This normally means that different skill sets or qualifications are needed which the employee in question does not have.

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1 Guide to Redundancy The firm of Richard Grogan & Associates has been involved in many redundancy cases. The Redundancy Legislation is probably one of the most complex and difficult pieces of legislation to understand. This guide is intended to give a practical overview. This Guide to redundancy is intended for both employers and employees. We have tried to set out this complex area in simple English. Entitlement to Redundancy To qualify for a redundancy payment an employee must have worked continuously for an employer for a period of at least two years. (In the legislation it refers to 104 weeks). There must be a good and legitimate reason for a redundancy. If there is no such reason the employee may have a claim for Unfair Dismissal. To terminate an employment on the grounds of redundancy the main requirements are; 1. A business closure or relocation This is where the employer intends to cease to carry on the business or where the employer intends to cease to carry on the business in that location. Simply moving one or two kilometres away would not be a ground for making an employee redundant. It would have to be a significant relocation. 2. That the business requirements have changed. This normally means that different skill sets or qualifications are needed which the employee in question does not have. 3. A business reorganisation. This normally arises where there is a downsizing of the business where less employees would be required.

2 Making an Employee Redundant When making an employee redundant or seeking redundancy there are rights and obligations on both the employer and the employee. These include; a. The employee must receive a Redundancy Certificate from the company. This must be given no later than the date of the dismissal / redundancy taking place. In effect this is the last day at work. b. There must be a legitimate reason for the redundancy (as set out above). c. The employee must receive proper notice of the redundancy and the reason for the redundancy. d. The employee is entitled to receive Minimum Notice under their contract or as set out by law. e. A redundancy cannot be based on any of the restrictive grounds which would include; Membership / Trade Union activity Religious / Political opinions Civil proceedings against the employer Race Sexual Orientation Age Membership of the Travelling Community Pregnancy Gender Family Status Marital Status

3 If a redundancy is based on any of these grounds the employee will have a claim for either Unfair Dismissal or a claim under the Employment Equality Legislation. What Types of Redundancies are There There are effectively two types of redundancy. There are known as Individual Redundancies and Collective Redundancies. The employer must be given the notice as set out in their contract or the statutory notice for redundancies. Where the employee has worked for less than two years one weeks notice. An employee who has worked for an employer for less than two years may be made redundant but they will not be entitled to a redundancy payment. Where the employee has worked for at least two years they must receive two weeks notice. Where they have worked between two to five years they must receive four weeks notice. If they have worked between five and ten years then the employee is entitled to six weeks notice. Where the employee has worked between ten and fifteen years with the employer they are entitled to eight weeks notice. Where the employee has worked for over fifteen years they are entitled to fifteen weeks notice. There is a statutory form being an RP50 which it is best practice to furnish. Collective Redundancies Collective Redundancies arise where during any period of thirty consecutive days the following occurs. 5 employees are made redundant where there is staff. 10 employees are made redundant where there is staff. Ten percent of the employees are made redundant where there are one hundred to two hundred and ninety nine employees. 30 employees are made redundant where there are over 300 employees.

4 Where there is a collective redundancy the employer must enter into consultations with the employee s representatives or the employees themselves to see if an agreement can be reached. This is set out under the 1977 Protection of Employees Act. These consultations must take place at least thirty days before the first redundancy occurs. The employer must provide certain information to the employees or their representatives. This would include; The proposed redundancy payments and how they are calculated, How individuals have been selected for redundancy; and The reason for the redundancy and the number of employees who will be affected. These special rules apply to collective redundancies. What is Statutory Redundancy Statutory Redundancy is calculated as follows a. Two weeks pay for every year of service subject to a statutory limit of six hundred euro per week. b. One week s normal pay subject to a limit of 600 There is a redundancy calculator which will calculate an employee s entitlement. Part of a year is taken into account in calculating the redundancy payment. The Tax Treatment of Redundancy Payments The statutory lump sum payment is ALWAYS EXEMPT from tax. What happens if any additional redundancy payment is being made In many cases employers, particularly where it is a voluntary scheme will seek to put in place a redundancy package which is better than the statutory redundancy sum and issues often arise as to how this will be taxed.

