Redundancy and Statutory Redundancy Payments explained.
What is redundancy?
Redundancy is the termination of a contract of employment.
The Redundancy Payments Act 1967 sets out instances of redundancy;
- The employer stopped performing the work that the employee was employed for or is doing it elsewhere.
- The requirement for an employer to perform a specific type of work that the employee was employed for is no longer necessary.
- The employer has decided to do the same work with fewer employees
- The employer wants to do the work in a way that the employee isn’t trained or qualified for.
- The employee is deemed not trained or qualified for, and the employer wishes to replace them with someone more capable.
These criteria share the common trait of focusing on a change in the role, or the responsibilities that come with it, or both.
Once an employee has been employed for in excess of 104 weeks, they are normally entitled to a statutory redundancy payment.
This is calculated in line with the Redundancy Payments Act.
Unfair Dismissal and Redundancies
Irish law protects employees in the workplace with statutory rights. These rights give employees entitlements such as minimum wages, reasonable working conditions, working hours, and health and safety at work.
A vital protection that employees are entitled to is the protection from unfair dismissal. If an employee works for an employer for longer than twelve months, their dismissal is considered unfair by default. It falls upon the employer to justify a dismissal.
Redundancies are not, however, a way for employers to skirt the protections provided by employment law. The process of making an employee lawfully redundant is highly regulated by law and requires specific conditions to be met.
Redundancy selection process
Corporate restructuring is a normal and commonplace business practice, but there needs to be a valid reason for determining whether a role has become redundant.
The process for selecting redundancies in a company must be fair, and impartial. Personal characteristics such as salary or age should not be considered. Instead, the focus must be on the nature of the role and whether it can be streamlined or restructured. A basic rule is that it must be the role and not the person must be selected.
An employer must give an employee at least two weeks’ notice of redundancy by law.
Transfer of Undertakings
When a company merges with or is taken over by a separate company, a process called a transfer of undertakings takes place. This is regulated by the TUPE (European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (S.I. No. 131 of 2003) directive.
During a transfer of undertakings, all the obligations of a contract of employment that the existing employer had are transferred to the new employer.
Employees cannot be made redundant solely because of a transfer of undertakings. They may, however, be made redundant due to the significant restructuring that will often take place. If there is a material change in the terms and conditions of employment after the transfer then employees can treat themselves as being made redundant.
Claiming redundancy
An employee who considers that they have been unfairly terminated during a redundancy process has six months from the date of the dismissal to bring a claim to the Workplace Relations commission who handle employment disputes.Legal issues around Redundancy
Legal disputes can often arise regarding redundancy. An employee may feel like they have been unfairly selected. This can occur, for example, only one person performing a role gets made redundant, while other employees in that same position continue to be employed in the same position.
These disputes can be taken to the Workplace Relations Commission (WRC), where an independent adjudicator will hear the case and issue a legally binding decision.
Alternatively, a settlement agreement may be reached between the parties to avoid the costs of litigation.
Setanta Solicitors has expert redundancy solicitors available to help navigate the redundancy process. Our employment solicitors have experience in resolving disputes quietly and efficiently, as well as drafting and advising on Settlement, Compromise, Termination or Redundancy Agreements whilst either representing employees or employers in the Workplace Relations Commission (WRC) or the Labour Court.
Please contact us for a consultation to discuss any queries, issues or concerns regarding your own redundancy process. We can carry out a full review, explain and advise employees and employers alike, to ensure redundancy procedures are being adhered to under the current laws, and discuss and explain your own redundancy agreement, for individual advice.
Setanta Solicitors advise employees and employers on the redundancy process. Please contact us to schedule a no obligation consultation at info@setantasolicitors.ie or 01 215 0168
