A Reminder about Collective Redundancies
by Michelle O’Riordan, Solicitor, Employment and Pensions Unit
With all the recent discussion about recession, it is inevitable that some companies will unfortunately need to make redundancies over the coming months. This article highlights the law on collective redundancies which has been in existence since 1977 and which was changed by new legislation that came into force last year.The Protection of Employment Act, 1977 and the Protection of Employment (Exceptional Collective Redundancies and Related Matters) Act, 2007 (the “Acts”) govern collective redundancies. They apply only to cases where more than 20 persons are employed by a particular employer. The Acts govern situations where the following redundancy thresholds are reached over a thirty day period:
(i) 5 redundancies in a workforce of 21-49;
(ii) 10 redundancies in a workforce of 50-99;
(iii) 10% of the workforce is made redundant in a workforce of 100-299; and
(iv) 30 redundancies from a workforce of 300 or more.
Where the number of redundancies satisfy the above thresholds, the employer must consult with employee representatives about the redundancies with a view to reaching agreement. Employee representatives include trade unions or persons chosen by the employees to represent them. If there are no employee representatives, the employer must facilitate an election procedure.
The consultation must include the following:-
(i) the possibility of avoiding redundancies or reducing their number;
(ii) the possibility of reducing the consequences of the redundancies by, for example, redeploying or retraining the employees; and
(iii) the basis on which the employees will be selected for redundancy.
The employer must supply the employee representatives with all relevant information relating to the proposed redundancy in writing, including the reasons for the proposed redundancies, the number and description of employees it is proposed to make redundant and the selection criteria. In addition, the Minister for Enterprise, Trade and Employment should be notified of the proposal to create collective redundancies at least 30 days before the first dismissal takes place and the Minister must be given copies of all information given to the employee representatives. The consultation process must occur as soon as possible and in any event at least 30 days before notice of dismissal is given to the first employee. It is important to stress that this time period refers to 30 days before the dismissal notice and not the termination of employment. If the termination date is used as the date of commencement of the 30 day period, the employer could be found to have entered into the consultation process with a pre-determined course of action in mind. As the consultation process must be with a view to reaching agreement, this is not permitted. The aim of the process should be to find alternatives to the redundancies. A Redundancy Panel was established under the 2007 Act. During the 30 day consultation process, collective redundancies may be referred to the Panel for consideration. The Panel will determine whether the redundancies are being carried out in order to replace employees with workers on lower pay or on materially inferior terms and conditions (exceptional collective redundancies). The Panel may also seek the opinion of the Labour Court. If the redundancies are found by the court to be exceptional collective redundancies, the employer may not be entitled to get a rebate on the lump sum payable to the employees and the employees will be entitled to take a claim for unfair dismissal. In such cases certain employees could be entitled to up to five years remuneration as compensation. Unfortunately, some companies will be facing the unenviable task of making certain employees redundant during the tougher economic times ahead. As such companies should be aware of the provisions of the Acts in order to ensure compliance with their obligations in relation to collective redundancies.
The Acts governing collective redundancies apply to establishments with more than 20 employees.
Collective redundancies are made where a certain proportion of employees are made redundant.
Employers must enter into a consultation process with employee representatives with a view to reaching agreement, 30 days before notice of dismissal is given to the first employee.
During the consultation process, the redundancies may be referred to the Redundancy Panel to assess whether they are exceptional collective redundancies.