Last week I looked at wage cuts. This week I’ll tackle the issue of redundancy.
In the first instance, a business can compulsorily lay off staff or impose short time (reduced working hours ), but these options can only be temporary by law.
Ultimately a business may have to consider redundancies, whether voluntary or compulsory. In considering voluntary redundancies, the employer can offer a redundancy package that is more attractive than statutory redundancy in order to entice employees to accept it. However the Voluntary Redundancy Scheme might not achieve the desired results. There may be insufficient applicants, or those who apply have skills or experience vital to the business, and the employer may not agree to their redundancy. The issue of compulsory redundancies will then arise.
The Redundancy Acts provide a number of specific grounds for redundancy, but generally a redundancy can be legally justified where there is a closure of a business, reorganisation or rationalisation, or simply a lack of work. Dismissal for redundancy is lawful, but an employee can bring a claim for unfair dismissal if he feels that the dismissal was not a genuine redundancy. However it is the employer who must prove to the Employment Appeals Tribunal that this was a genuine redundancy situation, and that the employee was fairly selected for redundancy.
It is a common misapprehension that in selecting an employee for redundancy, an employer must use the “last in, first out” method. In many cases this may be the appropriate and cost effective method of selection, but there are also many cases in which it is not. Employers must have regard to any collective agreement with employees that prescribes a method, or there may be a company policy on the matter. Even if there is no specific agreement or policy in writing, where selection for redundancy occurred in a particular way previously, it might well be accepted that the custom and practice of the business was to use that selection method again.
However for most employers the issue of redundancy is arising for the first time, and there are no specific agreements or policies in place. Those employers are free to adopt a selection method designed to retain certain qualifications, skills, and experience within the workforce. For example an employee with 30 years’ service might not have the computer skills of his colleague with two years’ service. If the company needs the skilled employee it is possible to retain him while making his longer serving colleague redundant. An employer considering skills in the selection process needs to take particular care in assessing each employee and should minute all of the factors which have determined the selections. The employer should be aware that his decision may be scrutinised by the tribunal at a later stage, and the decision should stand up to an objective review. With that in mind, the key characteristic of a genuine redundancy is its impersonality. Redundancy is not an opportunity for an employer to offload all of its bad timekeepers, lazy or disruptive staff. It is the job that has become redundant, not the person.
The employer will have to pay a redundancy lump sum to any employee with two years’ continuous service. The employee is entitled to receive two weeks’ salary (up to a maximum of €600 per week ) for each year of service, and one additional week. However the company will be entitled to recover 60 per cent of the payment from the Department of Enterprise, provided that it follows all procedural requirements.
In challenging times employers and their staff are being severely tested, and unpalatable decisions have to be made by both to ensure that business continues and jobs are retained. The correct approach by employers and workers can foster a spirit of unity, and restore confidence in the workplace. The employer needs to be honest and compassionate in his dealings with staff. The staff must acknowledge the daily reality for the business. Although it may be difficult to believe, there will be an upturn, and companies whose management and workforce take responsibility in these worst of times, will see the rewards in the future.
Mary McGregor is a litigation solicitor in the firm of Douglas Kelly & Son, Swinford, Co Mayo, telephone 094 925 1121.
