Redundancy your rights and the obligations of the employer regarding same

We can advise both employer and employee on Redundancy and the criteria that must be met regarding same. Under the Unfair Dismissals Act 1977-2007 the dismissal of an employee is an unfair dismissal unless, having regard to all the circumstances, there are substantial grounds justifying the dismissal. Redundancy is one such ground.

There are five definitions of redundancy contained in the Redundancy Payments Acts 1967-2003. Strict adherence to those definitions is required if an employee is to be dismissed by reason of redundancy. A redundancy may be justified by one or more of these five definitions and these are:

  • the fact that the employer has ceased, or intends to cease, to carry on the business for the purposes for which the employee was employed by him, or has ceased or intends to cease to carry on that business in the place where the employee was so employed;

Or

  • the fact that the requirements of that business for the employee to carry out work of a particular kind in the place where he was so employed have ceased or diminished or are expected to cease or diminish;

Or

  • the fact that the employer has decided to carry on the business with fewer or no employees, whether by requiring the work for which the employee had been employed (or had been doing before his dismissal) to be done by the other employees or otherwise;

Or

  • the fact that the employer has decided that the work for which the employee had been employed (or had been doing before his dismissal) should henceforth be done in a different manner for which the employee is not sufficiently qualified or trained;

Or

  • the fact that the employer has decided that the work for which the employee had been employed (or had been doing before his dismissal) should henceforth be done by a person who is also capable of doing other work for which the employee is not sufficiently qualified or trained.

Once a genuine situation of redundancy has been established, there is a further issue as to the fairness of selection of the employees to be made redundant (if there is not to be a complete plant closure). According to the legislation, redundancy dismissals have to pass the test of “reasonableness”.

Section 6(7) Unfair Dismissals Act, 1977 (as amended) provides that: “in determining if a dismissal is an unfair dismissal, regard may be had… to the reasonableness or otherwise of the conduct (whether by act or omission) of the employer in relation to the dismissal, and… to the extent (if any) of the compliance or failure to comply by the employer in relation to the employee with [any dismissal procedure] or with the provisions of any code of practice”.

Assuming that the employer decides to dismiss its employees by reason of redundancy, the legal entitlements are:

  • An employee who is being dismissed by reason of redundancy is entitled to 2 weeks notice in writing of the proposed dismissal. Part A of the Statutory Form RP50 must be used for this purpose and a copy should be given to the employee. Failure to comply with these requirements renders the company open to a fine. An employee is, during the 2 weeks redundancy notice period entitled to reasonable paid time off to look for new employment, or to make arrangements for training for future employment.
  • An employee who is dismissed by reason of redundancy must be given a redundancy certificate by the company, the original of which must be given to the employee not later than the date on which the dismissal takes effect. This is done on Part B of the Form RP50 which should be signed by both the employer and employee and then copied to the employee together with the statutory lump sum payment. Non-compliance with this requirement renders the employer open to a fine of up to _380.92. The employer must send a fully completed copy of each redundancy certificate to the Department when it claims rebate for the redundancy lump sums paid.
  • A lump sum redundancy payment is payable by the employer directly to the employee, and the amount of the payment is related to                                         – the employee’s length of service with the company;                                                                                                                                                                                 – the employee’s normal earnings (but only up to maximum earnings of €600 per week) prior to redundancy.

The lump sum payment is calculated as follows:

(a) Two weeks pay for every year of service;

(b) in addition, the equivalent of one week’s normal pay subject to the statutory ceiling of €600.

  • An employer who makes a lump sum payment to an employee is entitled to a rebate from the Irish Government of 60% of the statutory component of each lump sum payment made provided the company has given the employee 2 weeks notice of redundancy.. The claim is made by submitting the original RP50 to the Minister within 6 months of the date of payment of the redundancy lump sum.

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