A Guide to Redundancy Law in Ireland

Redundancy Law Resources:

• Guide to Redundancy under Irish Employment Law
• Bringing a Redundancy Claim
• Redundancy Payments Cases and Claims

Introduction to Irish Redundancy Law

For most employers citing redundancy, they will need to demonstrate that there have been significant changes in the direction of the business, closure of all or particular parts of the business, or significant changes in how the business operates.

Quite often, a business will justify the dismissal of employment by redundancy, by the justification that they intend to carry out the business, in a way and manner, for which the skill-set of the dismissed employee, is no longer required.

Another potential scenario is when businesses assert that they will carry on providing the same type of service or output, but will do so with a fewer number of employees.

Furthermore, a business may cite a change in working methods, as justification for the dismissal of an employee, by way of redundancy. 

The Unfair Dismissals Act provides that an employee who is dismissed shall be taken to be dismissed by reason of redundancy if for one or more reasons not related to the employee concerned the dismissal is attributable wholly or mainly to -

(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 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”

Selection Method for Redundancy due to Covid-19

In circumstances where redundancy is unavoidable, there is an onus on the employer to establish reasonable and objective criteria for selection and must apply such criteria fairly.

An employer is permitted to retain their best and most critical employees, in a revised and restructured organization. However, there must be some objective criteria, against which, employees are judged and appraised, for redundancy selection. The type of criteria usually utilized includes qualifications or training, educational qualifications, experience, client relationships, work rate, technical skills, quality of work and length of service. 

In any potential claim, it would be expected that an employer would be able to provide some criteria, against which, the dismissed employee was measured, against those who eventually retained their roles. 

In the case of JVC Europe Ltd v Panisi [2011] IEHC 279, Charleton J stated;

“In all cases of dismissal, whether by reason of redundancy or for substantial grounds justifying dismissal, the burden of proof rests on the employer to demonstrate that the termination of employment came within a lawful reason. In cases of misconduct, a fair procedure must be followed whereby an employee is given an entitlement to explain what otherwise might amount to a finding of real seriousness against his or her character. In an unfair dismissal claim, where the answer is asserted to be redundancy, the employer bears the burden of establishing redundancy and of showing which kind of redundancy is apposite. Without that requirement, vagueness would replace the precision necessary to ensure the upholding of employee rights. Redundancy is impersonal. Instead, it must result from, as section 7(2) of the Redundancy Payments Act 1967, as amended, provides, “reasons not related to the employee concerned”. Redundancy, cannot, therefore be used as a cloak for the weeding out of those employees who are regarded as less competent than others or who appear to have health or age related issues. If that is the reason for letting an employee go, then it is not a redundancy, but a dismissal.”   

Judge Charlton recited the specific legal requirements in effecting a legitimate redundancy, the first is Section 7(2) of the Redundancy Payments Act 1967, as amended by Section 4 of the 1971 Act, and by the Redundancy Payments Act 2003, wherein Section 5 (2) 1 requires that “(2) For the purposes of subsection (1), an employee who is dismissed shall be taken to be dismissed by reason of redundancy if for one or more reasons not related to the employee concerned the dismissal is attributable wholly or mainly … “ five listed grounds.

Thus, highlighting the essential requirement of “impersonality” in effecting a fair dismissal on grounds of redundancy, noting later that in St. Leger v Frontline Distributors Ireland Ltd [1995] E.L.R 160, an EAT Chairman stated that “Impersonality runs throughout the five definitions in the Act.”

In this case, Judge Charelton remarked that “It may be prudent and a mark of a 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”

Meaningful Engagement and Alternatives to Redundancy

An employer will need to have meaningfully engaged with the proposed employees selected for redundancy, to determine whether there are any alternatives to the redundancy. If an employee offers to work in another department, relocate, work in another position, take reduced hours and/or a reduction in salary, the employer will need to demonstrate that they took into consideration, the suggestions made. The employer may, during a Workplace Relations Commission hearing, be asked to explain, why the employee proposal was not sufficient or reasonable, in avoiding their redundancy. 

In Jeffers v DDC Ireland Ltd. UD 169/2000, the EAT held that where a person was being made redundant, there was an onus on the employer “(i) to take reasonable steps to seek alternative employment within the company for the employee being made redundant, (ii) to know what positions, if any, are available on the relevant date, and (iii) to offer any such reasonable alternative positions to the employee whose position is becoming redundant.”

