Redundancy occurs where employees are let go from their jobs when their position is no longer sustainable. This can happen for any number of reasons including a company closing or restructuring, lack of funds to keep the worker in employment or because the employer decides that the work involved should be carried out in a different way and needs a different type of expertise to carry this out. Unfortunately in the current climate it is becoming all too common that people are losing jobs and finding themselves plunged into the uncertainty that comes with this. What role then does the law play in assisting those who are faced with these circumstances and what entitlements do you have if you find yourself in a similar situation?
Types of Redundancy
It is worth noting from the offset that three types of redundancy exist – voluntary redundancy (when the employee chooses to leave their position when offered the opportunity to do so by their employer), compulsory (where the employee is given no option and is forced to leave their employment) and collective (large scale redundancies).
Under Irish law a minimum amount of compensation exists which becomes payable to those who have been made redundant, either voluntarily or compulsorily once the employee is over 16 years old and has been in insurable employment for at least 104 continuous weeks with their employer (insurable meaning that PRSI contributions have been paid).
The requirement of “continuous weeks” will generally still be met even if the employee has had a period of sick leave, holidays, adoptive/parental leave, maternity leave, carers leave or any career breaks or other time off which was approved by the employer. This means that absence for these reasons will not disqualify somebody from being entitled to redundancy payment if the 104 weeks would not have been met otherwise but such periods of absence may not be compensated for when calculating redundancy entitlement.
If the redundancy candidate meets these criteria they are automatically entitled to a minimum tax free redundancy payment of 2 week’s pay for each year they have worked with the employer plus an extra one week’s pay on top of this. The amount per week of compensation will be equal to what the employee is normally paid as their gross wage up to a ceiling of €600.00 per week.
This is the least amount that they are obliged to get but it is open to each employee to negotiate with their employer to secure a higher payment if at all possible. Trade Unions often take on this role if they are involved. There is no maximum level of compensation so employees need to make the best case they can to make sure that any deal made is in their best interests. Payment should be made on the last day of employment and a certificate of redundancy setting out the amount paid and basis of the calculation (a Form RP50) must be given to the employee who will sign same as an acknowledgement that they have received their entitlements in full.
A minimum notice period of two weeks must also be given to each worker who is being let go or in the case of collective redundancies consultations must be made with employees or unions 30 days in advance.
It is important also to be aware that any redundancy made by an employer must be reasonable and necessary having regard to the totality of the circumstances and alternatives to letting people go should be considered – any unfair selection of redundancy candidates or a selection which breaches the terms of your employment contract can lead to a claim for unfair dismissal. Specific employment equality laws exist which govern such situations. Should you have any concerns regarding your selection for redundancy or in considering a redundancy package that may be offered to you we would be happy to assist in advising you on these matters.