Employer Resources Newsletter - March 2021
Redundancy – Managing the Risks
The ongoing health crisis continues to impact on organisations and forcing employers to continuously review their people strategies. Government supports to-date have protected employees but as these supports begin to ease off, which is currently planned for end of June, employers will have to make some difficult decisions around redundancies.
Given the impact of Covid-19 on the organisations, it is expected that there may well be an increase in the number of redundancies in the second half of the year. Therefore, it is important that employers follow the legislation around redundancies to ensure they protect themselves from potential claims. A genuine redundancy can arise for a number of reasons -
- The organisation ceases to operate the business for which the employee was employed to do,
- The work the employee was contracted to do has ceased or the requirement for that work has reduced,
- The organisation has decided to carry on the work with fewer, or no, employees,
- The work the employee was contracted to do is to be performed in a different way and/ or the employee is no longer qualified to carry out that work,
- The employee’s work is to be done by a different employee who is sufficiently qualified and capable.
Navigating a redundancy process is complex and requires a lot of preparatory work. It is also an area that Adare Human Resource Management has vast experience in given the work we do on behalf of client organisations, helping to defend cases of unfair dismissal.
There are some careful considerations that an employer must take into account before selecting a position for redundancy. The employer must demonstrate that a redundancy situation existed. Having demonstrated that a genuine redundancy situation exists, it is essential to use fair selection criteria in selecting an employee for redundancy.
Selecting roles for redundancy
To fairly select an employee’s role for redundancy, an employer should first establish which positions are to become redundant. Having established that certain positions are no longer required, employees in that position must be considered against the criteria for selection.
When setting out the criteria for selection, employers should consider precedence – has the organisation made redundancies in past and, if so, what selection methods were used. The two main methods of selection used are ‘last in first out’ or ‘matrix selection criteria’ that can be based on qualifications, skills, experience or a combination of all three. If a redundancy process has been previously used by the organisation and it wants to use a different procedure, then it must have a specific reason for doing so.
Employers need to be careful and transparent when dealing with redundancies. While a redundancy situation may exist, an employee can have grounds for complaint if the manner of the selection for redundancy was unfair.
In selecting a particular employee for redundancy, an employer must apply selection criteria that are reasonable and are applied in a fair manner. An employee is entitled to bring a claim for unfair dismissal if they consider that they were unfairly selected for redundancy or consider that a genuine redundancy situation did not exist.
Under the Unfair Dismissals legislation, selection for redundancy based on certain specific grounds is considered unfair. These include redundancy as the result of an employee's trade union activity, pregnancy or religious or political opinions. The Employment Equality legislation also prohibits selection for redundancy that is based on any of the following nine grounds: gender, civil status, family status, age, disability, religious belief, race, sexual orientation or membership of the Traveller community.
It is important to point out that the burden of proof in a claim for unfair dismissal is on the employer. While an organisation may believe they are justified in making an employee redundant, they risk leaving themselves open to claims if they don’t follow correct policies and procedures.
Key legislation that needs to be considered when dealing with redundancies and dismissals includes the Redundancy Payments Acts 1967 – 2014, Unfair Dismissals Acts 1977 – 2015, Minimum Notice and Terms of Employment Acts 1973 – 2005 and the Employment Equality Acts 1998 – 2015.
Consultation and Alternatives to Redundancy
The decision to make redundancies should be the last resort. All other suitable alternatives should be explored prior to initiating redundancies during the consultation period. One of the conditions looked at in determining whether a dismissal by redundancy is fair or not is whether the conduct of the employer was reasonable.
An employer may have an ‘at risk’ meeting with the employees prior to making the decision to dismiss due to redundancy. This can be viewed as being fair and reasonable. The purpose of these meetings is to inform the employees that there is a possibility that redundancies may arise and that the Organisation is looking at all suitable alternatives to making redundancies. Employers should at this stage give employees an opportunity to explore other options that they may see as an alternative to redundancy.
Following on from the ‘at risk’ meeting, employers should engage in consultation with the affected employees to discuss whether any alternatives have been discovered and to consider the proposals of the organisation itself and whether they can reduce the number of or prevent the redundancies. If at this stage it is found that there are no suitable alternatives, it is then that formal notice of redundancy would be given. Upon issuing formal notice of redundancy, the employer must ensure that those impacted have full recourse to an appeal mechanism.
Risks associated with redundancy
Our experience representing organisations in the Workplace Relations Commission (WRC) and the Labour Court has shown time and again that it will find in favour of the complaint due to poor processes and procedures being followed by the organisation.