Similarly, in JVC Europe Limited the High Court noted:

“It may be prudent, and a mark of a genuine redundancy, that alternatives to letting an employee go should be examined. … Similarly, a fair selection procedure may indicate an honest approach to redundancy by an employer … Following what is on the surface a fair procedure does not necessarily demonstrate that the decision maker is taking an honest approach to a decision. As with much else, an apparently fair procedure can be used as a cloak for deceptive conduct. It may be followed in form only so as to mask an ulterior motive or with no intention of fulfilling its purpose, even should the best of reasons for not proceeding to redundancy arise during its course.”

In Keogh v Mentroy Limited UD 209/2009, the EAT found in favour of the employee in circumstances where performance issues had been raised. In that case there was a downturn in business and the employer in that case only selected the manager’s role while other more junior roles were being filled:

“In light of these extraneous considerations it seems that the employer failed to take an overall view of the workplace with the objective of seeing what would be the fairest thing to all its employees. The Tribunal does not doubt that the claimant would have returned to the shopfloor on a lesser salary rather than be faced with unemployment. There were many options open to the employer including short time and layoff… The reasons given were not the reasons being relied upon. No consideration was given to alternative workplace arrangements where the claimant was eager to stay and the hours were required.”

Dismissing 'Difficult' Employees by way of Redundancy

In Daly v Hanson Industries Ltd UD 719/1986, it was noted that, when considering any redundancy defence raised by an employer, the defence may be tested in two ways:

(a) was the redundancy genuine, or did the dismissal take place under the cloak of redundancy?

(b) was there a cause and effect relationship between the redundancy and the dismissal?

In Engineer v Consulting Engineering Company ADJ00016780 the WRC found that the key characteristics of a redundancy process require “impersonality” and “change”. In that case, the WRC found the complainant had been unfairly dismissed following a redundancy process initiated only after complaints were raised by the employee in relation to the inappropriate behaviour of management.

The EAT was faced with a similar position in Capaldi v C-Step Shoes Ltd UD 806/1989 where it found in favour of the employee on the basis of the evidence before it that:

"...the Managing Director did threaten to let her go at his first interview with her. In our view he would have done so if he could but... instead, he contrived a redundancy so as to get rid of her."

Lay-Off due to Covid-19

Ordinarily, if an employee has been on lay-off for 4 weeks or more, or 6 weeks in the previous 13 weeks, they may be entitled to propose their intention to claim redundancy from their employer, who in turn, can confirm the redundancy or issue a counter-notice, within 7 days. 

During lay off, an employee is still ‘employed’ by their employer and the essential terms of their contract of employment remain in force. 

Calculating Redundancy Pay

Under the Redundancy Payments Acts, an eligible employee who is found to be redundant is entitled to a statutory redundancy payment for every year of service (per Section 7 of the Redundancy Payment Act of 1967). The Acts provide for a payment of two weeks gross pay for each year of service.

A further bonus week is added to this. An eligible employee is one with 104 weeks of continuous employment with an employer whose position has ceased to exist. The calculation of Gross weekly pay is subject to a ceiling of €600.00.

Gross pay is the current normal weekly pay including average regular overtime and benefits-in-kind and before tax and PRSI deductions. Redundancy payment is tax free.

An employee must be able to show a minimum two years (104 weeks) of service in the employment.

Responsibility to pay Statutory Redundancy rests with the employer. Where an employer can prove to the satisfaction of the Department of Employment Affairs and Social Protection that it is unable to pay Statutory Redundancy to an eligible applicant, the Department will make payments directly to that employee and may seek to recover as against the employer independently. Such claims must be submitted on form RP50 which may be signed by both employer and employee (to be accompanied with a Statement of Affairs).

In the event that an employer refuses to engage with an employee in this way it is open for the employee to bring an appropriate complaint before the WRC.

The employee must have made a claim for a redundancy payment from an employer by notice and in writing before the expiration of 52 weeks form the date of the cessation of the employment per section 24 of the Redundancy Payments Act 1967 (as amended).

The time limit may be extended to 104 weeks where reasonable cause has given rise to the failure to apply and the WRC so finds.

Conclusion

If an employee believes that a genuine redundancy scenario does not exist, that they have been unfairly selected, or that the employer failed to meaningfully engage with them as to potential alternatives, they may be entitled to bring a claim for unfair dismissal before the Workplace Relations Commission.