What is redundancy and why is it an issue for employers?
Redundancies are difficult. Redundancy expertise is essential.
The reality is that the Redundancy process is difficult for the Employee, but is also an unpleasant one for the Employer. It’s something the Employer must get right first time, and have very clear procedures – and training if necessary – for Managers, regardless of the extent to which the HR Function is able to support them through it.
For the purpose of this section of our website, we are focusing on non-collective redundancies as defined by the Redundancies Payment Act 1967 and subsequent revisions.
What is redundancy?
Redundancy is when you, as an employer reduces the workforce because a job or jobs are no longer needed. Note that if you dismiss somebody and employ someone else, that is not a redundancy.
What rights do employees have in redundancy?
The Redundancy Payments Acts bestow a minimum entitlement to a redundancy payment for employees who have a defined period of service with the employer. This is commonly referred to as “statutory Redundancy. Remember however, that not all employees are entitled to the statutory redundancy payment.
Do employers pay redundancy payments?
- By and large, yes. As an employer, if you pay the statutory redundancy entitlement and give proper notice of redundancy (at least two weeks) you are entitled to a 15% rebate from your employer PRSI contributions. You will need to be tax compliant to receive this rebate.
How should employers deal with a redundancy situation?
First thing: “It’s not you, it’s the role.”
Know this: jobs are made redundant, not people. This principle, and the language relating to it, are fundamental in handling matters.
HR Duo’s service in this area addresses the step phases of having “just cause” for Redundancy, any selection process, the consultation process (often skipped by Employers, causing difficulties for themselves), documentation and all other factors relating to a Redundancy that may particularly apply to a Client’s business.
Our aim here is to provide the proverbial peace of mind, and for an Employer to know that should the need arise to make a staff or staff members redundant; everything will be done to the highest professional standards.
We work to ensure Clients avoid Unfair Dismissal Cases, and expensive, sometimes widely publicised, visits to the Labour Court.
Also, the manner in which a company communicates and manages a Redundancy can quickly become a cause for disquiet among remaining Employees and client and partner companies. So – don’t go there.
HR Duo’s services is there to give SMEs and their HR Team the confidence to engage in the Redundancy Process, secure in the knowledge everyone knows what to do, and how to do it.
Redundancy can be an entirely necessary task for an Employer to undertake. HR Duo gives clients the confidence and professional back-up to make the redundancy, get through it, ‘survive’ it, and be seen by the departing Employee as having applied a high level of ethical and business standards throughout.
What are the obligations of an Employer in a redundancy?
Redundancy of any job has the capacity to affect more than just the Employee and Manager directly involved: if the matter is not dealt with professionally by observing all the statutory steps, or handled with all the respect and compassion possible, the Company will also have problems. As an employer, you have critical obligations in relation to redundancy such as:
- Have you calculated (and paid) the correct redundancy pay?
- Did you calculate notice periods correctly?
- Are there alternatives to redundancy available?
- Is this a collective redundancy situation?
- Have you engaged in a consultation process?
If you get this wrong, there is a myriad of “nasties” waiting for you e.g. claims for unfair dismissal, additional redundancy payments and employment tribunals.
HR Duo provides the comprehensive redundancy policy, advisory and procedural required by SMEs to ensure the Company performs any Redundancies properly – and humanely.
What is constructive dismissal?
Constructive dismissal is when due to the conduct of you, the employer, or one of your employees, an employee can no longer carry on working for you. In simple terms, your employee is claiming that due to your behaviour/conduct, he or she was left with no other option but to resign.
As we said earlier, it may not necessarily be your own conduct but it could be another employee’s behaviour or, possibly more commonly, the manner in which a complaint, grievance or disciplinary process was conducted.
The key point here though, is that the employee has resigned, they haven’t been dismissed.
What are the grounds for constructive dismissal?
There are no specific grounds – many of the cases and ruling rely on case law and precedent. However, when assessing the employer’s actions, in order to qualify as constructive dismissal the conduct of the employer must not be petty or minor but must go to the root of the relationship between the employer and employee. A common example of grounds for constructive dismissal is if a bullying or harassment complaint is not handled properly.
A normal requirement for a successful claim for constructive dismissal is that the internal procedures must be exhausted. This of course means that you as an employer must, in fact, have procedures and policies to deal with incidents that could lead to a claim. So, for example; if your employee brings the concern to your attention in the time leading up to the resignation, was the grievance procedure followed? Was there an appropriate investigation etc?
Unlike other unfair dismissal claims, the burden of proof in cases of constructive dismissal lies with the complainant. However, the employer must be able to demonstrate an appropriate and reasonable action to the complaint.
How is redundancy calculated in Ireland?
The statutory redundancy payment to which an employee is entitled is calculated as follows:
Two weeks pay for each year of continuous employment over the age of 16.
Plus a bonus week. Note that all excess days are calculated as a portion of 365 days i.e. 6 years 211 days = 6.58 years.
‘Reckonable service’ is service excluding ordinary sick leave over and above 26 weeks and an occupational injury over and above 52 weeks. Reckonable service also excludes absence from work because of lay-offs or strikes. However, short-time work is reckonable.
All calculations are subject to a ceiling of €600 per week.
Statutory payments are exempt for tax.