Employees claiming redundancy

Redundancy Planning

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Employers need to be aware that from 30 September 2021, eligible employees will again be able to make a redundancy claim if they are not taken back on, says SARAH DALY.


Last year, as part of the Government’s Covid-19 emergency measures, section 12A of the Redundancy Payments Act temporarily extended the time-period under which an employee who has been laid off or kept on short-time due to Covid-19 can claim a redundancy payment from their employer.


The purpose of this measure was to help businesses survive the financial impact of the pandemic by enabling them to avoid mass redundancies over a short period of time.


The extension was originally due to expire on 31 May 2020 but has been pushed out several times and will now expire on 30 September 2021, at which point employees will be able to trigger a redundancy claim if they are not taken back on.


What does this mean for employers?


Under the redundancy payments legislation, an employee can apply for a redundancy payment if they have been on temporary lay-off or short-time for four continuous weeks or six non-continuous weeks within a thirteen week period.


The rate of statutory redundancy is two weeks’ pay for every year of service (over the age of 16) plus one additional week’s pay. Payment is capped at a limit of €600 per week.


Employers are required to pay eligible employees their redundancy entitlements. However, if the employer is unable to do so, subject to satisfying the relevant conditions an application can be made to the Department of Social Protection under the Redundancy Payments Scheme. This scheme is funded from the Social Insurance Fund. When a redundancy payment is made from the fund, the Department will seek to establish the employer’s financial situation and agree a debt recovery plan which may including repayments by instalment.


Note that redundancy can be extremely complex to administer. Employers who may be affected should seek advice from their HR, legal and tax advisors at the earliest opportunity.


Insolvent companies


The Government recently published a plan of action for collective redundancies following insolvency. The main provisions include:


  • amendments to a range of legislation in the areas of employment law and company law which deal with matters relating to collective redundancies following company insolvency,
  • development of a guidance document on the rights and remedies available to employees facing a collective redundancy situation following company insolvency,
  • establishing an independent Employment Law Review Group.


It remains to be seen how, and when, the various measures outlined in the plan will be implemented.


Currently, the situation is that where a company becomes insolvent, employees may be able to make a claim under the Insolvency Payments Scheme for outstanding debts such as arrears of wages or sick pay. There are conditions and limits for these payments. Claims must be made through an employer representative, official liquidator or receiver.

Covid-19 financial supports for business


A number of other changes to the Government’s Covid-19 emergency measures and financial supports for business are due to take place in the coming weeks as the country re-opens. The Department of Enterprise, Trade & Employment has recently published a summary of these changes. For details, see the Government website.

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