In this article, we provide a brief outline of the recent changes in employment law relating to collective redundancies, how to avoid potential pitfalls, and explain how they can be implemented for your business.
The Employment (Collective Redundancies and Miscellaneous Provisions) and Companies (Amendment) Act 2024 (hereafter the “2024 Act”) came into operation on 1 July 2024 and provided significant changes to Irish collective redundancy law. The 2024 Act enhances protection for employees in circumstances where their employer is insolvent. The article delves into the nuances of how this new law works in practice, with a particular focus on the additional responsibilities now placed on insolvency practitioners.
What is a collective redundancy?
Collective redundancies in Ireland are regulated by the Protection of Employment Act 1977 to 2024 (hereafter the “1977 Act”). This legislation provides for an information and consultation process that an employer must follow in certain circumstances.
Under the 1977 Act, a collective redundancy is where “during any period of 30 consecutive days, the number of redundancies is:
- 5 or more employees, where 21-49 are normally employed in an establishment
- 10 or more employees where 50-99 are normally employed in an establishment
- 10% or more of the employees where 100-299 are employed in an establishment or
- 30 or more employees where 300 or more are employed in an establishment.”
Key New Features
- Duty to Consult and Inform Employees
Under the 2024 Act, the consultation process with employees facing redundancy is now extended to a “Responsible Person” as defined below. The consultation period should commence as early as possible and no employee should receive notice of dismissal until the 30-day consultation period has expired and the Minister for Enterprise, Trade and Employment (the “Minister”) has been notified.
The obligation to inform and consult is an obligation which now extends to the Responsible Person i.e. any liquidator or similar appointee (such as receivers and examiners).
Should an employer or Responsible Person fail to initiate the consultation period under Section 9 of the 2024 Act or fails to comply with Section 10, they shall be guilty of an offence.
- Responsible Person
Section 4 of the 2024 Act now inserts a definition of a “Responsible Person” into the 1977 Act. This will include “a Liquidator, a Provisional Liquidator, a Receiver or any other person appointed by the court where they assume full control of the business.”
This is an added duty that will likely particularly affect liquidators in day-to-day business, particularly at the early stages of an appointment when, in our experience, the consultation period may already be underway.
- Removal of the exemption to notify the Minister for Enterprise, Trade and Employment
Employers and/or Responsible Persons must notify the Minister of its collective redundancy proposals at the earliest opportunity and at least 30 days before the first dismissal takes place.
The 2024 Act now removes a previous exemption which applied where if an employer was insolvent and the company was being wound up pursuant to a court-ordered liquidation, the Minister did not need to be notified. Now, unless the 30-day consultation has taken place following notification to the Minister, no redundancies can take place.
If an employer or Responsible Person fails to notify the Minister, it is liable for an offence and may result in a class A fine on summary conviction.
- Redress for Employees
The 2024 Act now provides employees with the ability to bring a claim before the Workplace Relations Commission (the “WRC”).
If the WRC makes a finding that an employer or responsible person has breached their obligations by (1) failing to consult with employees/their representatives, (2) failing to provide them with required information during the consultation process or (3) dismissing an employee before the expiration of 30 days following notification to the Minister (as above), they have the power to award up to four weeks of gross remuneration to the employee for each breach. This brings the maximum compensation that may be awarded for a breach of the 1977 Act to 12 weeks’ gross remuneration.
Conclusion
The obligation on employers to meaningfully inform and consult with employees in a collective redundancy situation has always been a key feature of the 1977 Act. The 2024 Act now widens this to insolvent companies to ensure additional protection is in place for employees and that it is not just a formulaic compliance exercise. The removal of the exemption to notify the Minister bolsters this obligation.
Employers, and those who fall into the category of a Responsible Person, should be acutely aware of these changes and obligations, especially where the company is insolvent. Heavy fines and/or compensation for employees can follow if breaches occur. Timelines should be carefully monitored; notices of redundancy issued prior to the completion of the consultation period may become invalid, depending on the specific circumstances.
