EMPLOYMENT CASE LAW / HUMAN RESOURCE MANAGEMENT - The redundancy process
The definition of redundancy is set out in the Redundancy Payments Act 1967 and amended by the Redundancy Payments Act 1971 - 2014, and outlines that a genuine redundancy occurs where one of the following arise:
The Process
If an Organisation is in the situation where redundancy is becoming a real possibility then there is a requirement to start consulting as to whether or not there should be any redundancy and what alternatives there might be to resolve the situation.
The first step of a redundancy process is to advise the Employee(s) in question that their role is “at risk”. An Organisation is required to consult with the individual(s) in question about the nature of the problem, and what they need to achieve so that alternatives can be fully considered. All relevant information must be provided to Employee(s). This consultation is supposed to be meaningful so no decision should have taken place prior to this stage of the process.
The ‘at risk’ meeting with the Employee(s) prior to making the decision to dismiss due to redundancy is viewed as being fair and reasonable. Indeed, it is one of the conditions looked at in determining whether a dismissal by redundancy is fair or not, and whether the conduct of the Employer was reasonable.
Following on from the “at risk” meeting, Employers should meet again with Employee(s) to discuss whether any alternatives have been discovered and whether they can reduce the number of, or prevent the redundancies. If at this stage that it is found that there are no suitable alternatives, then formal notice of redundancy would be given.
Possible Alternatives:
As part of every redundancy process, an Employer should:
Collective Redundancy:
A collective redundancy situation applies to Organisations with at least 20 Employees where, in any 30 days, the number of redundancies is:
Notice Periods:
Under the Redundancy Payments Acts, a minimum of 2 weeks’ notice is required. However, Employees are entitled to the greater of notice as per the Minimum Notice and Terms of Employment Acts 1973 - 2005 or as outlined within their Contract of Employment prior to termination of their employment. The Minimum Notice and Terms of Employment Acts 1973 – 2005 includes the following notice periods:
Redundancy Payment:
The Redundancy Payments Acts 1967–2014 provide a minimum entitlement to a redundancy payment for Employees who have a set period of service with an Employer. Not all Employees are entitled to the statutory redundancy payment, even where a redundancy situation exists.
At present, Employees qualify for a statutory redundancy provided they have at least 104 consecutive weeks service with their Employer (and provided they are over the age of 16 years).
The statutory redundancy payment is a lump-sum (tax free) payment based on the pay of the employee. All eligible employees are entitled to:
A few Do’s and Don’ts to keep in mind...
Do:
Don't:
If you require assistance with regards to a redundancy process, contact the team at Adare Human Resource Management – info@adarehrm.ie / 01 5613594.
- The Employer ceases to carry on the business for which the Employee was employed, or ceases to carry on the business at the same place where the Employee was employed;
- The need for work of a particular kind has ceased or diminished in that particular Organisation;
- The Employer has decided to carry on the Organisation with fewer or no Employees;
- The work which the Employee performed is to be performed in a different way and the Employee is no longer qualified to undertake the work; or
- The Employee’s work is to be undertaken by another person who is sufficiently qualified and capable to undertake other work for which the Employee is not sufficiently qualified or trained.
The Process
If an Organisation is in the situation where redundancy is becoming a real possibility then there is a requirement to start consulting as to whether or not there should be any redundancy and what alternatives there might be to resolve the situation.
The first step of a redundancy process is to advise the Employee(s) in question that their role is “at risk”. An Organisation is required to consult with the individual(s) in question about the nature of the problem, and what they need to achieve so that alternatives can be fully considered. All relevant information must be provided to Employee(s). This consultation is supposed to be meaningful so no decision should have taken place prior to this stage of the process.
The ‘at risk’ meeting with the Employee(s) prior to making the decision to dismiss due to redundancy is viewed as being fair and reasonable. Indeed, it is one of the conditions looked at in determining whether a dismissal by redundancy is fair or not, and whether the conduct of the Employer was reasonable.
