Generally, a redundancy situation arises if a role ceases to exist and it is not replaced. The reasoning for the redundancy situation could be:
- The financial position of the company
- Lack of work
- Reorganisation or
- Complete closure of the company
The Redundancy Payments Acts 1967–2014 give a minimum entitlement to a redundancy payment for employees who have a set period of service with the employer. Not all employees are entitled to a statutory redundancy payment.
Employers and employees must follow specific redundancy procedures to comply with the legislation in Ireland.
To be eligible for a redundancy payment, an employee must meet the following requirements:
- Be aged 16 or over. (Since 8 May 2007 there is no upper age limit of 66.)
- Be in employment that is insurable under the Social Welfare Acts. Full-time employees under the age of 66 must be paying Class A PRSI (This insurability requirement does not apply to part-time workers – see below.)
- Have worked continuously for the employer for at least 104 weeks over the age of 16.
- Have been made redundant.
In deciding whether an employee has worked continuously for you, for at least 104 weeks (2 years), the following situations do not break continuity of service:
- The employee is on maternity, paternity, adoptive, parental or carer’s leave
- The employee was off work through illness, agreed absence, holiday’s or lay off
- The employee was dismissed due to redundancy before reaching 104 weeks’ service and then taken back by your employer within 26 weeks of that dismissal
- The employee has been re-employed within 4 weeks of dismissal by an associate company of your business
- The employee has been voluntarily transferred to another employer and it is agreed that the continuity of service will not be broken
- The employee is placed back in your employment under the unfair dismissal’s legislation
- The employee is on strike or locked out of your employment
- There has been a transfer of the business to a new owner
The same rules apply to an apprentice and the employee may qualify for a redundancy payment unless they are dismissed within one month, after the end of their apprenticeship.
The Redundancy Payments Act 2003 amended the insurability requirements for redundancy to ensure the rights of part-time workers to statutory redundancy. This amendment brings them into line with the Protection of Employees (Part-Time Work) Act 2001, which provides that part-time employees cannot be treated in a less favourable manner than comparable full-time employees in relation to conditions of employment.
It means that the right of certain part-time workers (such as those in casual employment or in employment of inconsiderable extent) to statutory redundancy is recognised. They must still meet the requirement for 2 years’ continuous service as described above.
Redundancy should always be a last option, so you will need to look at all other alternative options first (see previous two posts).
A redundancy means the employee is being dismissed as you no longer have a requirement for that role. It is always a role that becomes redundant, not a person.
If you find yourself in this situation, the first thing to do is to refer to your Contracts of Employment and Employee Handbook and see what they say about redundancy, what you and your employees have signed up for, and let them inform you.
Consultation with employees is one of the obligations that must be met.
If the role being made redundant is not skill specific, that is you have multiple employees performing the same role, you can ask for volunteers. If the role is skill specific, voluntary isn’t an option.
A minimum of 2 weeks’ notice must be given for a redundancy and this increases with an employee’s length of service.
Having Objective and Justifiable Selection Criteria is another obligation that must be met. This could be last in first out, or on skills but skills matrix or based on performance but these can be trickier and you’ll need a trail of objective documentation to support your criteria. Whatever criteria you choose, you will need to apply it consistently across a department or the business. You should also consider any precedent set in the past or any custom and practice.
Consider input and suggestions from employees, especially if they highlight skill’s they have that you were not aware of. Move slowly and deliberately through the process. If you rush the process, it may come against you later, if there is a challenge. When employees make suggestions, thank them and do explore their suggestions, and give them due consideration, because some might be valid, and you might save yourself a redundancy and the associated costs.
Consider what employees can be trained to do other jobs.
Be conscious of equality legislation, particularly as it applies to the 9 protected grounds.
Changes to Redundancy rules during COVID-19
The law on claiming redundancy from an employer if an employee has been temporarily laid off, or temporarily put on short-time work has changed during the COVID-19 emergency period.
Normally, if an employee is laid off or put on short-time hours, they can claim redundancy from their employer, after 4 weeks or more, or 6 weeks in the last 13 weeks.
