Peter McInnes – McDowell Purcell Solicitors26 May 2009

Redundancy

Legislation• Redundancy Payments Acts 1967-2007• Unfair Dismissals Act 1977-2007• Protection of Employment Act 1977• Protection of Employment (Exceptional

Collective Redundancies and Related Matters) Act 2007

Redundancy

• Redundancy is a dismissal• Must be a genuine redundancy• Must be fair selection

Genuine Redundancy

• Section 7(2) of the Redundancy Payments Act 1967 (as amended) provides that a redundancy occurs where an employee is dismissed for one or more reasons not related to the employee concerned, and the dismissal is attributable wholly or mainly to the:

a) Cessation of the business in which the employee was employedb) Cessation or reduction in need of the business for employees to carry out work of a

particular kind in the place he was employedc) Decision to carry on the business with fewer or no employees whether by requiring the

work for which the employee had been employed to be done by other employees or otherwise

d) Decision to do work in a different manner for which the employee isn’t sufficiently qualified or trained

e) Decision that work should be done by a person who is also capable of doing other work for which the employee is not sufficiently qualified or trained

Genuine Redundancy• Two important characteristics:

1. Change» Cessation of business» Reorganisation» Restructuring

2. Impersonality» Position not person

• St Ledger v Frontline Distributors Ireland Limited [1995] ELR 160

Fair Selection• Must be reasonable both in terms of selection for

redundancy and manner of dismissal• Consultation• 2 stage process

• Advice of risk of redundancy• Allow input from employee before final decision• Check for precedents e.g. collective agreements,

custom and practice, redundancy procedure

Fair Selection• Objective selection criteria • Criteria might include

• LIFO• Qualifications/training• Flexibility• Attendance (possible disability discrimination)• Performance (possible double penalty)

• Selection matrices• Intrium Justitia v Kerrie McGarvey [ADE/08/22]

• Document selection criteria• Consistency• Explore alternatives

Fair Selection• O’ Kelly v XSIL Limited [UD 1086/2007]

• Senior Engineer• No alternative positions• No discussion with employee• Unreasonable behaviour of employer in

– Selection criteria– Manner of dismissal

• Unfair selection: reinstated

• Sheehan & O’ Brien v Vintners Federation of Ireland [EAT, 2008]

• Genuine redundancy existed• No consideration given to reorganisation proposal• €43,000 compensation

Employees on Protective Leave

• Notice of dismissal void• Includes maternity leave, adoptive leave, parental

leave• Gleeson v L’Oreal (EAT, 2008) -confirmed that

employers may keep employees on maternity leave informed of the process

Notice• 2 weeks notice – Redundancy Payments Acts• Minimum Notice and Terms of Employment Acts• Contract of Employment• Reasonable notice• PILON, if provided for in the contract or otherwise

by agreement

Redundancy Payments• Statutory• 104 weeks continuous employment• Two weeks per year of reckonable service• One additional week• Current cap €600 per week• 60% rebate to employer• http://www.redcalc.entemp.ie/

Redundancy Payments• Ex Gratia• Payment in excess of statutory entitlement• No legal entitlement• Custom and practice• Can be tax free but subject to limits:

1. €10,160 plus €765 per year of service2. Additional €10,000 if no previous claim in last 10 years and not a member of the

employer’s occupational pension scheme3. SCSB

• Compromise agreement

Reckonable Service• After 10 April 2005 - take account of absences from work

over last 3 years• Reckonable service

1. Holiday leave2. Sick leave (less than 26 consecutive weeks)3. Maternity, carer’s, adoptive and parental leave4. Periods of lock-out from employment

• Non- reckonable service– Periods of absence over 52 consecutive weeks due to work related injury– Periods of absence over 26 consecutive weeks due to illness– Any period of lay-off– Any period on strike

Collective Redundancies• Protection of Employment Acts 1977-2007• In a period of 30 days

– At least 5 in a workforce of between 20 and 50 employees– At least 10 in a workforce of between 50 and 100 employees– At least 10% of a total workforce numbering between 100 and 300

employees– At least 30 in a workforce normally employing 300 or more

employees

Consultation & Notification• Consultation with employee representatives ‘with a view to

reaching agreement’ • Section 9(3) – consultation must be initiated at least 30

days before the first notice of dismissal is given• Written notification to Minister for Enterprise, Trade and

Employment at least 30 days before the first notice of dismissal

• Penalties• €5,000• €250,000

Information• The reasons for the proposed redundancies, the number, or

descriptions, or categories of employees whom it is proposed to make redundant

• The number of employees and description of categories normally employed

• The period during which it is proposed to effect the proposed redundancies

• The selection criteria• The method for calculating redundancy payments other

than those set out in the relevant legislation

Exceptional Collective Redundancies

• Protection of Employment (Exceptional Collective Redundancies and Related Matters) Act 2007

• Irish Ferries dispute• Redundancy Panel• Purpose – to ensure collective redundancies are genuine• Unfair Dismissals Acts - 208 weeks remuneration• Criminal Sanction• Penalties

Injunctions• Nolan v Emo Oil Services Ltd [2009] IEHC 15• Other avenues of redress

– Unfair Dismissal– Wrongful Dismissal

Alternatives to Redundancy• Pay freezes• Pay cuts• Lay-off/short-time• Withholding bonus payments• Changing pension benefits• Career breaks• Unpaid leave e.g. one day per week• Redeployment

Pay Cuts• Three options

1. Agree change with employees • Notify employees of intention• Engage in consultation• Obtain consent in writing

2. Impose a unilateral variation on the employee• Employee may claim for:

– Constructive dismissal– Deduction of wages under Payment of Wages Act 1991– Breach of contract in the civil courts

3. Dismiss and re-engage the employee on different terms• This approach has not been tested in Ireland• Hollister v National Farmer’s Union (1979)

Lay-Off• Section 11(1) Redundancy Payments Acts

1967 (as amended)• Where the employee’s services not required

due to lack of work and there is a reasonable belief by the employer that the lack of work:• Will not be permanent• Notice to that effect is given to the employee

Short-Time• Section 11(1) Redundancy Payments Acts 1967 (as

amended)• Where for any week an employee’s remuneration

is less than half, or his hours of work are less than half, of a normal working week and there is a reasonable belief by the employer that:• The diminution in work will not be permanent• Notice to that effect is given to the employee

Lay-off/short-time• An employee who has been laid off of kept on short-time for

• 4 consecutive weeks; or• Series of 6 or more weeks (of which not more than 3 were

consecutive)may claim a redundancy payment

• The employee must serve written notice on their employer that they intend to claim redundancy by reason of lay-off or short-time

• Employer may give counter notice within 7 days of the employee’s notice and the employer must offer not less than 13 unbroken weeks of employment starting within 4 weeks of the employee’s notice. The counter notice must state that the employer will contest the employee’s claim for redundancy

Thank You

Peter McInnes – PartnerMcDowell Purcell Solicitors

Email: mail@mcdowellpurcell.ieTel: 01 828 0614