Navigating Collective Redundancy
In Ireland, there are strict rules applied to redundancy situations. A genuine situation of redundancy must exist, such as; significant changes in the direction of a business, closure of all or particular parts of a business, or significant changes in how a business operates.
The employer must use fair and reasonable selection criteria in choosing for redundancy.
Collective Redundancies occur when an employer is making a minimum number of positions redundant within a period of 30 consecutive days, that minimum will vary with the normal size of the establishment’s workforce, for example:
- 5 employees in an establishment employing 21-49 employees.
- 10 employees in an establishment normally employing 50-99 employees.
- 10% of employees in an establishment normally employing 100-299 employees, or
- 30 employees in an establishment normally employing 300 or more employees.
Collective redundancy laws in Ireland have their source in EU directives intended to bring the law across the different Member States in line with each other. The EU directives in effect in Ireland are governed by the Protection of Employment Acts, 1977 as amended.
Where an employer is proposing a collective redundancy, they are under certain legal obligations. They must:
- Inform the relevant Minister (currently for Enterprise, Trade and Employment of Ireland) in writing of the proposed redundancies at least 30 days before the occurrence of the first redundancy.
- Engage in a consultation process with the relevant employee representatives such as a trade union representative or in the absence of a trade union, a person or persons chosen by the employees to represent them.
Failure to notify the Minister can leave an employer liable to a fine of up to €5,000. If any collective redundancies take place before the expiry of the 30 days which begins on the day that notification is given to the Minister, the employer shall be guilty of an offence and liable to a fine not exceeding €250,000.
Provision of Information:
Before a collective redundancy can take place, the employer is obliged to give certain information to the employees’ representatives such as:
- The reasons for the redundancy
- The number and descriptions of the employees affected
- The number and descriptions of employees normally employed
- The period in which the redundancies will happen
- The criteria for selection of employees for redundancy
- The method of calculating any redundancy payment
Under the unfair dismissals legislation, selection for redundancy based on certain specific grounds is considered unfair. These include redundancy as the result of an employee’s trade union activity, pregnancy or religious or political opinions. The employment equality legislation also prohibits selection for redundancy that is based on any of the nine grounds of discrimination.
It is important to note that an employee should not be made redundant while they are on maternity leave, which is a very important consideration for employers to bear in mind when announcing large numbers of redundancies in a short period of time.
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. If the selection was based on one of the protected grounds, an equality case may also be taken.
Exceptional Collective Redundancies
On 8 May 2007, The Protection of Employment (Exceptional Collective Redundancies and Related Matters) Act 2007 (“the Act”) came into force. The Act, in part, aims to give greater protections to employees in collective redundancy situations.
An exceptional collective redundancy is a dismissal, by reason of compulsory collective redundancy, which shall not be deemed a redundancy, where the dismissed employees are replaced by new workers doing the same job and performing the same tasks for lower wages.
The Act allows for a referral to be made by an employee representative or the employer during the 30-day consultation period to a Redundancy Panel. The Panel consists of a chairman appointed by the National Implementation Body, and members nominated by, ICTU and IBEC. The Chairman of the Panel will invite the parties to make submissions to the Panel. If the Panel decides that the proposed redundancies constitute exceptional collective redundancies, (if they are genuine redundancies as opposed to situations where existing workers are replaced by lower paid workers) it may request the Minister to refer the matter to the Labour Court.
Should the Labour Court hold that an exceptional collective redundancy situation exists, and employees are dismissed in any event, the employee may claim unfair dismissal. In these circumstances, employees may be entitled to compensation of up to five years’ remuneration.
Collective Redundancy in Ireland – Conclusion
Redundancy law is complex especially when collective redundancy legislation comes into play. Employers must recognise the significance of compliance not just as a legal requirement but as a commitment to fairness and transparency. By embracing these challenges with care and diligence, Employers not only fulfill their legal obligations but also foster a workplace culture that values integrity, empathy, and resilience in the face of change.
This article was written by Sharon Sweeney, HR Consultant at Action HR Services.
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The information in this article is provided as part of the Action HR Services Blog. Specific queries should be directed to a member of the Action HR Services Team and it is recommended that professional advice is obtained before relying on information supplied anywhere within this article. This article is correct on 8th January 2024.