Redundancy Guidelines For Employers

redundancy

It should be pointed out that the below recommendations relate only to procedural matters in embarking on a redundancy plan. Irrespective of any steps adopted or advices followed it is the case that any employees that are made redundant and subsequently pursue a claim against the Employer alleging unfair selection for redundancy and accordingly a claim for unfair dismissal. If an employee who has been dismissed brings a claim before the Employment Appeals Tribunal alleging Unfair Dismissal, there is a presumption that the dismissal is unfair, and the onus rests on the Employer to discharge that presumption. The purpose of taking professional legal advice and adopting a fair consultation and selection process is to make it more difficult for a potential claimant to succeed on the grounds of failure to adhere to proper procedures.

1. What is a “Redundancy”?

Before setting out the recommended procedures to be adopted in a redundancy situation it is necessary to set out what, in fact, constitutes a “redundancy.” The relevant definition arises from the Redundancy Payments Act, 1967, Section 7(2) as amended by Section 4 of the Redundancy Payments Act, 1971, and Section 5 of the Redundancy Payments Act, 2003. An employee who is dismissed shall be taken to be dismissed by reason of redundancy if, for one or more reasons not related to the employee concerned, the dismissal is attributable wholly or mainly to a number of situations outlined in Section 7(2), as amended.

If an employee’s employment is terminated by reason of a valid redundancy situation, and the employee is fairly selected for redundancy, then the termination will not constitute an unfair dismissal. It is important to note that both criteria must be met, ie:

• a valid redundancy situation must arise; and
• a fair and transparent selection procedure is adopted.

2. Redundancy Criteria

In order for a valid redundancy situation to apply the following criteria must apply:

• There is a requirement that there is a change in the workplace. That can be anything from a shutting down of a business to a reorganisation. Similarly it can involve a change in the way the work is done, or in the nature of the job.
• There is a requirement of impersonality i.e. in order for a valid redundancy to exist it must be unconnected to the particular employee who is to be made redundant.
• The termination must arise “wholly or mainly” by reason of redundancy. Hence evidence of disagreements with management may give rise to a claim that a termination lacks the impersonality to amount to a valid redundancy and/or that the termination did not arise wholly or mainly by reason of redundancy, but rather for other, unconnected reasons.

If, having satisfied itself that there is a legitimate need to effect redundancies, the Employer must then consider the most appropriate method to apply to the selection of employees.

3. Collective Redundancies

If the Employer is proposing to affect Collective Redundancies then it is necessary to consider the provisions of the Protection of Employment Act 1977. A collective redundancy is one in which, in any period of 30 consecutive days, the number of dismissals reaches or exceeds:

• 5 in a business employing more than 20 and less than 50;
• 10 in a business employing at least 50 but less than 100;
• 10% of employees in a business employing at least 100 and less than 300; and
• At least 30 in a business employing 300 or more

4. Consultation Process

(1) A letter to the employees should invite a representative of the employees to be appointed. That person will engage with management of the Employer in regard to alternative solutions and if necessary, redundancies.

(2) Once a representative is appointed that person should be consulted with regard to possible alternative solutions and further in regard to the selection criteria, if redundancy becomes an unavoidable solution.

(3) Consultations are to take place as soon as possible. The consultations must occur no later than 30 days before the first dismissal is affected.

(4) After the consultation the Employer is obliged, by the virtue of the Protection of Employment Act, 1977 to supply the employees’ representative with all relevant information in writing seting out the following information:

(a) The reasons for the proposed redundancies;
(b) The number and description of the categories of employees whom it is proposed to make redundant;
(c) The number of employees, and description of categories, normally employed;
(d) The period during which it is proposed to effect the proposed redundancies;
(e) The criteria proposed for the selection of the workers to be made redundant; and
(f) The method of calculating any redundancy payments other than those methods set out in the Redundancy Payments Acts 1967 to 2007.

(5) The persons whom it is intended will be made redundant should be invited to attend individual meetings with selected management personnel of the Employer and each employee should be invited to make submissions in relation to possible alternative solutions to redundancy.

(6) If a “collective redundancy” is being considered then the Employer has an obligation to notify the Minister for Jobs, Enterprise and Innovation of the proposed redundancies at the earliest opportunity and again, in any event, at least 30 days before the first dismissal takes effect.

(7) Having addressed all of the above matters it is then in order to serve formal notification of redundancy which involves furnishing the RP50 Form to each employee selected. Each employee who has 104 weeks continuous service is entitled to statutory redundancy equating to 2 weeks per year of service, and an additional bonus week. The Employer can process a rebate of 60% of that payment by furnishing a copy of the RP50 to the Social Insurance Fund thereafter.

For further information on the law applying to redundancy matters please contact Edward Johnston of this office at ejohnston@gjs.ie