Redundancy Payments Acts 196J-10O5 – Protection of Employment Act 1977

Under the Unfair Dismissals Act 1977 (as amended) the dismissal of an employee is an unfair dismissal unless, having regard to all the circumstances, there are substantial grounds justifying the dismissal. Redundancy is one such ground.

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There are five alternative definitions of redundancy contained in the Redundancy Payments Acts 1967-2003. Strict adherence to those definitions is required if an employee is to be dismissed by reason of redundancy.

A redundancy may be justified by one or more of these five definitions and these are:

• the fact that the employer has ceased, or intends to cease, to carry on the business for the purposes for 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

• the fact that the requirements of that business for the employee 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

• the fact that the 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 the other employees or otherwise; or

• the fact that the employer has decided that the work for which the employee had been employed (or had been doing before his dismissal) should henceforth be done in a different manner for which the employee is not sufficiently qualified or trained; or

• the fact that the employer has decided that the work for which the employee had been employed (or had been doing before his dismissal) should henceforth be done by a person who is also capable of doing other work for which the employee is not sufficiently qualified or trained.

Redundancy – termination of employment

Once a genuine situation of redundancy has been established, there is a further issue as to the fairness of selection of the employees to be made redundant (if there is not to be a complete plant closure). According to the legislation, redundancy dismissals have to pass the test of “reasonableness”.

Section 6(7) Unfair Dismissals Act, 1977 provides that:

‘in determining if a dismissal is an unfair dismissal, regard may be had… to the reasonableness or otherwise of the conduct (whether by act or omission) of the employer in relation to the dismissal, and… to the extent (if any) of the compliance or failure to comply by the employer in relation to the employee with

[any dismissal procedure] or with the provisions of any code of practice.’

Legal Entitlements

Assuming that the employer decides to dismiss its employees by reason of redundancy, the legal entitlements are:

[i] Notice in accordance with the employee’s contract (or, at the employer’s option, payment of salary in lieu of that notice period).

[ii] An employee with 104 weeks continuous service is entitled to a redundancy lump sum payment (see details below).

[iii] An employee who is being dismissed by reason of redundancy is entitled to 2 weeks notice in writing of the proposed dismissal. A statutory Form RP1 must be used for this purpose. A duplicate of the Form RP1 fully completed must be sent to the Department of Enterprise, Trade and Employment at the same time as it is given to the employee. Failure to comply with these requirements renders the company open to a fine of up to €380.92. An employee is, during the 2 weeks redundancy notice period entitled to reasonable paid time off to look for new employment, or to make arrangements for training for future employment,

[iv] An employee who is dismissed by reason of redundancy must be given a redundancy certificate by the company, the original of which must be given to the employee not later than the date on which the dismissal takes effect. The redundancy certificate must be on the prescribed Form RP2. Non-compliance with this requirement renders the employer open to a fine of up to €380.92. The employer must send a fully completed copy of each redundancy certificate to the Department when it claims rebate for the redundancy lump sums paid.

[v] A lump sum redundancy payment is payable by the employer directly to the employee, and the amount of the payment is related to: the employee’s length of service with the company; and the employee’s normal earnings (but only up to maximum earnings of €507.90 per week) prior to redundancy.

The lump sum payment is calculated as follows:

(a) Two weeks pay for every year of service;
(b) in addition, the equivalent of one week’s normal pay subject to the statutory ceiling of €507.90.

[vi] An employer who makes a lump sum payment to an employee is entitled to a rebate from the Irish Government of 60% of the statutory component of each lump sum payment made provided the company has given the employee 2 weeks notice of redundancy. The company should forward Form RP2 together with Form RP3 (which is, in effect, the company’s claim for the 60% rebate) to the Department.

 Where collective redundancies occur

• 5 employees in a company employing between 20 to 50 employees.
• 10 employees, in a company employing between 50 to 100.
• 10% of employees in a company employing between 100 to 300
• 30 employees in a company employing more than 300 employees.

Then there is an obligation to notify employees and the Minister for Enterprise Trade and Employment 28 days before the redundancies are due to take place. There is also an obligation to consult with employees prior to the redundancies taking effect.

Where companies are in business in more than one EU state, the workers concerned and their representatives may have certain consultation and information rights under EC legislation.

European Communities (Protection of Employment) Regulations, 2000 (S.I. No. 488 of 2000)

The consultation requirements under the 1977 Act, referred to above, are extended by these Regulations to include consultation with employee representatives where there is no recognised trade union. The Regulations also provide for increases in the level of fines for failure to initiate consultation, failure to notify the Minister of proposed redundancies and failure to keep records.