Redundancy Following the Covid-19 Lockdown: What Employer’s Need to Know
As the country continues to re-open followed the enforced Covid-19 lockdown, many are now facing the reality that they have little choice but to reduce their workforce. Redundancies will, unfortunately, be on the increase across many sectors of the Irish economy, with hospitality looking like it will be particularly badly affected once government support ceases over the coming months. I have set out below the legislation regarding redundancy in Ireland and the rules which should be followed to ensure any redundancies are carried out in a fair and legitimate way.
The Redundancy Payments Acts 1967–2014 provide a minimum entitlement to a redundancy payment for employees who have a set period of service with their employer. Employees are required to have been employed for at least two years with their employer before they are eligible for a redundancy claim.
In the situation where an employee has been laid off or put on short-time work, this means that their contract of employment is temporarily suspended. If an employer is then required to make an employee redundant, they must re-activate the contract of employment in order to dismiss the employee on grounds of redundancy. When an employer gives notice of redundancy, employees are entitled to the full notice period. If an employee is not required to work out their notice period, they are entitled to payment in lieu of notice, which is their normal pay for that notice period.
Temporary Changes to Redundancy Legislation due to Covid-19
The law on claiming redundancy from an employer for those temporarily laid off, or temporarily put on short-time work, has changed during the Covid-19 emergency period. Normally, if you are laid off or put on short-time hours, you can claim redundancy from your employer after 4 weeks or more.
However, if an employee was laid off or put on short-time hours because of Covid-19, they cannot claim redundancy. This is set out in the Emergency Measures in the Public Interest (Covid-19) Act and applies from 13 March 2020. These rules have been extended to last until 10 August 2020. This may be further extended.
Rules to follow for Employers
The redundancy process can be a very emotional and stressful time for both employees and employers. By following the 4 points listed below, employers will ensure that they fulfil their obligations under Irish employment legislation:
- Business Rationale: Redundancy should only be used as a last resort and employers must ensure that they have a clear rationale for making certain positions within the company redundant. Ultimately, employers must be seen to have acted fairly and reasonably towards their employees before deciding to start the redundancy process
- Consultation Process: Employers should engage with any employees at risk of redundancy from the earliest possible stage. The consultation process should be meaningful and used by the employer to explain the business rationale behind the proposed redundancies. While a consultation period of at least 30 days is required for employers making 20-99 employees redundant, it is good practice for employers to use the 30-day period even in the event that less than 20 employees are being made redundant. Employers should also have an internal right of appeal in place at the end of the process. A well-managed process will protect employers defending claims of unfair dismissal from employees who believe the redundancy process was a sham or carried out with prejudice
- Fair Selection of Employees: The selection process for redundancies is often an area in which employers find themselves in difficulty, particularly in the case where a number of employees are performing similar roles. Some employers rely on objective, skills-based criteria for selection, whilst others rely on the last-in, first-out model. Communication and consultation with employees are both key elements in this process, and they should be made aware of the selection criteria from the outset. Similarly, when employers are re-opening for business on a phased basis following the Covid-19 lockdown, they must be careful how they select their employees who were previously laid off
- Pay Cuts: While agreed pay-cuts can sometimes be a genuine alternative to redundancies, employers should not artificially use the threat of redundancies to force their existing employees to take a cut in their pay. Any employer who does not act in good faith in this matter could end up being sued for unfair dismissal. In these instances, an employee can be awarded up to two years of wages.
If you have any queries regarding the content of this article, or further questions regarding the redundancy process, please feel free to get in touch with Ruairi Guckian from GHR Consulting on 089 4736323; email: email@example.com; or visit: www.ghrconsulting.ie