Redundancies are not a new phenomenon for employers in Ireland, but there has been a notable increase in recent months, particularly in the tech sector, that has dominated media headlines. As an industry that has proven itself to be one which tests the boundaries of traditionally accepted processes, we have lately seen a number of tech companies challenge the traditional consultation process that ordinarily goes hand in hand with affording employees fair procedures in a redundancy scenario. To what extent is there scope to, somewhat, "pivot" away from the established process when conducting redundancies in today's market?
Ailbhe Dennehy, partner, Denise Moran, senior associate and Darren O'Reilly, solicitor, consider current "on the ground" trends and key redundancy process perils and pitfalls.
Remember the formula! Fair reason + fair process = fair dismissal on the grounds of redundancy
In order to effect a fair dismissal on the grounds of redundancy in Ireland, there must be a genuine redundancy scenario and the employer must follow a fair process when effecting that dismissal.
As a starting point, the organisation must consider the objective business rationale for the proposed redundancies and determine if this comes within the permitted reasons for redundancy set out in the Redundancy Payments Acts 1967 to 2022. It is important that the business rationale underpinning any redundancy and the impersonal nature of a role being put "at risk" of redundancy can withstand scrutiny by Irish Workplace Relations Commission.
The process that must be followed will depend entirely on whether or not the proposed redundancies trigger the applicable collective redundancy thresholds. Collective redundancy legislation applies (Protection of Employment Acts 1977 to 2014) ("Collective Redundancy Legislation") where the number of employees impacted by the proposed redundancies in relation to the relevant headcount breaches the legislative thresholds and, as a result, certain notification and consultation obligations arise under statute. Where the thresholds are not breached, organisations have more leeway in terms of how they run the redundancy process.
At a high-level, what process must be followed in a collective redundancy?
Where the collective redundancy thresholds are triggered, the organisation must initiate consultation with employee representatives at least 30 days before the first notice of dismissal is given. Prescribed information, as set out in the Collective Redundancy Legislation, must be provided to the employee representatives. The organisation is also required to notify the relevant Minister of both the impending redundancies and certain prescribed information at least 30 days before the first dismissal takes effect.
The intention behind the notification to the Minister is to afford the Minister scope to intervene to seek to minimise job losses, where possible. However, in practice (until recently), such notifications have not generated a response. In what is certainly a change from ordinary practice to date, we have recently seen the Minister respond to acknowledge receipt of the notification, request additional information or simply seek further clarity on various components of the proposed redundancies. While this change in approach indicates the Ministerial notification requirement is no longer a "tick the box" exercise, the extent to which the Minister will seek to be more actively involved in any consultation process (beyond the foregoing) remains to be seen.
At a high-level, what does an individual redundancy process look like?
Depending on the circumstances, a selection exercise may be required where two or more employees are employed in the same or similar roles, to determine which role(s) will be placed at risk of redundancy. Any selection process must be based on objective, non-discriminatory selection criteria that is applied in a consistent and transparent manner.
Unlike in the case of collective redundancies, there is no statutory obligation on an employer to consult with an employee in an individual redundancy situation. The obligation to consult is instead implied through the onus on employers to act reasonably. When effecting a redundancy, a fair process involves explaining the objective business rationale for the proposed redundancy, informing the impacted employees that their role is "at risk" of redundancy, and holding a number of consultation meetings to explore proposed alternatives (including any suitable alternative roles or redeployment opportunities) to making the role redundant.
Short-circuiting the individual redundancy process
Employers typically hold a number of consultation meetings running over a period of between two and four weeks, depending on the circumstances of the proposed redundancy and what suggestions are being considered. Many of the recent headlines have turned on somewhat "short-circuited" redundancy processes. Some key trends include whether or not an individual redundancy consultation process can be completed within one week or whether or not IT / office access can be cut off prior to the conclusion of the consultation process. These trends have certainly generated headlines and, in addition to the employee relations issues that may arise, the legal risk with these approaches is that the meaningfulness of the consultation processes may be called into question.
Employee communication ending up in the hands of the media
Organisations should be cognisant that regardless of documents being marked "private and confidential" or employees being fully advised of the requirement to maintain confidentiality in respect of the process, relevant correspondence and details of how the process is being run could end up in the court of public opinion (i.e. news outlets or social media platforms). Careful and considered drafting of the documentation involved in the process and strict adherence to pre-prepared scripts will mitigate any potential PR fall-out.
When effecting redundancies in Ireland, take note of the following:
- Remember the formula! Fair reason + fair process = fair dismissal on the grounds of redundancy
- Preparation is key
- Consider if the reason for the redundancy can withstand scrutiny by the WRC
- Who will run the process and check that they have the relevant corporate authority
- Expediting a process can undermine meaningful consultation
- Consideration must be given to alternatives to the proposed redundancy
- Keep a paper trail as evidence that fair procedures were afforded and the redundancy situation is genuine and based on objective grounds
- DSARs are a sharp tool in an employee's arsenal so beware of what is recorded in writing!
For more information please contact our Employment, Pensions and Benefits team or your usual contact at Matheson.
This article was first published in Legal Island on Wednesday 24 May 2023.