In our series on redundancy, we’ve looked at the redundancy process and settlement agreements.
Because of the economic impact of Covid-19, we are, unfortunately, seeing more and more employers implement collective redundancies. Here, we take a closer look at the law around collective redundancies, the process employers need to adhere to and what employers and employees need to know if entering the process.
Collective redundancies differ from individual redundancies as there is a statutory process which must be followed when implementing collective redundancies. The procedure for large scale redundancies is laid down by the Protection of Employment Acts 1977-2014 (the “Act”). The Act establishes greater obligations on employers than in individual redundancies. The Act places an onus on employers, in the event of collective redundancies, to consult with employees and their representatives and to also notify the Minister for Employment Affairs and Social Protection at least 30 days before any dismissals take place.
What classifies as a collective redundancy?
A collective redundancy situation arises from dismissals where, in a period of 30 consecutive days, the number of employees being made redundant is:
- At least 5 employees in an establishment normally employing more that 20 and less than 50 employees;
- At least 10 employees in an establishment normally employing at least 50 but less than 100 employees;
- At least 10% of the number of employees in an establishment normally employing at least 100 but less than 300 employees; or
- At least 30 employees in an establishment normally employing 300 or more employees.
The Act does not apply to establishments which usually employ less than 21 employees. The Act applies to all employees with a contract for service and therefore the Act applies to all employees, even if they are not entitled to a redundancy payment.
Obligations of the employer during collective redundancies:
An employer is required to consult with and provide information “in good time” to the affected employees and to consult with the employees’ representatives. The employer must enter the consultation process with a view of reaching an agreement. However, it is not essential that an agreement is reached. The aim of the consultation process is to see if there are any alternatives to redundancies. It is important that discussions on the possibility of avoiding the proposed redundancies and reducing the number of employees affected take place during the consultation process. Employers cannot avoid going through the consultation process as failure to do so would breach the Act.
The consultation process should be initiated at the earliest opportunity and in any event at least 30 days before the first notice of dismissal is given. This means that consultations must begin before a decision is made and no contracts can be terminated until after the consultation process has finished.
Employers must give all relevant information in relation to the collective redundancies, in writing, to the representatives of the affected employees, including:
- The reasons for the proposed collective redundancies;
- The number and descriptions or categories of employees whom it is to make redundant;
- The number of employees and their description or categories normally employed;
- The period during which it is proposed to affect the redundancies;
- The criteria proposed for the selection of the employees to be made redundant; and
- The method for calculating any redundancy payments other than those methods set out in the Redundancy Payments Acts 1967-2014.
Notification to the Minister for Employment Affairs and Social Protection
The employer must also notify and provide information to the Minister for Employment Affairs and Social Protection (the “Minister”) at least 30 days before the first notice of redundancy is issued. The employer is obliged to send a copy of this notification to the employees’ representatives.
Collective redundancies cannot take effect before the expiry of the 30-day consultation period which commences on the date the Minister is notified.
If employers effect redundancies before the expiry of the 30-day consultation period, they may be found guilty of an offence under the Act and liable on conviction to a fine not exceeding €250,000. Employers should be aware that failure to consult can lead to a finding of unfair dismissal. Also, employers who fail to notify the Minister with the relevant information or fail to provide notification to the employees’ representatives may be found guilty of an offence and liable on conviction to a fine not exceeding €5,000 under the Act.
As with single redundancies, collective redundancies must be carried out in a fair and reasonable manner. The collective redundancy must be genuine, the employees must be fairly selected for redundancy and the employees must be selected in conjunction with an agreed procedure with a justifiable reason. If these criteria are not followed, the employees’ dismissals could be deemed unfair dismissals and could result in claims being made to the Workplace Relations Commission by the employees affected.
Given the sharp increase in the number of collective redundancies over the past few months, and the heavy sanctions that apply if there is a breach of the Act, it is important that both employers and employees are aware of their rights and responsibilities under the Act prior to implementing collective redundancies.
For more information on collective redundancies, or any other redundancy or employment-related queries, please contact Emer Murphy, Solicitor on the Employment Team at [email protected] or 01 644 5800 or Marc Fitzgibbon, Head of Employment at [email protected] or 01 644 5800.