Redundancy Payments

Irish Redundancy Process Expectations

In the case of Tracey Ring v Student Facilities & Services (UCC) Designated Activity Company (DAC) T/A Unisalon (ADJ-00037197), the Adjudication Officer gave a very useful summary of expectations with respect to a redundancy process:

“An employer does not have a free hand to act as it pleases. An employer is bound to act within the requirements of the law, irrespective of the circumstances the employer is navigating. It is not in dispute that there was a global pandemic. However, there is a well-trodden path in respect of dismissing an employee lawfully, by reason of redundancy. Specifically, it requires the employee to be put on formal notice that his/her role is at risk of redundancy. It requires a genuine consultation process being entered into, with the employee, by the employer. Often, an employer will implement a selection matrix (and a points system) to determine which roles in the organisation are to be made redundant, in a bid to be as fair to employees as possible, as redundancy is ‘impersonal’ – it is the role and not the person that is being made redundant. A lawful redundancy process requires the genuine consideration of suitable alternative employment within the organisation, including any suggestions the employee brings to the table. It requires the employee to be afforded a right of appeal.”

Summary of Irish Redundancy Law

In this case (A Service Technician -v- A Ventilation Company ADJ-00028929) the complainant began his employment with the respondent on 01 April 2019. He received notice of the termination of his employment by reason of redundancy on 15 May 2020 and the employment ended a few days later, without any explanation as to why he was selected for redundancy.

The WRC found that the termination of his employment was unfair in that procedures applied to the selection of the complainant for redundancy were unfair and quite seriously so.

Lawful Basis for Termination

Redundancy will provide a lawful basis for the termination of employment under the Unfair Dismissals Act, 1977.

The Redundancy Payments Acts 1967 to 2007 provides the legislative basis for assessing redundancies and a valid redundancy situation is deemed to have occurred where a dismissal occurs "wholly or mainly" from one of the following situations:

1. Cease the Business

Where an employer has ceased or intends to cease to carry on the business for the purposes for 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.

2. Requirements have Changed

Where the requirements of the business for an employee to carry out work of a particular kind, in the place where he was so employed, ceased or diminished, or are expected to cease or diminish.

3. Fewer Employees

Where an 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.

4. Work Differently

Where an employer has decided that the work for which the employee has been employed should henceforth be done in a different manner for which the employee is not sufficiently qualified or trained.

5. Not Qualified

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

Redundancy not a Valid Defence

It should be noted that a redundancy will not be a valid defence to a claim for unfair dismissal in circumstances where either:

The employee was unfairly selected for redundancy or was selected for redundancy in a manner not consistent with his contract of employment or the previous manner in which redundancies had been dealt with in the company provided that there is no special reason such as would justify a deviation from prior standard practice, or,

Where the redundancy is not a genuine redundancy situation.

Where an employee alleges that they have been unfairly selected for redundancy the onus of proving fair selection and therefore a fair dismissal rests with the employer.

Advertising Role after Redundancy

In An Office Administrator v A Retail Clothing Shop (ADJ-00017338) an employee raised a complaint seeking adjudication by the Workplace Relations Commission under the Industrial Relations Acts, claiming she was dismissed by her employer who said her role was made redundant, whereas, it was advertised immediately after her termination.

The Adjudication Officer noted that:

"The worker stated that she was unfairly dismissed by the employer following negative comments in the media about its business, which also named the worker as the employer’s Customer Services Manager. The worker stated that the employer dismissed her as a means by which it could enhance its public image following the media publications relating to its previous business practices.

I find that the worker gave an honest and credible account of the circumstances that led to her dismissal. The fact that the worker’s position was advertised at the same location, within a short time after she was made redundant due to the company’s supposed relocation, is sufficient in my view for the worker to succeed in her referral to the Workplace Relations Commission."

In all of the circumstances of this referral, the Adjudication Officer was satisfied that the employee was unfairly dismissed and recommend that the employer pay the worker €3,000 in compensation.

Lack of Funds and Redundancy Payment

The fact that a company cites a lack of funds to undertake a redundancy process and make a redundancy payment, does not preclude a redundant employee from pursuing a claim, nonetheless. 

In An Employee -v- A Florist (ADJ-00030562), the employee submitted that she was employed on a part-time basis by the owner of the respondent florist company on the 7 September 1997, as per her P60. She continued to work for the florist when the business was taken over by the original owner’s daughter and thereafter when the business was taken over by her son (the grandson of the original owner). The respondent company was established as a limited company in 2019 and the employee and a witness who gave evidence to the hearing were employed on the same terms and conditions throughout the different iterations of the company.

The employee submitted that the respondent did not provide contract of employment or payslips to employees. This contention was supported by the evidence given by a witness who was also an employee of the respondent.

The employee submitted that she was rostered to attend work on Friday 13 and Saturday 14 March 2020 but received a phone call on 11 March saying that she was being let go as the company had no funds. She did not receive and notice or redundancy payment. The employee’s version of events was corroborated by the witness who was working for a short time on 11 March but was also told that he was being let go with no notice or redundancy payment on that date.

The entitlement to a redundancy payment is outlined in Section 7 of the Redundancy Payments Acts which states as follows:

7.— (1) An employee, if he is dismissed by his employer by reason of redundancy or is laid off or kept on short-time for the minimum period, shall, subject to this Act, be entitled to the payment of moneys which shall be known (and are in this Act referred to) as redundancy payment.

