Key learnings
This case highlights that for dismissal due to redundancy to be considered fair, the correct procedures must be followed by the Employer to include a thorough and genuine consultation process prior to the dismissal. It is essential that where there exists a risk to an employee’s role that all suitable alternatives are examined as part of the consultation process as a means to mitigate the risk of redundancy. Acting reasonably and ensuring due process and natural justice are applied are the cornerstones of any redundancy process. In this case, the Respondent failed to offer any consultation in relation to the risk to the Claimant’s employment, failed to ensure due process by negating to examine any suitable alternatives such as layoff, and failed to apply natural justice by not offering representation or an appeal.
Background
The Complainant was made redundant on October 14th, 2020, after initially having a salary reduction of 10% at the start of the Covid-19 pandemic in March 2020. The Complainant had been employed with the Respondent as a food and beverage manager since July 2018. The complaint is that the dismissal was unfair as the redundancy of his role was not genuine. The Respondent’s case is that the Complainant’s role was redundant, and the dismissal was fair.
Summary of Complainant’s Case
The Complainant outlined that on August 7th, 2020, he was called to set up an Employee town hall meeting at 12pm. Adding to the group of 25 Employees who were already made redundant, the Employees were told that there would be further redundancies. The Complainant was brought in for a meeting with the Director of HR and the hotel manager at 1.30pm, where he was told that his job was redundant with immediate effect.
In his complaint, the Complainant noted that there had been no attempt to make any prior consultation with him and he was not given the option to bring someone with him to the meeting. Additionally, there was no specified termination date in his redundancy letter. Similarly, the Complainant referred to the lack of notice regarding the 10% reduction applied to his salary in March 2020, which he claimed if he had failed to accept, he would have lost his job.
The Complainant argued that he should have been entitled to a redundancy payment equal to his pay before March 2020. This was following a meeting with the HR Director to agree a redundancy settlement. The Complainant refused to sign the settlement which was an “ex gratia” sum in addition to the statutory entitlement of €5,810.77. An amount of €1,171.68 was agreed to be written off as holidays taken by the Complainant, to which he argued he had not taken any holidays between February and August 2020 and was in fact due two-weeks holiday pay in lieu.
Summary of Respondent’s Case
The Respondent submitted that due to the effects of Covid-19, there had been significant need for restructuring to the business. At the hearing in January 2022 the Respondent’s four hotels in Dublin had brought close to no revenue since March 2020. At the time, the Respondent had laid off 180 Employees by the end of March and made 25 Employees redundant. Employees earning over €35,000 had their salaries cut by 10% and the retained Employees were instructed to work for three days a week and take two day’s holidays.
Following the significant losses suffered to the business and the replacement of the Temporary Wages Subsidy Scheme, the Respondent decided to only reopen one of the hotels in August 2020 when restrictions lifted. The Respondent stated that they did not expect the other hotels to reopen until mid-2022 and they were continuing to incur losses.
The Respondent emphasised that the decisions they had to make were necessary due to the severe effects the pandemic had on the business, and the decision to make the Complainant redundant was required as part of their efforts to protect the business. The Complainant’s redundancy came after senior management met in August 2020 to discuss which roles were necessary for keeping the hotel open, the Complainant’s role was one of 17 others who were made redundant at this time. This came as a result of the effects of the EWSS (Employment Wage Subsidy Scheme).
Findings and Conclusions
The complaint relates to the Redundancy Payments Act 1967. The Complainant was dismissed due to reason of redundancy which was considered to be unfair by the Complainant.
Section 7 (2) of the Redundancy Payment Act provides:
(2) An Employee who is dismissed shall be taken to be dismissed by reason of redundancy if, for once or more reasons not related to the Employee concerned, the dismissal is attributable wholly or mainly to-
(a) the fact his Employer has ceased, or intends to cease, to carry on the business for the purposes of which the Employee was employed by him, or has ceased or intends to cease, to carry on that business in the place where the Employee was so employed, or
(b) the fact that the requirements of that business for Employees to carry out work of a particular kind in the place where he was so employed have ceased or diminished or are expected to cease or diminish, or
(c) the fact that his Employer has decided to carry on the business with fewer or no Employees, whether by requiring the work for which the Employee had been employed (or had been doing before his dismissal) to be done by other Employees or otherwise,
It is best practice to carry out a thorough consultation with the Employee prior to any decision regarding redundancy. In this case, the Respondent failed to engage in a consultation process and put the business at risk of being found in breach of the Unfair Dismissals Act due to a lack of procedure. Additionally, the financial difficulties the Respondent faced does not justify the lack of consideration of possible alternatives for the Complainant, and the obligation to act reasonably and involve the Complainant in the decision.
It was concluded that the Complainant’s redundancy was not genuine, and it would have been a fairer decision to lay the Complainant off for the period of business closure.
Decision
The decision to uphold the complaint resulted in the recommendation that the Complainant was entitled to receive a payment pursuant to the Unfair Dismissals Act, which is equivalent to nine months’ salary when he worked for the Respondent.