Redundancy OverviewPosted in : HR Updates ROI on 22 June 2023
For many reasons, numerous businesses every year are faced with re-structuring their organisations. Some of these reasons may include: the need for the worker has diminished or ceased, a new process or system is introduced which has caused a job to be unnecessary or the workplace has closed or is closing down. Unfortunately, decisions have to be made to maintain the survival of many organisations; these tough decisions will often include redundancy. When an employer decides they may need to make a role redundant it is vital to seek advice on the process, especially the consultation phase required under Redundancy Payments Acts of 1967 – 2007 to eliminate risks to the business.
In selecting employees for redundancy, the Company must apply selection criteria that are reasonable and are applied in a fair manner. The Company should consider all options, including possible alternatives. If there is an alternative position available it must be put to the employees. If they refuse a reasonable offer then it may be a case that they lose their entitlement to a redundancy payment. An employee may take up an alternative position on trial for up to four weeks.
It is very important to note that redundancy is still a termination of employment therefore a risk is attached to same. Although a redundancy situation may exist, employees may have grounds for complaint if the manner of the selection for redundancy was deemed unfair or that a genuine redundancy situation does not exist. An employee can take a case under the unfair dismissals legislation and be awarded up to two years of salary. Recent WRC decisions have excluded any statutory redundancy payments made when calculating the award. The amount of the award can vary significantly from case to case, depending on the circumstances, and does not include costs associated with preparation of the submissions for the day on behalf of the Company and legal costs for representation i.e., a HR Consultant / Solicitors, etc.
Under the unfair dismissal’s legislation, selection for redundancy based on certain specific grounds is considered unfair. These include redundancy as the result of an employee's trade union activity and any of the protected grounds outlined in the Employment Equality Acts.
To qualify for redundancy payments, employees must have:
- Worked continuously for at least 104 weeks over the age of 16.
- The position they hold must cease to exist. It is important to remember that it is always the position not the person that is made redundant.
Employers should note contractual notice periods that an employee is entitled to which will impact on their termination date for the calculation of any statutory redundancy payments.
Collective redundancies arise where, during any period of 30 consecutive days, the employees being made redundant are: 5 employees where 21-49 are employed, 10 employees where 50-99 are employed, 10% of the employees where 100-299 are employees, 30 employees where 300 or more are employed. The redundancy legislation requires that the Company must consult with the employees as soon as is reasonably practical but not later than 30 days in the case of collective redundancy. The following matters should be addressed in the employee consultancy phase:
- The reasons for the redundancy
- The number and descriptions of the employees affected
- The number and descriptions of employees normally employed
- The period in which the redundancies will happen
- The criteria for selection of employees for redundancy
- The method of calculating any redundancy payment, e.g. just statutory or an additional ex gratia
The employer is also obliged to inform the Minister for Enterprise, Trade & Employment in writing of the proposed redundancies at least 30 days before the occurrence of the first redundancy.
An employee who has been given a "Notice of Proposed Dismissal for Redundancy" may choose to leave their job before the redundancy date that has been given to them, for instance, to accept an offer of alternative employment. If they don't use “Form RP6 - Leaving Before a Redundancy Ends” to notify their employer in writing, they risk the danger of losing any entitlement to redundancy compensation if they decide to leave. A request of this nature may be granted or denied at the employer's discretion. It should be noted that a person's eligibility for a redundancy pay-out may be impacted if they leave without the employer's consent within the notice period.
If an employee has been laid off or working short-term for four consecutive weeks, or for 6 weeks out of the previous 13 weeks, they may notify their employer on “Form RP9 - Lay Off and Short-Term Processes” of their decision to request a redundancy pay-out. Certain restrictions relating to layoffs and short-term employment were postponed by the Emergency Measures in the Public Interest (Covid 19) Act 2020. However, these postponements have now been lifted. An employer has the opportunity to either accept this or to give ‘counter notice’. Counter notice must confirm that there will be full time work available again within the next 4 weeks and must last for a further 13 weeks without lay off or reverting to short term.
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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.