Redundancy Payments Acts 196J-10O5 – Protection of Employment Act 1977
An employee can be made redundant in their workplace. In accordance with the Unfair Dismissals Act 1977, an unfair dismissal is the one where there are no substantial grounds to serve as a legitimate justification for it. However, with regard to all the circumstances, redundancy is one such ground for an employer to dismiss an employee.
Still, for an employer to dismiss an employee, there are certain definitions from which at least one must serve as justification.
These definitions are as follows:
- In case the employer stopped or intends to stop the business for which they hired the employee. Also, in case the employer has decided to move the location of the operation beyond a reasonable commuting distance; or
- In case there are no more requirements, or there are fewer requirements of a business for the employee to carry on working in the place where they were working: or
- If the employer has decided to carry on the business with a reduced number or no employees, whether by requiring another employee to undertake the work which the redundant employee had been doing prior to the dismissal or otherwise; or
- In case the employer has decided that the work that the employee had been doing before his dismissal should be done in a different manner, for which the employee doesn’t have sufficient qualifications or training; or
- If the employer has decided that another employee, who is also capable of doing other work for which the dismissed employee is not sufficiently qualified or trained, undertakes the workload of the redundant employee.
Redundancy – employment termination
Termination of employment that was justified by redundancy needs to pass the test of reasonableness. There needs to be proof that the selection of employees that the employer has decided to let go on the grounds of redundancy was fair and genuine.
Section 6(7) Unfair Dismissals Act, 1977 provides that:
“in determining if a dismissal is an unfair dismissal, regard may be had… to the reasonableness or otherwise of the conduct (whether by act or omission) of the employer in relation to the dismissal, and… to the extent (if any) of the compliance or failure to comply by the employer in relation to the employee with [any dismissal procedure] or with the provisions of any code of practice.”
Employees that will be let go due to being redundant have certain legal entitlements.
These entitlements are:
- Notice that is in accordance with the employee’s contract (or a payment of salary instead of that notice period).
- Every employee with 104 weeks of continuous service has the right to claim a redundancy lump sum payment.
- The employee that is about to be dismissed by reason of redundancy has the right to receive two weeks’ notice, in writing, of the proposed dismissal. In that case, a statutory Form RP1 must be used. The employer must send a copy of the fully filled out Form RP1 to the Department of Enterprise, Trade and Employment at the same time as they give it to the employee. Failure to do so might result in a fine of up to €380.92. During the 2 weeks redundancy notice period, the employee has the right to request reasonable paid time off in order to seek new employment or to arrange training sessions for future employment.
- The company must give a redundancy certificate to the dismissed employee. The employer must give the original document to the employee not later than the date on which the dismissal takes effect. The prescribed Form RP2 must be used for the redundancy certificate. Failure to comply with this requirement could result in a fine of up to €380.92. The employer has the obligation to send a fully completed copy of each redundancy certificate to the Department when it claims a rebate for the paid redundancy lump sums.
- The employee has the right to claim a lump sum redundancy payment, and the amount of this payment is related to two factors. The first factor is the employee’s length of service with the company, while the second one relates to the employee’s usual earnings prior to redundancy dismissal. However, there is a limit of maximum €507.90 per week. Here’s how you can calculate a lump sum payment exactly:
(a) Two weeks’ pay for every year of service;
(b) In addition to that, the equivalent of a regular pay subject to the statutory ceiling of €507.90 per week
- The employer making a lump sum payment to the employee has the right to claim a rebate of 60% of the statutory component of each lump sum payment they made. However, this applies only if they have given the employee the 2 weeks redundancy notice. In this case, the employer needs to complete the Form RP3, along with the RP2, and send them to the Department.
Collective redundancies mean dismissals arising from redundancy where, in any period of 30 consecutive days, the numbers being made redundant are:
- 5 employees, in a company employing between 20 to 50 employees.
- 10 employees, in a company employing between 50 to 100.
- 10% of employees in a company employing between 100 to 300
- 30 employees in a company employing more than 300 employees.
In case of collective redundancies, the company must notify both the employees and the Minister for Enterprise Trade and Employment. The company needs to do that 28 days before the dismissals are due to take place. Also, the employer has an obligation to consult with the employees before the dismissals take effect.
For companies that are in business in more than one EU state, there are additional rules that may apply. For instance, the employees concerned, and their representatives may have certain consultation and information rights under EC legislation.
European Communities (Protection of Employment) Regulations, 2000 (S.I. No. 488 of 2000):
These Regulations extend the consultation requirements under the 1977 Act. That way, there is an addition of consultation with employee representatives where there is no trade union. Additionally, the Regulations also allow increases in the level of fines in case of:
- failure to start consultation;
- failure to notify the Minister of proposed redundancies;
- neglect or failure to keep records.
What happens if your position is made redundant?
Employers should always consult with you before making you redundant. The consultation should aim to provide you with a way to influence the redundancy process. The consultation will normally involve:
- speaking to you directly about why you have been selected
- looking at any alternatives to redundancy
- applying dispute resolution procedures when required
What is unfair dismissal?
Unfair dismissal occurs when your employer has not followed a fair redundancy process. Employers should always speak to you directly about why you have been selected and look at any alternatives to redundancy. If this hasn’t happened, you might have been unfairly dismissed.
Employees may be automatically unfairly dismissed for reasons of redundancy if selection for redundancy was unfair, or the employer does not act fairly in the circumstances. As an employee you can claim for unfair dismissal on the basis that the dismissal was not procedurally fair even though the reason (i.e. redundancy) is a fair one. An example of this would be if you do not receive a letter.
As an employer you should ensure you follow a fair procedure when making dismissals. If a claim is successful employers will be liable for unfair dismissal in addition to redundancy payments. Contractual redundancy payments are usually offset against any compensatory award.