It is important in considering a redundancy situation, and in particular, where one employee is to be selected for redundancy out of a larger group of employees, that a fair procedure is followed in how that individual is selected.
Our Clients VF and AD were working for a scaffolding company. They were both long-standing employees and had worked in a number of different areas of the company down through the years.
Times were tough for the business, and it was decided that they needed to trim the number of staff they employed to ensure the feasibility of the business. The problem was that VF and AD were perceived by the employer to be a bit more troublesome than some of the other staff. Not that they weren’t good at their jobs, they were just more inclined to their minds, to speak out when they saw an injustice or things not being done right.
They were also more expensive; the employer has taken on much newer, cheaper staff in recent years! Unsurprisingly, VF and AD found themselves being the ones who were made redundant.
“I was shocked that after all of my years of service, I could be treated like this”, VF
They came to us for assistance, and we immediately recognised and explained how their former employer had breached their legal rights to fair procedures.
In one of the funnier moments we have come across in our time in this area, it began to dawn on the Employer at the hearing that things were going awry on them when the Adjudicating Officer wondered aloud if this process which had been engaged in could constitute a collective redundancy and as a result, the Employer be guilty of a criminal offence (in addition to their civil and statutory liability to our Clients for unfair dismissal).
When we confirmed this, the employer’s representative hastily requested a brief adjournment so that the matter could be discussed and he “could take some instructions from my client!” Needless to say, the employer swiftly took out the chequebook when they realised that, as their own representative termed it, we had them “by the short and curlies!”.
Swift backtracking and engagement of this type is not unusual the straight talking and phraseology of the Employer Representative is probably slightly more unusual.
VF and AD settled their cases that day for significant sums of money, but what was far more valuable to them was to see their former employer taken to task and with the spotlight on them.
As with all unfair dismissal cases, the onus rests on the employer to prove that the dismissal is not unfair.
“I felt like shouting “You can’t handle the truth”!!!” VF
“To watch the careful and meticulous way that our team dismantled their position and the look of utter horror on their faces, when it dawned on them that things were unravelling, was just pure magic, and I’d have given up any of the money we settled for just for that moment alone!” AD
When is an employee unfairly selected for redundancy?
It is important to remember that redundancy must be the only or main reason for dismissal. If, as a company indicates that the reason for dismissal was prompted by capacity/capability to perform certain duties, etc, this would be detrimental to their case in that it would show that the real reason was, in fact personal to the employee.
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When does a genuine redundancy situation exist?
It is for the employer to prove that a redundancy situation exists that justified the dismissal at the date of the redundancy or that it was likely to arise in the immediate future. A genuine redundancy situation exists where dismissal is wholly or mainly attributable to one of the factors set out in section 7 (2) of the Redundancy Payments Act 1967 (as amended by the redundancy payment act 1971) (“the act”).
In a challenge to a redundancy selection in the Workplace Relations Commission “WRC”, the tribunal will consider whether a genuine redundancy existed in the first instance. For example, such redundancy may be considered a genuine reason for redundancy where it accords with section 7 (2)(c) of the act – “work to be done by other employees or otherwise” or equally reliance may be placed on section 7(2)(e) – “work to be done by an employee who is also capable of doing other work”.
However, whether this is the case (that such a situation did or did not pertain at the time to an employee who was made redundant or was likely to arise in the immediate future) will be a matter for the company to prove to the satisfaction of the WRC should proceedings for unfair dismissal be initiated.
Typically in a redundancy situation, a company will justify this by providing the relevant accounts and balance sheets that show the impact of the economic slowdown on the business that left them with no option other than to seek to make a role or roles redundant.
Therefore financial evidence, together with a record of the meetings and discussions that led to the decision to make a role(s) redundant, are typically relied on.
It is always important to know if such evidence exists. For example, an employee will often cite that the company is actively recruiting more staff and that what appears to be occurring is more in the nature of a workforce restructuring. Thus any specific verifiable information in relation to the filling of these positions would be helpful.
It is also helpful to verify whether positions have been advertised. Often at the outset of a case, we do not have the necessary information to assess whether a genuine redundancy situation did exist fully. However, the onus would rest on the company to prove to the satisfaction of the WRC that it did.
When is an employee unfairly selected for redundancy?
A crucial aspect of employment law is that the redundancy applies to the role, not the person. It is important, therefore to understand the nature and structure of the organisation, the department within which an employee worked and the roles that each employee undertook in the department.