5 In the case of a termination payment in addition to the statutory lump sum which is always exempt from tax there are additional exemptions. An employee is entitled to receive in addition to the statutory lump sum a figure of 10,160 together with a sum of 765 for each completed year of service. This is set out in Section 201 Taxes Consolidation Act. Problem Issues In a note such as this it is not possible to set out all the problems which arise but there are some regular issues which often come on for hearing or for which we are consulted on. These are a few of these types of issues; 1. The employer makes an employee redundant and then replaces them with somebody else. Unless the employer can show that there was a business requirement or it was part of a business reorganisation even where the employer has paid the employee their redundancy payment the employee may well be able to bring a claim for Unfair Dismissal. This claim must be lodged within six months of the dismissal but it may be extended to twelve months in exceptional circumstances. 2. The employee believes that they have been unfairly selected for redundancy. Again the employer must be in a position to show that either the business requirements have changed or it is as a result of a business reorganisation. The employer will be required, in an Unfair Dismissal case, to show that choosing a particular employee, to make them redundant was based on legitimate grounds. The ground that an individual was the least productive, had the worst sickness record, or had received a written warning in the past have all been held in cases not to be ground justifying a dismissal on the grounds of redundancy. In all of these types of cases the employees have recovered substantial sums. If an employee believes that they have been unfairly selected for redundancy they may bring an Unfair Dismissal claim. If they believe they have been selected for redundancy on any of the grounds set out in the Employment Equality Legislation they may in the alternative have a claim under the Employment Equality Acts. For employers when selecting an employee for redundancy it is very important that there is a clear and precise reason set out for the selection of the particular employee and it is always advisable that this is done in writing, in advance, and, can be shown to be a legitimate selection.

6 The Redundancy Payment is not paid Where redundancy is not paid the employee may bring a claim under the Redundancy Payment Legislation. Again, this should be brought within 6 months but can be extended to twelve months in certain circumstances. The employee receives their statutory redundancy payment but have not been given notice of their redundancy. In those circumstances the employee is entitled to the Minimum Notice. They can bring a claim under the Payment of Wages Act for the Minimum Notice as set out in their contract or can claim the Statutory Notice, whichever is more beneficial to the employee. The employee is also entitled to any outstanding holiday pay. If there is a failure to pay same the employee may bring a claim under the Organisation of Working Time Act. What should employers do so as to avoid problems Before putting in place any redundancy the employer should obtain appropriate legal advice. The firm of Richard Grogan & Associates would be pleased to assist. At a very minimum the employer should; a. Set out in writing the reason or reasons for redundancy b. Set out the selection criteria c. The selection criteria must be fair and open d. Apply the selection criteria to the staff to see who will, as a result of that selection criteria be made redundant. e. If it is a collective redundancy then commence the consultation process. f. If it is not a collective redundancy notification of redundancy should be sent to the employees involved. g. It is advisable to meet with the employees and explain to them why they have been selected. They will also have a right to appeal the redundancy under the Code of Practice and Grievance and Disciplinary Procedures. h. The employee should be notified as to when the employment will finish and should be furnished with a calculation of their redundancy payment which will be due.

7 i. An RP50 form should be completed and given to the employee along with a redundancy payment. The employee should be requested to sign for same. An original of the RP50 should be given to the employee along with their P45 on their last day of work along with any outstanding pay or holiday pay due to them and minimum notice. j. A copy of all the documentation should be kept by the employer What should an employee do if they are being made redundant a. They should ask the employer the reason why they are being selected for redundancy b. They should use the internal Grievance Procedure or the Code of Practice and Grievance and Disciplinary Procedures if the employee is not satisfied with the reason given. c. The employee should ask the employer as to what payment they will receive and should check to make sure they are receiving the proper notice and any outstanding pay including holiday pay due to them on the last day of work. d. If the employee is dissatisfied with their selection for redundancy then legal advice should always be obtained. The firm of Richard Grogan & Associates would be pleased to advise you on all Employment Law Issues which you may have. You may contact us on or Before acting or refraining from acting on anything contained in this note legal advice should always be obtained. This note is intended to give an outline only of the law relating to Redundancy.

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