Our HR experts provide you with the information you need to manage redundancies in accordance with Irish employment law.
Redundancy is a difficult and challenging situation for both employers and employees.
In Ireland, employers are legally obligated to handle redundancies fairly and effectively.
We understand the importance of strategic and compassionate redundancy solutions.
Our tailored HR expertise ensures a smooth transition for both employers and employees, fostering a resilient and adaptable workplace.
What is statutory redundancy?
Redundancy occurs when an employer closes their business or no longer requires specific roles to be filled.
The process of terminating employment in this way is referred to as redundancy, or making an employee redundant.
Employers have a legal obligation to follow a fair redundancy process in managing redundancy.
Working with an experienced HR consultant ensures effective redundancy management.
What is involved in redundancy?
Redundancy occurs when an individual loses their job due to their employer closing the business or reducing staff numbers, resulting in the position becoming obsolete.
This is considered a last resort, requiring consultation with the affected employee and establishing valid economic, technical, or organisational justifications for the workforce changes.
Employers may explore alternative work options within the company before finalising redundancy decisions, including alternative work.
For a redundancy to be deemed genuine, employers must provide a legitimate business rationale, such as financial difficulties, lack of work, reorganisation, or business closure.
The burden of proof lies with the employer to demonstrate the fairness of the dismissal, including a fair selection process and adherence to proper procedures.
Disputes over fairness may arise if economic justifications are lacking, if the reasons given for redundancy are not genuine, or if unfair selection criteria are applied.
If the employer makes a reasonable offer of alternative work, and it is refused, the employee may lose their entitlement to a redundancy payment.
To make a position redundant, it’s not enough to be able to satisfy yourself the role is redundant.
Three key areas will be considered:
- If there was a genuine reason for redundancy
- Was there a fair selection process?
- Was a fair consultation process carried out?
Redundancy procedures can be either compulsory or non-compulsory. Non-compulsory redundancy may involve voluntary redundancy or early retirement, allowing employees to choose these options before facing compulsory redundancy.
Collective redundancy situations, affecting a specific number of employees within a defined timeframe, require employers to follow consultation rules, providing information to employee representatives and the Minister for Enterprise, Trade, and Employment.
The laws governing redundancy are outlined in the Redundancy Payments Acts 1967–2014, the Protection of Employment Acts 1977-2014, and the Employees (Provision of Information and Consultation) Act 2006.
What’s a genuine reason for redundancy?
Section 7(2) (a) of the Redundancy Payments Acts outlines five grounds for a genuine redundancy situation.
- The employer has ceased or intends to cease to carry on the business
- Requirements of the business for the employee to carry out work of a particular kind has ceased or diminished
- The employer decides to carry out the business with fewer or no employees
- The employer decides work being done is to be done in a different manner, for which the employee is not qualified or trained to do
- The employer decides that the work being done is to be done by a person who is capable of doing other work for which the employee is not sufficiently qualified to do
Where your reasons for redundancy fall under one (or more) of the above five it is important to follow through with a redundancy procedure.
This ensures fair procedure and reduces the risk of unfair selection and any potential unfair dismissal claims.
Employers must follow certain processes when an employee is made redundant.
Redundancy occurs where loses their job due to circumstances such as the closure of the business or a reduction in the number of staff.
The Redundancy Payments Acts 1967–2014 provide a minimum entitlement to a redundancy payment for employees who have a set period of service with the employer.
Not all employees are entitled to this statutory redundancy payment, even where a redundancy situation exists.
How is redundancy calculated in Ireland?
Redundancy pay in Ireland is calculated based on the Redundancy Payments Act 1967.
Eligible employees, with 104 weeks of continuous employment, receive a statutory redundancy payment of two weeks’ normal weekly remuneration for each year of service, plus a bonus week.
The calculation considers the employee’s length of reckonable service and weekly remuneration, capped at €600 per week.
In cases where employers face financial difficulties, the State’s Redundancy Payments Scheme ensures employees receive statutory entitlements.
The mywelfare.ie website offers a redundancy calculator for estimating entitlements.
Time off and holidays
If made redundant, the employee is entitled to reasonable paid time off in order to look for a new job.
This right is set down in law in Section 7 of the Redundancy Payments Act 1979 (You should note that while the Redundancy Acts have been amended a number of times the provisions as set down in 1979 for time off still remain).
The employee is entitled to any holidays that are outstanding or payment in lieu of holidays.
Between receiving their notice of redundancy and the date the employment ends, the employee may give notice that they wish to leave before the end of their full notice period.
They should do this by submitting Form RP6. As the employer, you may decide whether or not to allow the request.
You should note that an employee leaving during the notice period without your express agreement may affect the entitlement to a redundancy payment.
Managing the redundancy process
The following steps should be taken when managing redundancies:
- Identify the need for redundancy: Evaluate the business situation to determine if there is a genuine need for redundancy
- Prepare a redundancy plan: Develop a plan that outlines the reasons for redundancy, the number of affected employees, and the selection criteria
- Consult with employees: Notify affected employees and representatives of the redundancy plan. Provide an opportunity for consultation and feedback
- Select employees: Select employees for redundancy based on objective criteria. Ensure the process is fair and consistent
- Provide notice: Inform affected employees of their redundancy and provide them with the required notice period
- Pay statutory redundancy: Pay affected employees their statutory redundancy payment
- Offer outplacement support: Provide outplacement support to help affected employees find new employment
How we can help
The complexities of redundancy management can be overwhelming for businesses, especially those with limited HR expertise.
Partnering with an experienced HR consultant can provide significant benefits and avoid grievances or more serious legal consequences.
Expert guidance and compliance: All our HR consultants possess in-depth knowledge of Irish employment law and ensure that redundancy processes are conducted in a fair, transparent and compliant manner. We help you avoid potential legal challenges and minimise the risk of unfair dismissal claims.
Efficient redundancy planning and implementation: HR Buddy will advise on developing comprehensive redundancy plans, identifying alternative employment options, conducting fair and impartial selection processes and providing outplacement support. This ensures that redundancies are managed effectively and the impact on affected employees is minimised.
Reduced HR burden: Partnering with a HR consultant frees up valuable time and resources for in-house HR teams, allowing them to focus on core responsibilities and strategic initiatives.
Cost-effective: We offer cost-effective solutions to complex HR challenges which can be costly to employers if implemented incorrectly.
Contact our friendly team today
As your HR partner, HR Buddy can provide your business with ongoing support and guidance on a variety of HR matters, including redundancy management, recruitment, payroll and employee relations.
By leveraging the expertise of an HR consultant, you can enhance your HR capabilities, minimise risks and foster a positive and compliant workplace environment.
Contact us today on 0646698034 about managing the redundancy process at your business.
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