Redundancies

It is the position rather than the person that becomes redundant and if the person is to be replaced this suggests it is not a valid redundancy. An example of a valid redundancy would be where the employer ceases to carry on its business in part or entirety.

An employer must demonstrate that its redundancy process is fair and show that:

  1. The redundancy is genuine – the position held by the employee is no longer required; and
  2. The selection of employees is fair – objective criteria must be used by the employer.
  3. It conducted itself ‘reasonably’ throughout the process – the employer must consult with the employee before making decisions on redundancies.

An employer must consult with the potential affected employees. An employer cannot meet with an employee with the attitude that the redundancy situation is a done deal. An employer must allow discussions on whether there are alternative roles available, whether the employee would be willing to relocate or work in another position before the employer has made a decision on the redundancy.

An employee who is made redundant after consultations have taken place is entitled to a minimum two weeks’ notice. However, notice periods may be longer depending on length of service or whatever is stipulated in the employee’s contract. The employee is entitled to whatever is the longest period, but at a minimum two weeks’ notice must be given in a redundancy situation.

An employee with two or more continuous years’ service is entitled to a statutory redundancy lump-sum payment which is calculated as follows:

  1. Two normal weeks’ pay for every continuous year worked
  2. One additional weeks’ pay

This lump sum is capped at €600 per week. The statutory lump-sum is tax free but any payments in excess of what the employee is statutorily entitled to receive would be taxed in the normal way i.e. Ex-gratia redundancy payments – this will be up to the employer in the circumstances.

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