Having considered the written and oral evidence of the complainant taken together with the evidence of the witness, the WRC found that the complainant was an employee of the respondent company and it was clear that her employment ceased in accordance with Section 7 of the Redundancy Payments Acts with effect from 13 March 2020. Accordingly, the WRC found that she was entitled to a redundancy payment in accordance with the Social Welfare Acts.

Suitable Alternative Employment and Redundancy Payment

This case (ADJ00020568) involved a bar tender who commenced employment with the respondent company on 27 January 2015. He was based out of a Liffey Valley, Dublin West premises. In late 2018, these premises were closed and the employee later received a letter offering him alternative work in the Harbourmaster Bar, Dublin 2. The employee concerned did not want to accept this alternative work and, in the alternative, sought a redundancy payment. The respondent company contended that the offer of another comparable job did constitute suitable alternative employment and therefore the employee concerned was not entitled to claim a redundancy payment. The WRC disagreed, a decision which was later appealed by the respondent company to the Labour Court.

The Labour Court, when making such a determination, as to the suitability of alternative employment under a redundancy scenario, is required to consider two issues, the first of which is the suitability of the offer of alternative employment and whether the employee’s decision to refuse such an offer could be considered reasonable in the circumstances.

In Cambridge & District Co-Operative Society Limited -v- Ruse, the English Employment Appeals Tribunal, when considering the similarly worded provisions of the English legislation, noted that “the suitability of the employment is an objective matter whereas the reasonableness of the employee’s refusal depends on the factors personal to him and is a subjective matter to be considered from the employee’s point of view.

The Labour Court went on to note that, in the given circumstances, although the work was of a comparable nature, the time, cost and energy required to attend Dublin 1, where the new role was located, was considerable when due regard is had to the fact that the previous role was accepted on the basis that it was in close proximity to the employee’s home. That being the case, the Labour Court accepted that the working conditions and patterns of the employee would deteriorate under the new arrangements. Therefore, the Labour Court found that the employee was entitled to a statutory redundancy payment.

Alternative Role and Risk of Redundancy

When an employer offers an employee an alternative role, it is important that the employer notify the employee that they may be made redundant, if they fail to accept the alternative position.

In Accounts Manager v Catering Wholesaler (ADJ-00019253), the employee undertook both IT and finance tasks. She was asked to take on an exclusively IT role, and refused. She was later made redundant.

In Paisley v McCormack Dental Ltd UD1257/2002, the Employment Appeals Tribunal held that an employee must be aware that they are being considered for redundancy when offered alternative employment. In that case, the complainant refused the offer of an alternative position prior to being informed that his position was at risk of redundancy. The EAT held that:

“The Respondent acted unreasonably in that the Appellant was not told that he was being considered for redundancy until late in the day, a fact that might have coloured his attitude to the earlier job offer and his negotiation of terms and that the earlier job offer was not made again once it became clear that its refusal was leading to redundancy.”

The WRC was of the view that the employee was not aware when she was offered the IT CRM position that her job was in danger of being made redundant. If she had been, she may well have accepted the alternative position.

That being the case, the WRC awarded the employee, in this case, €10,000, in addition to her statutory redundancy payment.

Failure to Pay Redundancy Amount

The employee in this instance (A Deli Assistant -v- a Sandwich Shop (ADJ00027111)) was employed by the respondent company as a deli assistant from 04 September 2006 to 31 December 2018. The employee concerned submitted that she received a notification of her redundancy on 30 November 2018 and her position was terminated on 31 December, by way of redundancy. She noted that she contacted her former employer on numerous occasions, primarily via text message, between January 2019 and February 2020 seeking her redundancy payment. 

It was noted by the WRC that the complaint was submitted on 12 February 2020, some 60 weeks after the date of the redundancy. Under Section 24 of the Redundancy Payments Act, where an employee fails to make a claim for a lump sum within the period of 52 weeks following the redundancy date, an adjudication officer of the Workplace Relations Commission, if satisfied that the employee concerned would have been entitled to the lump sum and that the failure was due to a reasonable cause, may declare that the employee be entitled to that lump sum and the employee shall thereupon become so entitled. That being the case, the WRC accepted that the employee delayed making a complaint, in good faith, acting under the assumption that her former employer would make payment. 

The WRC found that this complaint, under the Redundancy Payments Act, should succeed and awarded the complainant a redundancy lump sum based on a calculation of her weekly pay commensurate with her reckonable service.

Retirement or Redundancy?

In this case (Sales Area Manager -v- Construction Company (ADJ00026280)), the WRC was tasked with interpreting a set of circumstances wherein the redundancy of the employee concerned was disputed. The employee claimed he was made redundant and was therefore entitled to a redundancy payment, whereas the employer counterclaimed that he was retired in line with company policies and procedures.

No contract of employment or policy was provided by the parties in relation to the retirement age of the employee. The employee was a member of the Construction Industry Federation pension scheme and was receiving that pension. The normal retirement age for members of the CIF scheme is 65 years of age. The employer noted that the normal date of retirement of staff is 65 while accepting that another staff member is 74 years of age. The WRC was cognisant of the judgment of Mr Justice Hedigan in the High Court case of McCarthy -v- HSE where the employee’s retirement age of 65 was found to be an implied term due to membership of a pension scheme. That being the case, in addition to the fact that the employee was replaced and therefore his role was not made redundant, the WRC found that the complaint had no merit and that the employee concerned was not dismissed due to redundancy.