Following on from the “at risk” meeting, Employers should meet again with Employee(s) to discuss whether any alternatives have been discovered and whether they can reduce the number of, or prevent the redundancies. If at this stage that it is found that there are no suitable alternatives, then formal notice of redundancy would be given.
Possible Alternatives:
As part of every redundancy process, an Employer should:
- Lay-off occurs where the services of an Employee are not required to work for a specified period of time due to a lack of need for work to be carried out by that Employee, or until the reasons for the lay-off no longer exist. The Employer must give advance notice that the break in employment is of a temporary nature otherwise the Employee could claim statutory redundancy (most contracts of employment allow for this option).
- Short-time occurs where there is a reduction in the amount of work available leading to a reduction in the number of hours worked, which is less than 50% of normal weekly working hours or his / her pay is less than half of his / her normal take home pay.
- Other options can include redeployment, voluntary redundancy and/or seeing if staff will agree to a reduction in hours so that cuts can be made without anyone losing their employment.
Collective Redundancy:
A collective redundancy situation applies to Organisations with at least 20 Employees where, in any 30 days, the number of redundancies is:
- 5 Employees in an Organisation with 20 – 50 Employees.
- 10 Employees in an Organisation with 50 – 100 Employees
- 10% of the workforce in an Organisation with 100 – 300 Employees.
- 30 Redundancies in an Organisation with 300 or more Employees.
- Notify, in writing, the Minister for Employment Affairs and Social Protection of the proposals at least 30 days in advance before the first dismissal takes place;
- Enter into consultations, at least 30 days in advance before notice of redundancy is given, with a view to agreement with staff representatives.
- Provide Employees with the following information: the reasons for the redundancy, the number / descriptions of Employees affected, the number / descriptions of Employees normally employed, the period in which the redundancies will happen, the criteria for selection of Employees and the method of calculating any redundancy payment.
Notice Periods:
Under the Redundancy Payments Acts, a minimum of 2 weeks’ notice is required. However, Employees are entitled to the greater of notice as per the Minimum Notice and Terms of Employment Acts 1973 - 2005 or as outlined within their Contract of Employment prior to termination of their employment. The Minimum Notice and Terms of Employment Acts 1973 – 2005 includes the following notice periods:
- 13 weeks to 2 years – 1 weeks’ notice
- 2 and 5 years – 2 weeks’ notice
- 5 and 10 years – 4 weeks’ notice
- 10 and 15 years – 6 weeks’ notice
- Over 15 years – 8 weeks’ notice
Redundancy Payment:
The Redundancy Payments Acts 1967–2014 provide a minimum entitlement to a redundancy payment for Employees who have a set period of service with an Employer. Not all Employees are entitled to the statutory redundancy payment, even where a redundancy situation exists.
At present, Employees qualify for a statutory redundancy provided they have at least 104 consecutive weeks service with their Employer (and provided they are over the age of 16 years).
The statutory redundancy payment is a lump-sum (tax free) payment based on the pay of the employee. All eligible employees are entitled to:
- Two weeks' pay for every year of service, and
- One further week's pay.
A few Do’s and Don’ts to keep in mind...
Do:
- Consult with Employee(s) at all stages before making any decisions as part of the “at risk” stage of the process,
- Consider alternative suggestions which may be put forward,
- Use objective selection criteria based on skills requirements and ensure the selection method is fair and transparent,
- Avoid potentially discriminatory criteria,
- Provide details of all alternative employment which might exist within the Organisation,
- Adhere to notice periods in Contracts of Employment, as well as minimum notice set out in legislation, and
- In the event of a Collective Redundancy, ensure you adhere to the additional steps required.
Don't:
- Make decisions based on the individual in question,
- Use redundancy to deal with capability/conduct issues,
- Use subjective criteria which cannot be justified,
- Make decisions before speaking to the Employee(s) in question, and
- Limit the details of alternative roles which might be available.
If you require assistance with regards to a redundancy process, contact the team at Adare Human Resource Management – info@adarehrm.ie / 01 5613594.
