Redundancy Guide Ireland

Your Questions Answered

Volume 1.

What is Redundancy ?

If an employee is dismissed by the employer by reason of Redundancy, or if the employee is laid off, or kept on short-time, they will be entitled to a redundancy lump sum payment from the employer, if they have the requisite service period and the employee is in insurable employment.  This just means that the employee is in employment where the employer is liable to pay PRSI.

Was I Unfairly Dismissed ?

If an employee is dismissed and has a concern a genuine redundancy situation did not arise, then may have the option of making a claim under the Unfair Dismissals Acts.

A dismissal by redundancy is a defence to an unfair dismissal claim. The redundancy must have been a genuine redundancy though.  

There is a significant difference between a genuine redundancy and a faux redundancy.

There are a set number of reasons set out by the legislation whereby a dismissal can be a dismissal by reason of redundancy. A redundancy is not a redundancy because an employer says it is a redundancy.

If a case for unfair dismissal arises, the employer states there was a genuine redundancy situation, the employee says there wasn’t, the Adjudication Case Officer will look behind the veil of redundancy in the case, to apply the law to the facts.

S.5 of the Redundancy Payments Act 2003 is crucial to understand dismissal by redundancy correctly. It states:

5.—Section 7(2) of the Principal Act is amended by inserting “for one or more reasons not related to the employee concerned’’.

In essence it is the Position – not – the Person that becomes redundant.

If an employer makes an employee redundant citing reasons of work performance, the dismissal then relates to the individual employee and not the position. In this case, an unfair dismissal action can possibly arise.

Selection & Redundancy

The selection of one employee over another and the Criteria used by the employer must be created and designed fairly.

In UD206/2011 it was stated:

“When an employer is making an employee redundant, while retaining other employees, the selection criteria being used should be applied in a fair manner.

While there are no hard and fast rules as to what constitutes the criteria to be adopted nevertheless the criteria to be adopted will come under close scrutiny if an employee claims that they were unfairly selected for redundancy.  

The employer must follow the agreed procedure when making the redundancy. Where there is no agreed procedure in relation to selection for redundancy, as in this case, then the employer must act fairly and reasonably.

The following are some questions an employee who considers they were unfairly selected for redundancy should ask themselves.

When was the decision taken to dismiss the employee ?. Was the decision to dismiss the employee taken before the consultation meeting took place ? for example.

Was a worthwhile and genuine Consultation conducted with the employee prior to being made redundant ? and were suitable alternatives considered ?.

Was there a discussion regarding the criteria to be used ?. Was the employee made redundant asked for their input into the criteria used ?. Was there much consideration given to any alternatives to redundancy ?.

Redundancy is about the jobs position being no longer viable. It is not about the employee.

Some employers seem to consistently misunderstand this when applying selection criteria.

Employees will know the role they have been doing themselves. They will know instinctively if the selection criteria were designed with fairness in mind or not.  

Genuine Redundancy & Fair Selection

In C. V O.L. UD 219/2009 it was stated that the ‘’best practice’’ was to ‘’carry out a genuine consultation process’’ before reaching any decision on redundancy.

Questions for employees to ask themselves are, was there discussions about how to save the jobs ? Were alternatives considered by the employer ? Did the employer consult with the employees in a1consultation process ?. A consultation process is not a box ticking exercise.

In M. V J2 G. I. L. UD1369/2008 it was found the complainant was not adequately consulted.

In JVC E.L. V P. 2012 ELR 70 it was stated that :

It might be “prudent and a mark of genuine redundancy that alternatives to letting an employee go should be examined” and that “a fair selection procedure may indicate an honest approach to redundancy by an employer”.

In M. V K. [1993] ELR 35 it was stated that “it is well established that there is an obligation on an employer to look for an alternative to redundancy”.

Selection Criteria should be reasonable and have objective criteria across the board.

Redundancy Process

A reasonable redundancy process could involve:

  • Warning employees that the redundancies are possible;
  • Making genuine assessments and attempts to prevent the redundancies;
  • Setting out clearly what the objective criteria are for the redundancy selection;
  • Giving employees the opportunity for their input.
  • KiEngaging in a consultation process with the employees.

