Unfair Dismissal & Redundancy

Unfair Dismissals & Redundancy Claims

Prior to the introduction of the Unfair Dismissals Act 1977, termination of employment was addressed under redundancy legislation which was first introduced in 1967.  The then Minister for Labour Dr. Patrick Hillery addressed Dáil Éireann stating that “a basic fact of economic life which we must accept is that a certain degree of redundancy is an inescapable feature of a dynamic economy”. The purpose of the legislation was to protect workers facing job loss but also to promote economic expansion. The Redundancy Payment Acts affords an employee facing a job loss with protection while also recognising that economic expansion depends on an employers’ ability “to adapt themselves to new and changing demands”. An employee facing a job loss through redundancy who has the required level of service is entitled to a statutory lump sum under the Redundancy Payments Acts.

Redundancy & Unfair Dismissals

The Redundancy Payment Acts facilitate an employer to adapt to a changing economic landscape. There is however an abundance of caselaw which demonstrates that a dismissal by reason of redundancy will create a presumption of unfairness in circumstances where it can be demonstrated that the redundancy was motivated by reasons other than the needs of the business which can lead to a finding of an unfair dismissal by a tribunal such as the Workplace Relations Commission. This can occur when it can be shown that no genuine redundancy existed or where there is some other motivation for effecting a redundancy. It is essential that a redundancy is impersonal and not related to a reason that is specific to a person.  In the case of Panisi v JVC Europe [2011] IEHC 279, Justice Peter Charleton stated as follows:

“Redundancy is impersonal. Instead, it must result from, as s.7(2) of the Redundancy Payments Act 1967, as amended, provides, “reasons not related to the employee concerned.” Redundancy, cannot, therefore be used as cloak for the weeding out of those employees who are regarded as less competent than others or who appear to have health or age-related issues. If that is the reason for letting an employee go, then it is not a redundancy, but a dismissal.”

When does a redundancy amount to an unfair dismissal?

A dismissal by reason of redundancy will be held to be fair in circumstances where it results ‘wholly or mainly’ from five situations as set out in the Redundancy Payments Acts. They include situations such as where the employer has ceased to trade, or the requirements of the business have diminished to such an extent that fewer employees are required. The golden thread that runs throughout all five situations contained in the Redundancy Payments Acts is their impersonal nature. It is essential that a redundancy is carried out as a result of the needs of the business and not connected to reasons associated with an individual employee. In circumstances where it can be demonstrated that a redundancy occurred for a reason other than the five situations set out in the legislation then an employee will be found to have been unfairly dismissed.

To illustrate this point, it is of some guidance to review the recent decision of the Workplace Relations Commission in a Business Development Officer v Tourist Entertainment Company ADJ-00023492. In this case the respondent had suffered heavy financial losses and examinership was a near certainty. The respondent argued that cost reduction plans had to be implemented and there were five roles that were surplus to their requirements. The decision was made to terminate the complainant’s employment by reason of redundancy. The complainant submitted to the Workplace Relations Commission that he had been subjected to an unfair dismissal. 

The complainant outlined to the Workplace Relations Commission, that prior to commencing formal employment with the respondent that he had provided the respondent with financial support. It was due to this funding that the company had come out of examinership initially. The complainant stated that when he raised the issue concerning the loan with the respondent that this had led to considerable “friction” between the complainant and the directors. Following this, the respondent met with the complainant and outlined to him that the company was no longer “trading well” and his role was now at risk. The respondent never discussed alternatives to redundancy, nor did they discuss their selection criteria. The complainant’s role was terminated, and he submitted a complaint to the Workplace Relations Commission seeking compensation for unfair dismissal.

The adjudicator noted that the complainant’s financial assistance to the company prior to commencing employment caused friction. The adjudicator accepted that the company was in financial difficulty but noted that the respondent had not engaged with the complainant, nor had they ever discussed alternatives to redundancy or set out their selection criteria. The adjudicator stated: “I find that there was no effort to engage with the Complainant and they just went through the motions to make it appear to be a genuine redundancy, which it was not”. The adjudicator granted redress to the complainant in accordance with the Unfair Dismissals Act 1977.  

Anyone wishing to read the above decision from the Workplace Relations Commission may do so by accessing www.workplacerelations.ie.  If you feel that you have been subjected to an unfair dismissal or should you wish to discuss any of the matters discussed above,  then please get in touch by contacting us at (01) 833 8147 or alternatively you can email us at [email protected]. Telephone,  and videocall consultations are available by appointment.