Redundancies and the law: what are your obligations?

No employer wants to let people go, but when redundancies are inevitable, a full understanding of your legal obligations is essential, writes Emma Richmond

The news has been dominated recently by large-scale redundancies in the technology sector, with behemoth employers like Twitter, Stripe and Meta making headlines daily.

Despite the depressing news, redundancy is not something any employer wants to face. However, in these uncertain times, it can be inevitable. Redundancy will leave your staff worried about what this means for their future career prospects so, as an employer, it is important to get the right legal advice when contemplating a redundancy programme.

Employers must fully understand their legal obligations under Irish employment legislation, so we strongly advise consulting with a professional firm to ensure a fair, transparent, and legally compliant redundancy process.

Before you reach out to a third-party, there are some key considerations to bear in mind.

Redundancy

A redundancy occurs when an employee's position no longer exists and the employee is not replaced. Within Irish employment legislation, there is provision for different scenarios which constitute a redundancy situation—for example, where an employer decides to carry on its operations with fewer employees.

Collective redundancy

A collective redundancy occurs where multiple redundancies are affected within a 30-day consecutive period. This is also dependent on the size of the workforce:

In a collective redundancy situation, there are additional employer obligations. These include:

• notifying the Minister of Enterprise Trade and Employment of the proposed collective redundancies 30 days prior to effecting any redundancies; and
• engaging in a consultation process with employee representatives. The minimum period of consultation is 30 days. No employee can be made redundant during this consultation period.

Selection criteria in a collective redundancy

Where a certain number of employees within a particular department (e.g. 10 employees within a department of 20) are being made redundant, the employer must apply objectively justifiable selection criteria. Examples of objectively justifiable selection criteria include adopting the approach of “last in, first out” or basing the selection criteria on an employee’s qualifications.

Collective redundancy notice period

In a collective redundancy situation, no employee can be made redundant during the consultation period.

Once the consultation process has concluded and notice is issued, an employee who has at least two years’ service and is selected for redundancy must be given at least two weeks’ notice. Where an employee’s contractual notice is greater than two weeks, the employer must provide the employee with their contractual notice. While an employer may pay an employee in lieu of their notice period, the employee must be permitted to work during two weeks of their notice period.

Statutory redundancy

Employees with over two years’ service are entitled to a statutory redundancy payment which is calculated as two weeks' pay for every year of service (capped at a maximum of €600 per week) plus one additional week's pay.

Employers may decide to pay their employees an ex gratia payment over the statutory requirements. It is good practice where employees are receiving an ex gratia payment that they be expected to sign a severance agreement in which they waive their right to take any future claims against their employer.

Employees should obtain independent legal advice in advance of signing a severance agreement. Employers should get advice in drafting severance agreements to ensure that they are effective and enforceable.

Redundancy entitlements and legal compliance

Another key consideration is redundancy entitlements. Some of these include:

• entitlement to statutory redundancy;
• the lawfulness of the redundancies;
• timeframes of employment contracts;
• any transfer of undertakings in relation to the TUPE Regulations; and
• considerations regarding ex gratia payments.

Employing the services of a professional for legal advice and consultation on relevant compliance requirements concerning redundance is advised here.

Emma Richmond is Partner at Whitney Moore LLP Law Firm