If you were put on lay off or short-time hours because of COVID-19, you cannot claim redundancy. This is set out in the Emergency Measures in the Public Interest (COVID-19) Act (pdf) and applies from 13 March 2020.
This rule has been extended until 30 November 2020.
The Redundancy Consultation Process is of the utmost importance. It can be challenging but when operated well, this process can yield good results and helps to keep the trust in the relationship.
Nothing can be agreed or implemented until the consultation process and period is completed.
As soon as you know that you need to invoke a redundancy begin the process. Don’t give the grapevine time to spread rumours.
Consultation can be done in person or remotely online. You will need to check what the employee would prefer.
You can offer an alternative, lower paid role to an employee, but it must be accepted and agreed by the employee, in writing.
For example, if a role at a particular rate of pay can no longer exist, because the business is unable to sustain it, that position can be made redundant because it no longer exists. It may happen, that you are still going to have a need for someone to do part of that job, but it’s going to be at a lower salary. You can have that conversation with the employee and offer them the alternative lower paid role.
If they accept it that’s fine, and then you need to issue a new contract because it is a different job and a different rate of pay.
You can also negotiate a delayed redundancy through the consultation process, again with written acceptance and agreement from employees. This may come into play if the changes to the Redundancy legislation are extended beyond 30 November 2020.
For example, an employer can engage in a consultation process with employees and get written, signed agreement, that the company is not going to look at redundancy right now, but if things have not improved by a particular date next year, then you will review the situation again at that time. There are a lot of employees who don’t want to lose their jobs, so this is an option, but it has to be negotiated and agreed, in writing.
The consultation process paperwork also needs to be carefully managed. Every employee has the right to submit a data request and there should not be any documented evidence that the redundancy was a “fait accompli” before getting to the end of the consultation process.
If you have employees that are out on sick, maternity, or any other leave, make sure you include them in the consultation process.
This also applies for someone who has just returned to the organisation. Go to even greater lengths with these employees so you can demonstrate that you did everything to try and engage a fair consultation process. It can be text messages, WhatsApp messages, anything that you can print as phone calls are harder to capture.
Remember to keep the detailed paper trail at each step along the way. Failure to consult has an award of up to 4 weeks wages per employee. Claims of Unfair Dismissal, Unfair Selection for Redundancy or Discrimination have awards of up to 2 years pay.
- LET THEM KNOW – Inform employees their role is ‘At Risk’ of being made redundant and is being considered as part of the redundancy process. Tell them why and what has happened. Let employees know you have exhausted all other options.
- Put this in writing to each employee whose role could potentially be affected. Give the employees their required notice in the first consultation meeting. You will be giving them a letter to say their job is at risk and if it turns out that their role is being made redundant, the day of redundancy will be at the end of the required notice period.
- INVITE SUGGESTIONS – for alternative measures or solutions.
- LISTEN TO ALL SUGGESSTIONS – and give employees adequate time to put forward their suggestions. Thank them for their inputs, explore them and give them due consideration. For example, you might have an employee in another side of the business who has qualifications in accounting, but you are not using them because they are not employed in that role. They could say that they would like to be considered for an available role in accounting. Be open to that and give it due considerations.
- DISCUSSIONS WITH EMPLOYEES – A week after the first consultation meeting, meet with the employees again and discuss their suggestions, how you have explored them and how you discussed them with relevant people. Tell them who you spoke to and what you did with their ideas and suggestions and how you explored them to see if you could do something with them or not and tell them what your decision is.
- FURTHER SUGGESSTIONS – Give employees a further opportunity to put forward suggestions or alternative options or to consult further with you regarding their role being made redundant. Put this in writing then go back to them at the end of week 2 with any secondary suggestions that came through. If suggestions are not feasible, at the beginning of week 3 give them the letters to say that the redundancy is going ahead.
- You will want to show how you have done everything you can to avoid having to go down the redundancy road and that it really is a last resort.
Next week, I’ll cover the Redundancy Payments, PUP, EWSS and Redundancy, Collective Redundancies and Managing Employee Reactions.
Thank you for reading and engaging with me here. If this is a current issue for you or you would like some more information or support, please contact me at email@example.com.