the possibilities for avoiding dismissals properly.  

When the employee asks you about “his” redundancy remember that it is the position that is being proposed for redundancy and while of course this does apply to an individual, it is the roles and tasks associated with a particular position that may be made redundant.   When discussing matters with an employee, it is important to reinforce the fact that a proposed redundancy is not personal in any way whatsoever.

It is crucial to demonstrate that all efforts to consider alternatives to a redundancy are being considered.  You can emphasise to these employees in this case that your priority is to avoid redundancies where possible and that you are giving full consideration to potential alternatives and wish to do so in conjunction with the employees’ themselves.  At the outset however, it is important to inform the employees that you wish to be upfront with them and given that this is a restructuring and the impact of COVID-19 on your organisation, it is unlikely to be possible to find alternative positions.  

In terms of the exact process to be followed, it will vary individual circumstances but generally speaking, you should start with an at risk consultation meeting where you advise the employees that the roles are at risk of being made redundant and that you are entering into a two week consultation process with them to ascertain if there is any way of avoiding the proposed redundancies, as outlined above.   A letter should issue to them after that meeting confirming what was discussed at the meeting.

During that two-week period, you should take any feedback the employees wish to give you. At the end of the consultation and information period, the employees should be met with again to discuss whether any alternatives could be identified and, if not, confirming their redundancy.  At this meeting, the employees should be given formal notice of redundancy. A letter should then issue, setting out what transpired during the consultation period and the reasons for their redundancy. Employees should always be offered the opportunity to appeal against a redundancy.

Although the employees will not be entitled to any statutory redundancy payment, they will be entitled to any outstanding contractual entitlements, such as their notice period, outstanding annual leave and any other outstanding contractual payments which may be due.

 

This article is correct at 15/05/2020
Disclaimer:

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.

Jennifer Cashman
Ronan Daly Jermyn

The main content of this article was provided by Jennifer Cashman. Contact telephone number is +353 21 480 2700  or email jennifer.cashman@rdj.ie

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