Critical to any planned redundancy is the fact that fair procedures must apply and an employer must be able to demonstrate all considerations. Implicit in any potential redundancy are the justifications a genuine redundancy situation exists; fair selection procedures are employed and legislative requirements are met in terms of procedures and compliance.
If any of the above is not in line with fair procedures or natural justice then an employee can see redress under the Unfair Dismissals Acts, Industrial Relations Acts, Redundancy Payment Acts, or the Employment Equality Acts if the dismissal was on any of the nine grounds previously mentioned, which may result in financial liability or other redress on the employer.
€20,000 awarded by the Labour Court in compensation in a constructive dismissal case
The Labour Court found that the employer failed to operate its own procedure for dealing with complaints in such as a way as to meet its special obligation to ensure that all arrangements are in place to safeguard staff.
This matter comes before the Court as an appeal by the Claimant at first instance, against the decision of an Adjudication Officer in her complaint made under the Unfair Dismissals Act, 1977 (the Act) against her former employer (the Respondent). The Adjudication Officer held that the Claimant had not been unfairly dismissed.
The Claimant had been employed by the Respondent as a care support worker from November 2010 until March 2018 when her employment terminated through resignation. The Claimant contends that she was constructively dismissed.
Summary position of the Claimant
The Claimant submitted that on 30th of August 2016 she was called to a meeting with her manager. At that meeting she was informed that a service user had made a complaint against her. Her manager advised her that the service user was refusing to be supported by the Claimant.
The Claimant was permitted to work her normal rostered hours for a further month. On 12th of October 2016 the Claimant was presented with an alternative roster which would avoid her having to work with the service user who had made the complaint. That roster, which was described on the 13th of October by the Respondent as a sample roster, involved the working of split shifts and a significant reduction in earnings. As an alternative to that option, the Claimant was invited to consider working in another location of the Respondent which would involve travelling for one hour and fifteen minutes each way.
The Claimant was certified unfit for work through stress related illness thereafter.
In February 2017 the Claimants’ rate of sick pay was reduced by the Respondent in accordance with the sick leave policy of the Respondent. The letter advising the Claimant of this development also advised her that the service user had made another allegation against the Claimant which must be referred to the HSE. No details of this complaint were provided to the Claimant.
In April 2017 the Claimant lodged a grievance in accordance with the procedures in place in the employment. A grievance meeting was held on 11th of May 2017. The outcome of the grievance hearing was conveyed to the Claimant in September 2017. She appealed that decision in October 2017 and, in December 2017, she was advised that her appeal had failed.
The Claimant formally resigned in March 2018.
The Claimant submitted that the Appellant operated a Complaints Management Procedure which had been developed to safeguard the rights of service users and staff. This procedure was not invoked by the Respondent in the case of the complaint made against the Claimant and consequently the Respondent had flouted its obligation to protect the Claimant.
The Claimant at the hearing submitted that, as a care giver, the allegations which had been made against her undermined her professional reputation and the failure of the Respondent to address the complaint in a manner which afforded her an opportunity to defend herself exposed her to significant stress.
She submitted that the Respondent’s conduct was such as to constitute a unilateral breach of her contract of employment and was so unreasonable as to mean that the Claimant could not fairly be expected to continue in her employment.
Summary position of the Respondent
The Claimant provided care support to users in their own homes. Individual service users have the right to refuse any particular visitor, including a carer, entry into their own home.
In the case of the Claimant, a service user refused to accept support from her with effect from 30th of August 2016.
The Respondent met with the Claimant on 12th of October 2016 and put options to her which included working a roster which did not involve the Claimant providing support to the service user who had raised issues with the Claimant. The Respondent also suggested that the Claimant could consider working at another facility of the Respondent. At that meeting also the Claimant was asked to provide alternative suggestions to address the issue which had arisen.
The Claimant initiated a grievance against the Respondent in April 2017 and the Claimant’s grievance was dealt with through the internal grievance procedure and ultimately was not successful including at appeal stage.
The Respondent had taken no action to force the Claimant to resign and it was clear that the Claimant had only one intention for a period of time and that was to claim constructive dismissal.
Discussion and conclusions
The Act places a high burden on the Claimant in a constructive dismissal case. In order to succeed in such a complaint, a Claimant must establish that because of the conduct of the employer she was entitled to terminate her employment, or it was reasonable for her to do so. A long line of decisions of this Court, and the Employment Appeals Tribunal before 2015, have established that conduct of an employer which would justify an employee terminating the contract of employment includes a breach of the contract of employment by the employer which goes to the root of that contract or circumstances where the employer’s unreasonable behaviour was such that the employee could not reasonably be expected to remain in the employment.
