Redundancy Rights

It is important that employers and employees seek advice before undertaking a redundancy process. There are various redundancy rights and obligations imposed upon employers prior to undertaking a redundancy.

They will need to comply with provisions in the Employment Rights 1996 which state that, amongst other things, an employer needs to undertake the following:

  • Identify an appropriate pool for selection;
  • Consult with individuals in the pool;
  • Apply objective selection criteria;
  • Consider suitable alternatives to redundancy.

In addition, if there are 20 or more employees being made redundant over a period of 90 days or less, an employer has a duty to consider the obligations under the Trade Union and Labour relations (Consolidation) Acts 1992. Advice should be sought specifically in this regard.

Essentially an employer must ensure that they go through the correct procedures and that they adopt a fair and objective procedure. If following that process employees are to be made redundant then they will be entitled, as a minimum, to statutory redundancy pay. It may be contractually that they are entitled to enhanced redundancy payments and/or that the company operates an enhanced package. If that is the case, then advice should also be sought when applying it.

Before proceeding, an employer must establish that there is a genuine redundancy reason which generally means work place closure, business closure or reduction of workforce. It is important to identify those employees who are at a risk and then establish the correct pool. Thereafter, employees should be scored based on selection criteria. Those criteria should be established in consultation.

It is also good practice if employees are to receive an enhanced redundancy package to request a signed compromise agreement if there are issues in relation to their employment. A compromise agreement will prevent any claims at a later date and ensure that any payments are properly documented.

Alternatives to redundancy which should be considered include reducing hours, reducing salary, job sharing and/or temporary stoppages such as sabbaticals or unpaid leave. Employees will always be reluctant to take a pay cut, but it may be a viable option as opposed to redundancy. Any pay reduction must be agreed in writing.

The key for any company is to adopt a fair procedure and consult properly with all employees involved. Provided they do so they are likely to avoid issues at a later date which include disgruntled employees and potential unfair dismissal claims. The most common claims in relation to redundancy relate to failure to inform and consult and/or adopt a fair/objective procedure. This can include using redundancy at a means to dismiss employee that no longer fits in and/or making a pre-determined decision as to who should be made redundant without undergoing the proper requirements. Seeking advice at an early stage can prevent significant time and expense post termination.