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What do the recent Government changes in redundancy mean for the employer?

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Redundancy Changes September 2021

The Government has announced that the suspension of sections of the Redundancy Payments Act 1967 will be lifted at the end of this month. It will also introduce a new special redundancy payment for those impacted.

The Government has confirmed that Section 12A of the Redundancy Payments Act 1967, which suspended certain sections of the Act, will not be extended beyond 30 September 2021. The provision was introduced as an emergency measure in March 2020 to effectively suspend an employee’s right to seek redundancy if they had been laid off or put on short-time work due to the measures required to limit the spread of COVID-19 for the duration of the emergency period. It has been extended six times.

In addition, the Government has announced that it will make a special payment of up to a maximum of €1,860, to workers who have lost out on reckonable service while temporarily laid off over the course of the pandemic and who are made redundant. To support employers, where they are unable to pay statutory redundancy to their employees, the State will fund these payments from the Social Insurance Fund on their behalf. The Government states that a flexible and discretionary approach will be taken in relation to the recovery of these payments and in many cases the debt can be repaid over a number of years.

Reckonable service – employees

“Reckonable service” is the service that is taken into account when calculating a redundancy lump sum payment. It is important to note that reckonable service is a separate and distinct matter from the qualification threshold. An individual must first meet statutory qualification criteria before becoming eligible to receive a lump sum. As matters stand, a period of lay-off within the final three years of service before redundancy is not allowable as reckonable for the purposes of the calculation of this payment. Furthermore, it is the employers’ responsibility to pay statutory redundancy payments in the first instance.

The Department of Enterprise, Trade and Employment has received legal advice to the effect that imposing the cost of the layoff period (if it were to be allowable as reckonable service) on employers would give rise to constitutional issues and is fraught with legal risk. Such an approach is also in direct conflict with the strategic aim of wider Government policy since the start of the pandemic to minimise financial hardship on businesses with a view to preventing permanent job losses.

Key points for employers:

  1. Selection criteria used in a redundancy process must be impersonal and objective, and applied fairly and uniformly;
  2. Caution should be exercised when using selection criteria based on performance, as these will be subject to extra scrutiny by an adjudication body. The criteria cannot be used a “cloak” to weed out a perceived under-performing employee and cannot be implemented in such a way as to target an individual;
  3. Particular caution should be exercised by smaller organisations when using selection criteria based on performance as the employer may be in a position to identify easily, in advance of setting criteria, who might be performing well and who might not; and
  4. Employers should give consideration to all alternatives to redundancy – and should use “creative thinking” when considering alternatives to redundancy.

Need more help? Voltedge Management team can help you to get advice on all aspects of human resources and management. Email Ingrid at info@voltedge.ie or ring our offices at 01 525 2914.

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