It has also been established in the decisions of this Court and the Employment Appeals Tribunal that a Claimant who contends that she has been constructively dismissed must demonstrate that that she has acted reasonably herself in the circumstances by, for example, availing of the employer’s grievance procedure in order to allow the employer an opportunity to rectify the problem before she feels compelled to resign.
The Respondent submitted that, having regard to the fact that the service provided to users is provided in their private homes, it had no means available to continue to allocate the care of a particular service user to the Claimant in circumstances where the service user refused to allow her to enter his home or to provide support to him.
It is not for the Court to take the place of the Respondent in determining which arrangements were operationally or financially sustainable in the circumstances arising from the decision of the service user. It is sufficient to note that the Respondent concluded that no solution could be found which would not have a significant impact on the earnings or the working arrangements of the Claimant.
In the within appeal, the Respondent failed to operate its own procedure for dealing with complaints from service users at all, but instead moved to propose the implementation of arrangements carrying negative consequences for the Claimant in response to unchallenged allegations as regards the conduct of the Claimant.
In all of the circumstances, the Court concludes that this failure of the Respondent to initiate and conduct its own procedure which had been developed to safeguard service users and care staff constitutes conduct of Respondent which was so unreasonable as to mean that, within the meaning of the Act, the Claimant was entitled to terminate her contract of employment.
Following her dismissal, the Claimant was without work for a period of almost six months and subsequently engaged in work at rates of pay which were less than the earnings she enjoyed in the employment of the Respondent which amounted to €33,000 per annum approximately. The Court took note also of the submission made by the Claimant outlining her efforts to mitigate her economic loss. The Court measured the compensation which is just and equitable in the circumstances at €20,000.
Even though constructive dismissal tends to be difficult to establish, this case is a good example of where the burden of proof has been met by the Employee. It is essential for Employers not only to have a comprehensive Grievance policy in place, but to also carry out the procedures in such a way as to ensure that the employee could be satisfied that all steps had been taken to fairly address the circumstances and that they were offered the opportunity to set out their own account and to have it fully considered. Otherwise, as this case indicates, the conditions could potentially be so unreasonable as to justify the termination of the employment contract.
Employer ordered to pay €7,750 in compensation for due to a lack in transparency and fairness in the redundancy procedure
Labour Court found that employee was unfairly dismissed as she was not made aware that she was being compared to her colleague for the purposes of redundancy selection.
This matter comes before the Court as an appeal by the Respondent at first instance, a Dublin based company, against the decision of an Adjudication Officer in a complaint made by the Claimant under the Unfair Dismissals Act, 1977. The Adjudication Officer held that the Claimant had been unfairly dismissed and made an award of €16,000 in compensation.
The Claimant had been employed by the Respondent from March 2017 until September 2019 when her employment was terminated.
Summary Position of the Respondent
The Respondent submitted that the Claimant had lost her employment by reason of redundancy following a fair and objective process. She had been employed as Marketing and Communications Manager.
Following a meeting in July between the Managing Director and the owner it was decided that costs would have to be reduced and that there would have to be a reduction in the numbers of staff employed.
The Managing Director met with all members of staff on 27th August 2019 at which time the Claimant sought to be considered for a pay rise. She was advised that this would not be possible by reason of the fact that the company was under financial pressure due to the under-performance of revenues.
A range of positions were not replaced or not renewed and a decision was made to make the position of Marketing and Communications Manager redundant.
The Managing Director met with the Claimant and one other member of staff and discussed their skills and abilities in the context of adapting the marketing approach to be more focussed on PR, social media and active engagement.
Based on those conversations it was decided that the Claimant’s role would be made redundant. She was advised that her finishing date would be 13th September 2019 but that she would be paid until 6th October 2019.
The Respondent has not filled the role of Marketing and Communications Manager in the period between the date of departure of the Claimant and the date of the hearing of the Court. The Respondent retained the other member of staff who had been spoken to in the context of an assessment of skills and abilities because she had established strong relationships with customers and because the Claimant had highlighted that she was unable to carry out that role.
The Respondent conducted a fair process to consider all roles within the company and the qualifications of staff. In that process, staff were consulted.
Summary Position of the Claimant
The Claimant was employed as Marketing and Communications Manager in March 2017 reporting directly to the CEO. In the weeks before April 2019 the CEO advised the Claimant that she would be recommended for a pay rise after the 2019 event.