How is Redundancy Calculated ?

To calculate Redundancy you need the Date of Commencement, the Date of Termination, and the Gross Weekly Sum.

By typing in the above information to a Redundancy Calculator, you can find many online, it will give you the sum you are entitled to.

Redundancy Payments ?

If the employee has 104 weeks continuous service completed with the employer, is in insurable employment, they are entitled to two weeks of the employee’s normal weekly salary by the number of years continuous employment and one weeks salary.

When is Redundancy Paid ?

Once the employee has been dismissed they must be paid the redundancy lump sum if a number of conditions are met.

Am I entitled to Redundancy if I resigned ?

There is legal provision for this at S.9 (1)(c) of the Redundancy Payments Act 1967(as amended) which has the effect that an employee can terminate their own employment, if this is due to the employers conduct, and is still able to claim redundancy.

The employer’s conduct could be many things, however, an example is if an employer changed a term of contract unilaterally, such as demanding an employee change a place of employment to a different part of the country.

In most scenarios it will be the employer who terminates the employment, and the employee then seeks the redundancy lump sum payment.

What are the different reasons for Redundancy ?

There are 5 reasons set by Law whereby a dismissal constitutes a redundancy.

These are:

 a) the fact that his employer has ceased, or intends to cease, to carry on the business for the purposes of which the employee was employed by him, or has ceased or intends to cease, to carry on that business in the place where the employee was so employed, or

(b) the fact that the requirements of that business for employees to carry out work of a particular kind in the place where he was so employed have ceased or diminished or are expected to cease or diminish, or

(c) the fact that his employer has decided to carry on the business with fewer or no employees, whether by requiring the work for which the employee had been employed (or had been doing before his dismissal) to be done by other employees or otherwise, or

(d) the fact that his employer has decided that the work for which the employee had been employed (or had been doing before his dismissal) should henceforward be done in a different manner for which the employee is not sufficiently qualified or trained, or

(e) the fact that his employer has decided that the work for which the employee had been employed (or had been doing before his dismissal) should henceforward be done by a person who is also capable of doing other work for which the employee is not sufficiently qualified or trained.

Many of the above genuine reasons for redundancy relate to the economic need of the enterprise. Redundancy dismissals are not about the employee’s personality, performance or a personality clash with the employer, for example. Genuine redundancy situations are impersonal to that employee.

Reasonableness of Employer

If an employee considers they were unfairly selected for Redundancy and hence unfairly dismissed, the Adjudication officer (decision-maker) will consider the Reasonableness or otherwise of the conduct of the employer to assess if an unfair dismissal arose.

It is unreasonable for an employer to not have a proper consultation process in place with an employee regarding the selection process for redundancy, for example.

Notice of Redundancy

An employer must give an employee 2 weeks-notice of the dismissal by reason of redundancy not later than 2 weeks before the date of dismissal.

Right to Redundancy

If an employer dismisses an employee and the reason for the dismissal is redundancy, then the employee is entitled a redundancy payment, as specified in S.19 of the Redundancy Payments Act 1967, if a number of conditions are met.

What constitutes a redundancy situation is set out clearly in the legislation under S.7 (2) of the Redundancy Payments Act 1967.

Right to Redundancy – Service Period

For an employee to be entitled to a Redundancy lump sum, they must have satisfied the requisite service period with the employer.

This is 104 weeks.

Impersonality & Change

Two key features in genuine redundancy situations are impersonality and change.

In any case for unfair dismissal that relates to redundancy, the facts will be assessed to ascertain if the redundancy was genuine or not.

A dismissal by reason of redundancy must be for a genuine redundancy reason.

The second hurdle an employer has to overcome when defending a claim for unfair dismissal by reason of redundancy is that of impersonality.

In simple terms the decision to dismiss must have a causal connection to the position becoming redundant, as opposed to being related to the employee in question.  

When are you not entitled to Redundancy ?

Re-engagement with Same Employer

Say the directors of an IT company have decided to wind up the company, but have offered the employee suitable alternative employment in a company owned by the same company.

