Unforeseen or sudden major disruptions to businesses, such as the coronavirus, extreme weather events and other environmental factors, can result in business owners and employers facing significant continuity challenges.
A substantial aspect of contingency planning is mitigating the adverse effects of any crisis, through emergency planning. That emergency planning may include engaging in alternative workforce arrangements.
The management consultants, HR professionals and employment lawyers at RSM Ireland, are available to help you minimize the impact of such adjustments.
Background
Each business is required to manage their operations in such a way that provides all employees with employment security, wherever it is possible to do so. There may, however, be instances which lead to a change to the structure of the business, meaning workforce adjustments may become necessary. This could possibly include; a decrease in the resource levels required for a particular type of work or service, the restructuring or reorganisation of a department to make more efficient use of roles and responsibilities, an introduction of technical advancements altering existing roles or a site closure/relocation of particular service functions.
Alternatives to Redundancy
Before deciding to implement any redundancies, a business should carefully consider all alternative courses of action such as, but not limited to, natural wastage (e.g. resignations etc.), restrictions on recruitment, retraining and redeployment to other parts of the organisation, short-time working or temporary lay-offs.
Short-Time/Lay-Off
Consider the longevity of your situation. Under the Redundancy Payments Acts 1967-2014, a lay-off situation arises when a business is unable to provide work for an employee but believes this to be a temporary situation and gives them notification of the lay-off before the work finishes.
A short-time situation arises where, due to a reduction in the amount of work to be done, the employee’s weekly pay is less than half their normal weekly pay or the hours worked are reduced to less than half the normal weekly working hours. This must be a temporary situation and the business must notify the employee before the reduction starts.
If a lay-off or short-time situation exists and has continued for 4 weeks or more, or for 6 weeks in the last 13 weeks, the employee may give the business notice in writing of their intention to claim redundancy. Unless the business gives the employee a counter notice within 7 days of their notice, they may be entitled to a redundancy payment if they qualify for redundancy.
Every endeavour will usually be made by a business to avoid redundancies as far as is reasonably practicable. Where such circumstances present themselves, it is important for businesses to take appropriate steps to keep the number of redundancies to a minimum, whilst considering the needs of the business.
Having a policy
The purpose of a redundancy policy is to set out a framework for managing consultation and redundancy practice, in a fair and equitable manner. It is important for businesses to ensure a consistent, professional and empathetic approach is taken, with any employee affected by proposed changes, in order to minimise hardship, while taking account of individual circumstances and the needs of the business.
Where it becomes necessary for businesses to consider redundancies, affected employees should be notified at the earliest possible opportunity of the reasons for the potential redundancy situation and of their proposals.
Workforce adjustments selection criteria
In the case of JVC Europe Ltd -v- Panisi, Justice Charleton stated:
“In all cases of dismissal, whether by reason of redundancy or for substantial grounds justifying dismissal, the burden of proof rests on the employer to demonstrate that the termination of employment came within a lawful reason… it must result from “reasons not related to the employee concerned”. Redundancy, cannot, therefore be used as a cloak for the weeding out of those employees who are regarded as less competent than others or who appear to have health or age-related issues. If that is the reason for letting an employee go, then it is not a redundancy, but a dismissal.”
When a business needs to make redundancies or put staff on lay-off/short-time, that business must select the employees concerned with good faith and fairness. The selection criteria established by the Workplace Relations Commission and Labour Court in redundancy cases (relevant skills and knowledge, relevant experience, relevant qualifications or training, disciplinary record, attendance record, communication skills (verbal/written), time management/productivity), constitute a good standard, however, the employer may use different criteria.
Payment
To qualify for a redundancy payment, employees must have at least 2 years’ continuous service. The statutory redundancy payment is a lump-sum payment based on the pay of the employee. All eligible employees are entitled to:
- Two weeks’ pay for every year of service over the age of 16; and
- One further week’s pay.
The amount of statutory redundancy is subject to a maximum earnings limit of €600 per week. Pay refers to current normal weekly pay including average regular overtime and benefits-in-kind, but before tax and PRSI deductions.
Conclusion
There are a number of alternative workforce adjustments available to your business in a time of crisis. Examining your circumstances may point you to a solution you and your team are comfortable with.
It is critical that businesses have a policy in place, and implement it in a fair and equitable manner. Failing to follow the correct procedures during workforce adjustments can expose your company to a claim to the Workplace Relations Commission (WRC).
Through these uncertain and critical times, our multi-disciplinary business continuity team can advise on a full range of continuity planning and resource services. We can harness our expertise across audit and advisory, tax, transaction and management consulting, to support your people and work towards minimizing your risk of operational and commercial exposure to help you serve your clients.
John Glennon
Catherine Corcoran Gearty
