REDUNDANCY INFO

Independent Information on Redundancy in Ireland

Text Box: Redundancy Explained

Redundancy is a termination of employment caused by an employer needing fewer employees to do work of a particular kind and it arises in situations such as the following:
* An employer ceasing a business they have been operating.
* An employer ceasing to carry on business at a location where particular employees are based.
* An employer’s requirements for employees in a particular category ceasing or diminishing.
* An employer deciding to carry on the business with fewer staff.
* An employer organising work to be done in a different way and judging that existing employees are not 
 sufficiently qualified or trained to adapt to this new work method.
* An employer reducing the scope of their workforce.

Redundancy legislation emphasises the objective nature of redundancy with distinctions such as “for one or more reasons not related to the employee concerned”. Thus, an employee who is dismissed for any reason other than redundancy (e.g. misconduct, inefficiency etc.) is not entitled to a redundancy payment. He or she may, of course, have a claim for unfair dismissal under the Unfair Dismissals Acts 1977 to 2001. 

Likewise, redundancy does not arise in a situation where an employee is directly replaced in the same job by another employee (except where he/she is replaced by one of the employer’s immediate family). 

It is up to the employer in the first instance to determine whether or not there is in fact a redundancy situation. Disputes in this regard can be referred to the Employment Appeals Tribunal (EAT) for adjudication.

Under the Redundancy Payments Scheme all eligible employees are entitled to a statutory redundancy lump sum payment on being made redundant. A redundancy situation arises in general where an employee’s job no longer exists and he/she is not replaced. An employee is entitled to two weeks pay for every year of service, with a bonus week added on, subject to the prevailing maximum ceiling on gross weekly pay.

The Department of Enterprise, Trade and Employment, which administers the Scheme, will pay the employer a 60% rebate. Where the employer is unable or unwilling to pay the lump sum, the Department steps in and pays what is due from the Social Insurance Fund (SIF).

Eligibility for redundancy is dependent on the amount of service an employee has, they being in insurable employment, their age and a genuine redundancy situation existing. This is all covered in more detail in the Eligible Employees section. 

In some circumstances where employees have been laid off or left in a short-time working situation, they may be entitled to claim redundancy. This is covered in more detail elsewhere.

When a number of employees are being made redundant within a 30 day period, the organisation may be in a ‘collective redundancy’ situation. Employers have additional responsibilities in collective redundancies and details of how this situation arises and what the additional responsibilities involve are provided in the Employer Information section

Sometimes redundancy situations are voluntary. This is when an employer needs to reduce their workforce size and asks for employees to volunteer for redundancy. The people who volunteer are, if they fulfil the normal conditions, eligible for statutory redundancy. Of course, there must be a genuine redundancy situation in the first place. 

Employers regularly agree redundancy settlements with their employees that are above statutory minimum requirements. In these circumstances, employees, for instance, who have not reached the minimum period of service set by law may also be provided with a payment. Legislation has been drafted to ensure minimum entitlements exist, while, at the same time, facilitating parties to agree more substantial terms. 

In cases of change of ownership, under the transfer of undertaking legislation, where employees are re-employed with no change to their working conditions, then it is not a redundancy situation. This area is covered in more detail in the Employer Information section.

Selection 
Where an employee believes she/he has been made redundant unfairly and disputes it, the onus is on the employer to prove the existence of a redundancy situation. They will also need to be able to demonstrate they used proper criteria in selecting employees for redundancy and that these criteria were used in a fair manner.  

Two noteworthy qualifications exist regarding fair selection:

1. Where an employee is selected in contravention of a procedure that has been agreed between the employer and the employee or trade union or that was established by custom and practice and no special reasons are produced for departing from this procedure, then the dismissal will be unfair.

2. If the employer has an ulterior motive in selecting the particular employee, then the dismissal will be unfair even if there was a genuine redundancy.


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