The news that large numbers of staff are being laid off in big tech firms in Ireland raises important legal issues.
While individual circumstances will differ depending on the situation, employees and employers need to be aware of the law, particularly where large numbers of staff are being made redundant at the same time.
When is it a Collective Redundancy?
Collective redundancies of large numbers of staff at the same time are governed by EU directives intended to bring laws in this area across the different Member States into line with each other. The EU directives are given effect in Ireland by the Protection of Employment Acts 1977 – 2014.
Collective redundancies occur when an employer is making a minimum number of employees redundant within a period of 30 consecutive days. The minimum number depends on the size of the employer’s workforce. For example, it is 30 or more employees being made redundant in an establishment that normally employs 300 or more employees.
Employers Obligations
Where it is proposed by an employer that a collective redundancy is to take place, the employer is under certain legal obligations.
- Consultation: First of all, the employer must hold consultations with the employees’ representatives. This can be a trade union or, where there is no trade union, a person or persons chosen by employees to represent them.
The purpose of these consultations is to try to reach agreement on the possibility of avoiding the proposed redundancies, reducing the number of employees affected by them or at providing aid for redeploying or retraining employees made redundant. The consultations also should discuss the basis on which it will be decided which particular employees will be made redundant.
Importantly, the consultations must be initiated at the earliest opportunity and at least 30 days before the first notice of dismissal is given.
- Provision of Information: Before a collective redundancy can take place, the employer is obliged to give certain information to the employees’ representatives. This must include –
- the reasons for the proposed redundancies,
- the number, and descriptions or categories, of employees whom it is proposed to make redundant and,
- the criteria proposed for the selection of the workers to be made redundant.
An employer who fails to comply with the legal obligations to hold consultations and to provide information to employees’ representatives is committing a criminal offence and can be fined up to €5,000 on conviction.
A valid reason for redundancy?
More generally, there are strict rules applying to all redundancy situations in Ireland that employers must comply with. A genuine situation of redundancy must exist. In other words, the employer must have a real business reason to make employees redundant, for example through a business reorganisation or financial difficulty.
Even where a genuine situation of redundancy exists, the employer must use fair and reasonable selection criteria in choosing people to make redundant. In many workplaces, redundancies are done on a ‘last in, first out’ basis. However, other criteria may be applied once they are fair and reasonable.
Employers cannot select people for redundancy on an arbitrary basis, nor can they discriminate in selecting an employee for redundancy, for example on the basis of the employee’s age, gender or sexual orientation.
Rights of the Employee
Individual employees can also bring a complaint to the Workplace Relations Commission that the employer has breached the obligation to hold consultations or to provide information. Where the WRC finds that the employer has contravened the relevant provisions of the Protection of Employment Acts, it can direct the employer to comply with the Act and can also award up to 4 weeks’ pay to the employee by way of compensation.
An employee cannot be made redundant while they are on maternity leave, which is a very important consideration for employers to bear in mind when announcing large numbers of lay-offs in a short period of time.
Where an employee has been selected for redundancy unfairly, or that there was no genuine redundancy situation, that employee can bring a claim for unfair dismissal to the WRC. In such a claim, the dismissal of an employee is deemed to be an unfair dismissal unless the employer can prove that there were substantial grounds justifying the dismissal. Therefore, the burden falls on the employer to prove that the dismissal was justified, the employee does not have to prove that the dismissal was unfair.
A final word…
In a world where global firms often make decisions regarding employee headcount on a worldwide basis, it is easy for the employer to fall foul of European or domestic law as it relates to redundancy and dismissal. However, such employers may find that their haste in seeking to reduce their employee numbers ends up resulting in successful legal claims by employees, or even criminal sanctions.
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The EBA is an association of Senior and Junior Counsel who are members of the Bar of Ireland who specialise in employment, equality and labour law in litigation and in advising and supporting employers and employees in resolving workplace disputes.
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The views expressed above are the author’s own and do not reflect the views of The Bar of Ireland.