Redundancy, Lay-off & Short Time in the Hospitality & Retail Sectors – What rights does an Employer have?

Following the recommendations of the National Public Health Emergency Team, which have been approved and adopted by the Government on Monday 19 October, Dublin will now move to Level 5 of the “Resilience and Recovery 2020-2021: Plan for Living with COVID-19” for a period of six weeks, to be kept under review.

Unfortunately, these measures will now place businesses in the hospitality and retail sectors under increased and severe pressure to survive following the initial devastation to trading brought about by the coronavirus earlier this year.

In light of the foregoing, employers in the hospitality industry will now immediately face difficult decisions and will need to consider options in relation to staffing requirements into the future as a result of another sudden closure and resultant loss of revenue.  Some of the options available to affected employers are set out below.

Temporarily Reducing the Workforce – Short-Time / Lay-Off

If job losses are anticipated by an employer, regard should be paid to the Redundancy Payments Acts 1967-2014 which makes provision to temporarily lay-off employees or to put them on short-time working hours on notice.

It should be noted that employees cannot be placed on lay-off / short time absent an express contractual right or implied right (custom and practice) to do so.  The absence of such a provision could lead to a claim for breach of contract if an employee is laid off or placed on short-time without agreement.  It is always advisable to agree lay-offs / short-time with employees in those circumstances.  Notwithstanding the foregoing, it is likely that a Court would imply a right to lay off given the gravity of the current pandemic.

Short-Time / Lay-Off Notification

An employer must reasonably believe that the short-time working or lay off is not permanent which must be notified to the employees.  An employer is required to give notice of short-time and lay off to employees, however the legislation does not provide for a minimum period of notice.  It is likely that exceptional circumstances, such as the current COVID-19 crisis, will justify a short period of notice.

Short-Time / Lay-Off Selection

It is also important that careful consideration should be given to selecting employees for short time and lay-off.  Fair procedures require that objective selection criteria should be applied and care must be taken not to discriminate against employees on any of the nine grounds contained in the Employment Equality Acts 1998-2015.

Redundancy

Unfortunately, certain businesses may not be in a position to temporarily reduce staff and will have to contemplate redundancies.  The legislation governing redundancies in Ireland is the Redundancy Payments Acts 1967 (as amended) (“the Acts”) and a redundancy is defined in the Acts as a dismissal of an employee by an employer resulting “wholly or mainly” from one of the following:

  1. the fact that his employer has ceased, or intends to cease, to carry on the business for the purposes for which the employee was employed by him, or has ceased or intends to cease to carry on that business in the place where the employee was so employed; or
  2. the fact that the requirements of that business for employees to carry out work of a particular kind in the place where he was so employed have ceased or diminished or are expected to cease or diminish; or
  3. the fact that his employer has decided to carry on the business with fewer or no employees whether by requiring the work for which the employee had been employed (or had been doing before his dismissal) to be done by other employees or otherwise; or
  4. the fact that his employer has decided that the work for which the employee has been employed (or had been doing before his dismissal), should henceforward be done in a different manner for which the employee is not sufficiently qualified or trained; or
  5. the fact that his employer has decided that the work for which the employee has been employed (or had been doing before his dismissal) should henceforward be done by a person who is also capable of doing other work for which the employee is not sufficiently qualified or trained.

An employer should give careful consideration to the procedure to be adopted when effecting redundancies.  It is crucial that it can be demonstrated that there is a genuine redundancy situation, falling within the definition above, and that the redundancy process is carried out fairly and reasonably.

Reasonableness

The Unfair Dismissals (Amendment) Act 1993 states that “in determining if a dismissal is an unfair dismissal, regard may be had…to the reasonableness or otherwise of the conduct (whether by act or omission) of the employer in relation to the dismissal”.  In light of same, if the conduct of the employer is determined to be unreasonable in carrying out a redundancy, the dismissal of the employee may ultimately be held to be unfair in a subsequent claim by an employee to the Workplace Relations Commission.

Selection

Selection of employees for redundancy is extremely important with the key focus for employers being the application of objective selection criteria.

There are no set legal criteria in employment legislation for the selection of employees and an employer must set its own criteria, depending on the requirements of its business.

Unfair Dismissal

Employers should always consider any alternative options before redundancies and this process should be fully recorded.  If an employee ultimately takes a case for unfair dismissal, it will be important for employers to have documented the manner in which a decision was made to carry out redundancies and the alternative options that were considered and discussed in advance of same.

Whilst a redundancy may be a defence to a claim of unfair dismissal, an employer must demonstrate that a bona fide redundancy situation existed and that the employee was fairly selected for redundancy.  A disgruntled employee can bring a claim to the Workplace Relations Commission for unfair dismissal and if the employee’s claim is upheld, the Workplace Relations Commission can, inter alia, award an employee compensation of up to a maximum of two years remuneration.

In light of the above, the importance for employers in obtaining the correct advice on implementing redundancies cannot be overstated.

How we can help

If you have any queries or concerns, or would like to discuss the above in further detail, please feel free to contact Richard Lee, Partner, BHSM on 01 440 8300 / rlee@bhsm.ie.

This article is for general information purposes.  Legal advice must be obtained for individual circumstances.  Whilst every effort has been made to ensure the accuracy of this article, no liability is accepted by the author for any inaccuracies.

 

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