February 01, 2023
In recent weeks, set against a backdrop of decelerating business growth, hiked interest rates, and increased inflation, we’ve seen several announcements from global technology companies regarding reductions in their global workforce.
Job losses have been announced by many global technology companies operating out of Ireland including HubSpot, Twitter, Meta, Stripe, Amazon, Intel, Microsoft, Google, and TikTok. In some cases, it’s still unknown how the planned reduction of the workforce will hit Irish-based employees but what is certain is that there are important considerations for any employers faced with the unfortunate decision to make a proportion of their workers redundant.
If not managed correctly, collective redundancies present a risk of discontent, internal disputes, and external employment claims, particularly in the areas of redundancy, unfair dismissal and discrimination/equality. Employers need to be conscious of the statutory provisions in relation to collective redundancy and whether it applies to their Organisations.
Firstly, how do you define a ‘Collective Redundancy’?
A collective redundancy situation arises where a dismissal for redundancy purposes occurs over any period of 30 consecutive days and where a minimum number of employees may be affected based on a specific threshold of employee numbers in their totality, such as those indicated below:
-
five persons in an establishment normally employing more than 20 and less than 50 employees.
-
ten persons in an establishment normally employing at least 50 but less than 100 employees.
-
ten per cent of the number of employees in an establishment normally employing at least 100 but less than 300 employees.
-
thirty persons in an establishment normally employing 300 or more employees.
The number of employees normally employed is taken as an average number of employees in the 12 months before the date on which the first dismissal takes place.
What are the Legislative Requirements for entering into Collective Redundancies?
If an Organisation’s potential redundancy numbers are in line with the above, there are legal requirements as outlined in the Protection of Employment Acts 1977 - 2014 which must be adhered to in the event of proposed collective redundancy situations, such as:
-
Notify, in writing, the Minister for Enterprise, Trade and Employment of the proposals at least 30 days in advance before the first notice of redundancy is given;
-
Engage in an information and consultation process with employees’ representatives, at least 30 days in advance before notice of any proposed redundancy is given;
-
Provide employees with the following information: the reasons for the proposed redundancies, the number / descriptions of employees affected, the number / descriptions of employees normally employed, the period over which it is proposed to implement redundancies, the criteria for selection of workers to be made redundant and if there is to be a payment other than the statutory redundancy payment, the method of calculating any such payment.
Risks Associated with Redundancy
One of the key considerations for employers implementing any proposed redundancies is that fair procedures should apply. Implicit in any potential redundancy are the justifications demonstrating a genuine redundancy situation exists, fair selection procedures are applied, and legislative requirements are met in terms of procedures and compliance. If the process is not followed correctly, redress may be sought by an employee under the Unfair Dismissals Acts, the Redundancy Payment Acts, the Protection of Employment Acts or the Employment Equality Acts, which may result in the imposition of a financial liability or other redress on the employer.
Unfortunately, some redundancies may be unavoidable set against our current economic backdrop and if an employer does not carefully take the above considerations into account, they risk getting it wrong, which can prove costly. Therefore, we always advise early and proper planning.
To learn more about compliant practices and the application of legislative requirements contact our consultants today.