Redundancy and Alternatives to Redundancy

Clare Ferguson

H.R. Outsourcing,3 Parnell Street,

WaterfordTel. 051 820101

Email: hr@hroutsourcing.iewww.hroutsourcing.ie

Overview

• Introduction• Redundancy Legislation• Selection Criteria• Notice Periods• Redundancy Payments• Alternatives to Redundancy: Lay-off, Short-

time and other alternatives

Introduction

• Current economic climate forcing reductions in staff costs

• Cost-cutting measures to consider: Redundancy, Lay-offs, Short-time

• Keeping Your Productive People

Redundancy Legislation

• Obligations on employers under the following acts:– Redundancy Payments Acts 1967-2007– Unfair Dismissals Acts 1977-2007– Protection of Employment Act 1977, 2007

• Definition of Redundancy:– Redundancy occurs when an employee is

dismissed for one or more reasons not relating to the employee concerned

Selection Criteria

• Voluntary Redundancies• Selection of employees for compulsory

redundancy must be on objective grounds• ‘Last-in, first-out’ criteria (all else being equal)• It is important to ensure that the selection

criteria chosen:– Does not discriminate (Part-time, Fixed term

workers)– Ensures the required skill-set is maintained in the

business

Notice• Collective Redundancies and Notice

– What is a Collective Redundancy?– Consultation must take place 30 days before the first notice is served– Formal Notice to Minister for Enterprise, Trade and Employment

• In the case of any termination of employment, a minimum notice period applies, dependent on the length of service:

Length of Service Minimum Notice13 weeks- 2 years1 weeks’ notice2- 5 years 2 weeks’ notice5-10 years 4 weeks’ notice10-15 years 6 weeks’ notice>15 years 8 weeks’ notice

• The notice period stated in a contract of employment will over-ride the notice periods above if a longer period of notice is outlined in the contract.

• Payment in lieu of notice may apply if stated in Contract of Employment or on agreement with employee.

Redundancy Payments

• An employee who is terminated on the grounds of redundancy is entitled to a redundancy payment, providing they have 104 weeks (2 years) continuous service with the company after reaching the age of 16.

• Statutory Redundancy payments are calculated as follows:– 2 weeks’ gross pay for each year of continuous employment + 1

additional weeks’ gross pay

• The statutory payment is capped at €600 gross earnings per week and all statutory payments are tax-free

• 60% rebate can be claimed by employers from the Department of Enterprise, Trade and Employment.

• Ex-Gratia Payments

Alternatives to Redundancy (1)

• Lay-off– Lay-offs arise where employment ceases temporarily

due to the employer being unable to provide an employee with work for which s/he was employed to do

– Employers may lay-off their workforce where it is reasonable to believe that the lay-off will not be permanent.

– Employees are not entitled to be paid during the lay off period

– Notice must be given to the employee, although no set periods of notice apply.

Alternatives to Redundancy (2)

• Short-time– Short-time occurs where an employees’ pay is less

than half of his/her normal weekly pay or their hours of work are reduced to less than half of his/her normal weekly hours.

– Employees receive pay in respect of hours actually worked during periods of short time

– Notice must be given to the employee, although no set periods of notice apply.

Alternatives to Redundancy (3)

• Please note that employees on lay-off or short-time can claim for redundancy after a period of: – 4 consecutive weeks or– A series of at least 6 weeks within a 13 week period

where not more than 3 were consecutive• Other Alternatives– Reduced Hours– Pay freeze– % Pay cuts

Thank you for your attention

For further information, please contact:-

Clare Ferguson Managing Director

HR Outsourcing,3 Parnell Street,

Waterford.

www.hroutsourcing.ieTel. 051 820101 Email: hr@hroutsourcing.ie