If this employee refuses to take up the similar role employment position, can they still apply and are they entitled to obtain the statutory redundancy payment ?.

The law on this is set out in S. 15 of the Redundancy Payments Act 1967(as amended).

This states that an employee is not entitled to a redundancy payment, if the employer has offered to renew the contract, or re-engage him/her under a new contract with the same employer.

The terms and conditions of the new employment position should be similar to the persons old role.

If an employee ‘’unreasonably refused the offer’’ they will not be entitled to a statutory redundancy lump sum.

An employer should write to the employer will full detail of the new role they are proposing, so the employee can examine if the terms and conditions of the alternative role offer, are similar to that of their old role.

Whats reasonable to the employee is evidently personal to him/her ie are the terms of the suitable alternative a good and fair fit for the employee ?. For example, does the role propose they work in a different location ?. Is this suitable ? etc. Has there been a fundamental change in the terms and conditions of the emplyees employment ? for example.

If an employee refuses to take up the suitable employment, claims statutory redundancy, the employer refuses to pay the redundancy, and a case arises, a subjective test will likely be applied to assess the reasonableness of the employee’s refusal to take up the alternative employment offer.

Re-Engagement with New Company

To be entitled to redundancy an employee must have been dismissed. An employee will not be considered dismissed if he/she is re-engaged with a new employer immediately on the termination of the previous employment.

Statement in Writing

Before the start of the new employment with the new employer – ie re-engagement – the employee must have received a Statement in Writing from the previous employer with details of the terms and conditions of the contract with the new employer, and all particulars, and the employee must notify the employer then she/he accepts the Statement.

Lay-Offs

An employee can activate a right to a redundancy payment in a temporary Lay-Off situation if certain conditions are met.  

Section 12 of the Redundancy Payments Act 1967 provides this right to an employee: 

(1) An employee shall not be entitled to redundancy payment by reason of having been laid off or kept on short-time unless — 

( a ) he has been laid off or kept on short-time for four or more consecutive weeks or, within a period of thirteen weeks, for a series of six or more weeks of which not more than three were consecutive, and 

( b ) after the expiry of the relevant period of lay-off or short-time mentioned in paragraph ( a ) and not later than four weeks after the cessation of the lay-off or short-time, he gives to his employer notice (in this Part referred to as a notice of intention to claim) in writing of his intention to claim redundancy payment in respect of lay-off or short-time. 

When a lay-off occurs is defined by S. 11 of the Redundancy Payment Act 1967 which states 

Where an employee’s employment ceases by reason of his employer’s being unable to provide the work for which the employee was employed to do, and

( a) it is reasonable in the circumstances for that employer to believe that the cessation of employment will not be permanent, and 

( b) the employer gives notice to that effect to the employee prior to the cessation, that cessation of employment shall be regarded for the purposes of this Act as lay-off.  

If an employer wants a Lay-Off situation to be considered not a redundancy situation, it is very important that the employer has complied with the Notice requirements of the Lay-Off to the employee. This should be done in writing and the employer should ensure this has been successfully communicated to the employee.  

Time Limits – Claims to Workplace Relations Commission

An employee must within 52 weeks from the date of dismissal or the date of termination of employment submit a completed complaint form to the Workplace Relations Commission.

There is provision for a time extension application where the employee who submits a claim out of time can decisively prove there was ‘’reasonable cause’’ for the delay.

This is no easy task.

The employee must be able to show there are reasons that explain the delay and also that provide an excuse for the delay. This must be reasonable. Serious medical reasons could be one such reason, but it will considered could the employee have given instructions to their solicitor to lodge the complaint within time, for example.

An adjudication officer in the Workplace Relations Commission can action his/her discretion to hear case outside the 52 week timeframe provided the facts related to S.24(3) of the legislation.

Sham Redundancies

What can be commonplace is a scenario where an employer dismisses an employee citing reason of redundancy, and the employee considers they were unfairly dismissed and no genuine redundancy arose.

The decision maker hearing such cases at the Workplace Relation Commissions must initially assess in cases of this nature, was there a genuine redundancy at all.

