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Redundancy

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  • Redundancy Payments Acts, 1967–2003
  • Protection of Employment Act, 1977 (as amended)
  • European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (S.I. No. 131 of 2003)
  • Protection of Employment (Exceptional Collective Redundancies and Related Matters) Act, 2007

Redundancy Payments Acts, 1967-2003

Redundancy payments compensate a former employee whose position has become redundant for loss of employment and benefits built up in employment. The legislation also provides for certain lay-off and short-time situations.

Scope

To come within the scope of the Redundancy Payments Acts, an employee must:

  • work or have worked under a contract of service or apprenticeship. Neither agency workers nor persons working under a contract for services (independent contractors) are covered by the Act;
  • be over 16 years of age and in employment which was insurable for all benefits under the Social Welfare (Consolidation) Act 2005;
  • have been in such employment in the period of the four years ending on the date of termination;
  • have been continuously employed for 104 weeks (after attaining the age of 16 years).

Continuous service

Employment is presumed to be continuous unless proved otherwise. Employment is continuous unless it is terminated by:

  • dismissal
  • voluntary resignation
  • receipt of a redundancy payment.

Continuity is not broken by:

  • an employee voluntarily transferring from one employer to another and both employers and the employee agreeing that all the service will be regarded as continuous;
  • periods of absence due to sickness or injury;
  • lay-off, holidays, or any other absence authorised by the employer;
  • service in the Reserve Defence Forces;
  • absence from work because of a lock-out by his employer or for participation in a strike;
  • dismissal due to redundancy before attaining 104 weeks’ continuous service and resumption of employment with the same employer within 26 weeks of dismissal;
  • leave under the Maternity Protection, Adoptive Leave, Carer’s Leave or Parental Leave Acts;
  • reinstatement or re-engagement under the Unfair Dismissals Acts;
  • where an employee is re-engaged by an associated company of a company which formerly employed him/her within four weeks of the dismissal;
  • an employer’s failure to give the required statutory notice; the balance of such notice will be continuous where the Employment Appeals Tribunal so orders.

Reckonable service

An employee’s reckonable service must be computed to calculate the redundancy lump sum. It includes a week falling within a period of continuous employment during any part of which an employee is:

(a) at work, or

(b) absent from work because of sickness, layoff (see below), holidays or with the employer’s permission;

(c) on leave or absent under the Maternity Protection Acts, the Adoptive Leave Acts, the Parental Leave Acts or the Carer’s Leave Act;

(d) absent from work because of a lock-out by the employer or because the employee was participating in a strike

(e) periods of service where continuity is preserved in any case of redress by way of reinstatement or re-engagement under the Unfair Dismissals Acts.

Reckonable service excludes absences during the three year period ending with the date of termination of employment:

(a) in excess of 52 consecutive weeks, due to an occupational accident or disease as defined by the Social Welfare (Occupational Injuries) Act, 1966;

(b) in excess of 26 consecutive weeks because of any other illness, including injury;

(c) due to lay-off;

(d) due to a strike in the business or industry in which the employee is employed.

Redundancy arising from lay-off and short time

An employee who has been laid off for a period of at least four consecutive weeks or for a series of six or more weeks of which not more than three were consecutive within a period of 13 consecutive weeks, may claim redundancy if he/she gives written notice of termination of his/her contract of employment to the employer. A form RP9 is used for this purpose.The employer may, however, serve a counter-notice within seven days.

To contest a claim, the employer must be in a position to re-employ for a period of not fewer than 13 consecutive weeks, to commence not later than four weeks from the date on which the employee’s notice is received. The employee’s claim to redundancy would succeed, however, should the employer fail to meet this commitment.Advice should always be sought in relation to lay-off and short time.

Redundancy procedures

An employer who proposes to dismiss an employee who is covered by the Redundancy Payments Acts, must give the employee, not less than two weeks before the date of dismissal, notice in writing of the proposed dismissal. A copy must be sent to the Minister for Enterprise,Trade & Employment. Form RP50 is provided for this purpose.

The two weeks’ notice under the Redundancy Payments Acts is the minimum period of notice due to an employee who has two years/104 weeks’ service. However, if the employee is due longer notice under the Minimum Notice & Terms of Employment Acts or under his/her contract of employment, then that longer period of notice remains due. The RP50 or other specific written notice of the proposed redundancy, must, however, be given to the employee at least two weeks before the date on which the redundancy is due to take effect.

An employer who fails to give adequate notice or who furnishes false information will be liable to a fine of up to €5,000. The failure of an employer to give adequate notice will also affect his/her redundancy rebate.

Statutory redundancy payment

When a qualified employee is dismissed for redundancy purposes (or has terminated his/her contract as a result of lay-off or short-time), he/she is entitled to a statutory lump sum payment equal to:

  • two weeks’ normal weekly remuneration for each year of continuous and reckonable service: and
  • the equivalent of one week’s normal weekly remuneration.

In calculating a week’s pay, an upper limit of €600 per week (€31,200 per annum) is placed on earnings for statutory redundancy purposes.

The Acts contain complex rules for the calculation of the statutory redundancy payment which is based on normal weekly remuneration, to take into account average overtime, commission and other variable payments (for further information on calculating statutory redundancies, see Policies and Procedures). Statutory redundancy payments are tax-free.

Certificate of redundancy RP50

Qualified employees being made redundant should be given a copy of a certificate of redundancy, Form RP50, by the employer on the date of the dismissal. This should be accompanied by the statutory redundancy payment (and any other payment due at the same time, e.g. pay in lieu of notice, pay for the final week(s) of employment, etc). The RP50 should refer only to the amount of the statutory redundancy payment, but an accompanying statement should itemise all the payments being made at the time of dismissal. The employee should sign the RP50 as a receipt for the statutory redundancy payment, which is needed in order to claim a redundancy rebate. An employer who fails to give a redundancy certificate, or who furnishes false information in the certificate, is guilty of an offence and liable, on summary conviction, to a fine of up to €3,000.

Employer’s claim for rebate from the Employer’s Insolvency Fund RP50

The Minister for Enterprise,Trade & Employment must make a payment to an employer from the Social Fund, amounting to 60% of the statutory lump sum paid to each qualified employee. A completed and signed form RP50 should be sent to the Minister within six months of the date of the payment of the redundancy lump sum. The Minister may require evidence of the employee’s continuous service, normal weekly remuneration, etc. He/she also has discretion to reduce the rebate to not less than 40% of the statutory redundancy payment, if the employer failed to comply with the proper notice provisions for the RP50.

For More information on this act contact the General Secretary,Sean Lane, on 01-6761989