Redundancy
This can end up being very expensive for employers if not handled carefully. To comply with the Redundancy Acts, it is advisable to consult your solicitor before making any employees redundant. When an employer decides, on redundancy grounds, to let go an employee from their company, strict rules apply to make the purported redundancy legal.
A common reason to make a redundancy is when the job position of the employee ceases to exist, for example, when two companies merge. In such a situation no new employee can be taken on to continue in that role. Re-organisation (downsizing of the company) is also a recognised redundancy situation. Where a company is making several redundancies, the redundancy process of selection is very important. Here an accepted rule is the ‘Last in First Out’ rule. In other instances where the ‘Last In…’ rule is not used the employer must list the possible candidates for redundancy and score or rate their skills combined with their length of service with the company, absenteeism, punctuality, and disciplinary record. But in this process, impartiality is critical. A bias against an employee chosen for redundancy could result in an unfair dismissal case taken by the employee. An employer must inform the employee (or employees) that a redundancy situation has arisen and must inform them of the process to be carried out in order to determine who will be selected to be made redundant. This is known as the ‘consultation process.’
Employee Rights
An employee is entitled to a lump-sum payment on leaving their job under redundancy. To qualify, employees must have two years with their employer in which they will receive two weeks’ pay for each year of employment and one further week’s pay. There is a maximum of €600 per week. An employer can give more than the statutory entitlement if they wish to.
Severance Contract
This can be a useful device for employers to avoid any future claims by a former employee for unfair dismissal or unfair redundancy selection. Basically, the employer gives the employee ex-gratia sum over and above the statutory payment and these terms are usually set out in a severance contract. If the employee accepts the severance contract, then they cannot later make a claim against their employer regarding their departure under redundancy.