Following the 2019 event, the staff of the business were advised that the Respondent company and another company would merge, that the then CEO would be leaving the business and that a new Managing Director would take up duty.
At that time the Claimant was asked to take on the role of Speakers Manager while that position was being advertised. Staff were advised over the Summer of 2019 that sales staff were not meeting targets. The subject of redundancy was never mentioned.
On 27th August 2019, the Claimant met with the MD to discuss marketing plans as was commonplace. At that meeting the Claimant mentioned that she would like to be considered for a pay rise. The MD advised the Claimant that the company was in financial difficulty and advised her that if she wanted more money, she should find a new job. The MD asked the Claimant to think about her day-to-day tasks and arranged for another meeting to discuss how the Claimant could grow in her role and how she and the company could continue a happy working relationship.
That second meeting took place on 6th September 2019 whereat the Claimant expected to be given further responsibilities and to discuss how she could grow in her role. The meeting took place at the end of the working day as the rest of the staff were leaving the premises. It was a very short meeting during which the Claimant was advised that she was to be made redundant.
The Claimant had actively sought employment following the termination of her employment with little success until, in July 2020, she secured full time employment.
Discussion and Conclusions
The Court considered carefully the submissions of the parties.
The Respondent submitted that it conducted a fair and transparent process leading to the termination of the Claimants employment by reason of redundancy. The Claimant submitted that she had no notice of the Respondent’s decision to terminate the employment.
The Court accepted that the Respondent was entitled to restructure its business and to reduce its workforce as it considered appropriate having regard to operational requirements and indeed, as was the case apparently in the employment, financial considerations.
The Court noted the Respondent’s submission that the decision to terminate the employment of the Claimant and to retain the other employee was taken after these meetings. It is common case that the Claimant, not having been advised that the termination of her employment was in contemplation, was not asked to make any submission as regards her suitability to carry out a role in the restructured company.
The Court could not accept that what amounted to a selection process designed to identify as between two employees who should be retained in the business, can be considered fair or transparent in circumstances where, as was accepted by the Respondent, neither employee was made aware that such a process was being conducted.
It is the dismissal of the Claimant which was at issue in this appeal. It is not disputed that the role carried out by the Claimant was made redundant and that the various elements of that role were assigned to other staff through a re-alignment of responsibilities in the company.
It is clear therefore that, in the present appeal, the Respondent beard the burden of establishing that there were substantial grounds justifying the dismissal of the Claimant. In discharge of that burden the Respondent submitted that her dismissal resulted from a redundancy of her role and following the conduct of a process designed to identify as between two employees which employee would be retained in the business as a result of that redundancy.
For the reasons set out above the Court was satisfied that the Complainant was unfairly dismissed.
Taking all of the circumstances of this matter into account the Court determined that the appropriate form of redress in this case was compensation in respect of the financial loss suffered by the Claimant as a result of her dismissal.
The Court noted carefully the earnings of the Claimant prior to her dismissal, the attempts made by her to secure employment following her dismissal and the fact that she secured full time employment in July 2020.
The Court, having regard to these matters, ordered the Respondent to pay the Complainant compensation in the amount of €7,750, being the amount which the Court considered to be just and equitable in all of the circumstances.
The Decision of the Adjudication Officer was varied accordingly.
This case highlights the importance of having and following a fair and transparent procedure when selecting employees for redundancy. Employees must be made aware that their jobs may be in jeopardy when their skills and competencies are being assessed for the purposes of redundancy and should be given an opportunity to propose alternative options to the redundancy. While the Labour Court did reduce the Adjudicating Officer’s awarded compensation of €16,000 to €7,750, this decision is nevertheless a good example of the high financial consequences of not approaching redundancy in an open and transparent manner.
Extension of Government COVID-19 Supports
At the end of February, the Minister for Finance announced that the Government was extending the dates for the Employment Wage Subsidy Scheme (EWSS), Covid Restrictions Support Scheme (CCRSS) and the Pandemic Unemployment Payment (PUP) from 31st March until 30th June. The Covid enhanced benefit has also been extended.
The suspension of the redundancy provisions, which were due to expire on 31st March, have also been extended to 30th June in order to prevent job losses.
Gender Pay Gap Amendment
Following on from previous commitments, most recently in January, the Minister for Equality stated last week in the Seanad that he intends to bring forward amendments to the Gender Pay Gap Information Bill 2019 in the coming two weeks.