The history of facts between the facts between the parties will be examined during cases of this nature.

For example, did the employee make a complaint about something to the employer prior to the decision to dismiss ?. If an genuine redundancy situation exists, then it is the position of the person that has become redundant. It must not relate to the person ie employee and any grievances between an employer and the employee.

If there was a genuine redundancy, then what was the business economic need for this ?.

Was the employee dismissed replaced by an existing or new employee ?.

What is stated in the letters from the employer to the employee for the reason for the dismissal ?. It cannot be because of a toxic relationship between the employer and employee, for example.

If a dismissal directly relates and links to the grievance an employer has towards an employee, then this is not a genuine redundancy situation as is required only by the specific reasons laid out on the legislation, and the employer then is exposed to liability in an unfair dismissal claim.

Redundancy Fund

What happens an employer cannot pay the lump sum ?.

The employer must firstly take all steps to obtain the lump sum from the employer. If the employer has refused or failed to pay, is insolvent, or if the employer has died then employee can apply to the Minister for a payment.

The Minister can pay to employees lump sum entitlement out of the Social Insurance Fund.

Frequently Asked Questions

What is the statutory redundancy sum in Ireland ?

An employee who qualifies is entitled to two weeks statutory redundancy payment for every year of service, plus a bonus week.

What are you entitled to when you are made Redundant ?

This is answered above.

Can you make someone redundant and then replace them ?

This should not happen and the employer may be open for an unfair dismissals action being taken by the former employee.

In redundancy it is the position / role / job that becomes redundant.

If an employer terminates an employee giving a reason for the redundancy, the only valid reasons for redundancy are those permitted by the Redundancy Payments Acts.

How do you prove unfair redundancy ?

There is a significant difference between a genuine redundancy and a sham redundancy. A sham redundancy can give rise to an unfair dismissal claim. If a disingenuous redundancy reason is given, this is unfair, and contrary to the legislation, and it can then be the duty of the employer on which the burden of proof resides, to prove no unfair dismissal arose.

How is Redundancy Calculated ?

To calculate Redundancy you need the Date of Commencement, the Date of Termination, and the Gross Weekly Sum.

By typing in the above information to a Redundancy Calculator, you can find many online, it will give you the sum you are entitled to.

What is a true redundancy situation ?

There are 5 reasons set by Law whereby a dismissal constitutes a redundancy.

These are:

 a) the fact that his employer has ceased, or intends to cease, to carry on the business for the purposes of which the employee was employed by him, or has ceased or intends to cease, to carry on that business in the place where the employee was so employed, or

(b) the fact that the requirements of that business for employees to carry out work of a particular kind in the place where he was so employed have ceased or diminished or are expected to cease or diminish, or

(c) the fact that his employer has decided to carry on the business with fewer or no employees, whether by requiring the work for which the employee had been employed (or had been doing before his dismissal) to be done by other employees or otherwise, or

(d) the fact that his employer has decided that the work for which the employee had been employed (or had been doing before his dismissal) should henceforward be done in a different manner for which the employee is not sufficiently qualified or trained, or

(e) the fact that his employer has decided that the work for which the employee had been employed (or had been doing before his dismissal) should henceforward be done by a person who is also capable of doing other work for which the employee is not sufficiently qualified or trained.

Many of the above genuine reasons for redundancy relate to the economic need of the enterprise. Redundancy dismissals are not about the employee’s personality, performance or a personality clash with the employer, for example. Genuine redundancy situations are impersonal to that employee.

Do you have to pay Redundancy ?

If an employee has been dismissed by and employer, is entitled to redundancy under the Redundancy Payments Acts, the employer has a legal obligation to discharge the lump sum payment to the employee.

If an employer contravenes the redundancy payments acts, an employee should avail of and activate their legal rights under the legislation.

DISCLAIMER

Please be advised that the above-mentioned material is intended as an overview and as a broad out-line of the topic discussed. It should not be considered as complete and comprehensive legal advice, nor act as an appropriate substitute.
Due care has been taken in the publication of this article and we do not accept legal liability as a result of reliance on any material covered in the above article.