Like discrimination, unfair selection relates to an employee’s treatment in relation to other employees and it cannot arise in isolation. There is an obligation on the company to consider the full range of persons in a specific role and apply criteria that were objective in selecting the individual as the person to be made redundant.
Thus if an individual is the only person doing a specific role, unfair selection may not arise.
It is important to remember that redundancy must be the only or main reason for dismissal. If, as a company indicates that the reason for dismissal was prompted by capacity/capability to perform certain duties, etc, this would be detrimental to their case in that it would show that the real reason was in fact personal to the employee. This can, however be avoided by a company where the capability of employees is specifically identified as a criteria in the selection process.
It is important, therefore at this stage to establish and confirm whether an employee was ever informed of any dissatisfaction with work performance, capabilities or competence.
You might also confirm that there are no other issues of contention or complaint made against the employee during the employment and that there were no allegations or complaints made against the employer or any work colleagues during the employment.
In a redundancy situation, did the employer act reasonably and fairly?
There is no statutory requirement for an employer to have consulted with an individual employee prior to that employee being made redundant. However, it is now viewed as good industrial relations practice, and failure to do so may be utilized to show the unreasonableness of the employer in the circumstances.
Often a company will arrange meetings with employees and give advance warning of the nature of the meeting or the fact that redundancy is being considered. Only when consulting with the employees affected and seeking their views and suggestions concerning possible redundancy should a company seek to select individuals for dismissal and confirm that a redundancy situation exists.
At this stage, notice can be given and is normally set out in writing confirming the selection, the procedure followed, the criteria used and setting out the redundancy terms.
At the consultation stage, there is a requirement to consider alternative work within the company. The employee, if at all possible, should be given the opportunity to consider alternative work within the company or put forward any proposals in relation to alternative work or alternative or reduced conditions of employment within the company.
It is important to know whether the company considered such matters and, if they did, whether such matters are documented. There is a view that if no consideration was given to alternative work within the company, the employer would view this as unreasonable.
What are the costs of an application to the WRC?
Unlike many other forums for legal redress, the WRC does not have the power to award costs. Therefore each party must bear their own costs. It, therefore, is advisable to always consider the potential exposure to costs at this stage and the fact that whatever the outcome of the case, the applicant will not be liable for the employer’s legal costs before the WRC.
Of course, this also means that even if an applicant is successful, he must bear his own costs. It is often easier to quantify the cost exposure before the WRC than in other legal forums, which may be helpful for an employee in considering his options.
An employee’s entitlement to a reference
Often a reference is an important issue which must be considered before seeking legal redress. The employee will have to decide how important a reference may be given the nature of the industry in which he works. There is no obligation on the company to supply a reference, and typically, when legal proceedings have been issued, references are often reduced to mere factual statements of the dates of service and the roles and responsibilities carried out.
A more fulsome reference may be negotiated if a matter is to be ultimately settled. It is helpful for a reference to state that his position was terminated because of redundancy and therefore avoid suspicion of misconduct or incompetence. If the matter goes to a hearing, the opportunity to acquire a meaningful reference is generally lost.
What compensation or redress is an employee entitled to?
Compensation is the most common remedy awarded by the WRC. If successful in an unfair dismissal action, an employee may be awarded a maximum of up to two years’ salary. However, such a high award has only been made on a handful of occasions and should not be expected.
The manner in which an award is calculated is almost designed to mitigate against such high awards in that a successful claimant can only be compensated for the period in which they were at a loss and as such, as soon as they gain further employment, their loss stops and that is the height of what they can be awarded.
If the employer cannot prove that the dismissal was fair, a realistic result is a sum in the region of 50%-75% of the employee’s lost earnings. The average award of the WRC currently is around €11,000.
Because an award is only made for actual loss from the date of dismissal to the hearing of the action and for any projected loss in the future, a claimant should ensure that they keep a good record of their efforts to find work.
You see, if you were to take up another job or to set up a business on your own account, the actual achievable loss would be the loss of salary up to the start of your new job and the differential, if any, of the rate of pay between your old job and the new job.
There is also an obligation on any claimant to mitigate their loss, and it is useful for an applicant to demonstrate how they attempted to do so. As noted, these efforts should be recorded and documented by keeping the details of all applications, etc.
Traditionally, the WRC’s awards are lower in relation to younger claimants who have a longer working career ahead of them than older claimants. Regard may also be given to the length of time an applicant has worked with a company.