28/01/2021 Briefing

Unfortunately, notwithstanding the collective efforts of employers, employees, representatives and the Government, the number of potential collective redundancies notifications between January and October 2020 was more than double that of the same period for 2019. The notifications made in this period affected more than 10,000 roles. Having regard to this trend and the likely ending of popular Government support schemes in 2021, we examine new developments in respect of collective redundancies that employers should be aware of.

 To whom should a notification be made?

Under the Protection of Employment Acts 1977 to 2014, an employer is obliged to notify the relevant Minister of the proposed redundancies at the earliest opportunity, and in any event at least 30 days before the first dismissal takes effect. Certain specified information must also be provided.

From 13 October 2020 onwards, the Minister to whom the notification must be made is the Minister for Enterprise, Trade and Employment.

When does the 30 day period for triggering collective redundancy obligations start to run?

The recent decision of the European Court of Justice (ECJ) in UQ v Marclean Technologies S.L.U (C-300/19) is an important reminder for employers to consider what might happen in the 30 day period both before and after the redundancy takes effect – i.e. a 60 day period in total. If other dismissals may occur, a collective redundancy obligation could be triggered.

After the employee’s dismissal, a number of other redundancies also took place. Under Spanish law, only terminations of employment which took place in the relevant period prior to the date of the individual dismissal at issue were taken into account to establish the existence of collective redundancies. Terminations taking place in the relevant period subsequent to that date were considered only if the employer had acted abusively. The employee argued that her dismissal formed one of a number of “covert” collective redundancies and the correct redundancy procedure had not been followed. She stated the fact that a number of persons (sufficient to reach the threshold) were made redundant after her dismissal meant that a collective redundancy procedure should have been followed in respect of her dismissal.

The ECJ affirmed that the relevant period is effectively a rolling period – i.e. that employers should consider the period both before and after the relevant dismissal to determine whether a threshold has been met. This is aligned with Irish legislation, which, unlike the Spanish law in question, refers to “any” period of 30 consecutive days, and does not expressly treat the period before or after the redundancy in question differently.

 With whom should an employer consult?

An employer is obliged to initiate consultations with employees’ representatives. This is expressly defined as meaning a trade union, staff association or excepted body with which it has been the practice of the employer to conduct collective bargaining negotiations, or, if no such body exists, a person/persons chosen by employees to represent them, under an arrangement put in place by the employer.

In practice, particularly if there are a very small number of employees involved, employers sometimes seek to consult with individual employees directly. However, the danger of taking this approach was illustrated in a 2020 WRC decision. In Senior Customer Service Representative v Customer Call Centre Service (ADJ-00021532), an Adjudication Officer made a monetary award of one week’s salary against a non-union employer who opted not to put in place or suggest an arrangement for the selection of an employee representative. The Adjudication Officer rejected the contention that the HR Manager, who conducted the consultation process and was available to answer queries, met the definition of an employee representative as she was a conduit for the delivery of management decisions.

It is important that any employer efforts to facilitate an arrangement whereby employee representatives can be chosen by employees is documented, particularly as the legislation does not prescribe a method of election. If there is no union, staff associations or similar groups can be looked to, but an employer must be prepared to stand over the authority of the body to be consulted in respect of such issues – employees may challenge that some staff associations didn’t have this level of authority conferred upon them (particularly if key cohorts of the employee population are not represented in the association). In some circumstances, an election or appointment process may be appropriate. In others, employees may insist on individual consultation having been offered the opportunity to choose representatives. The right process will inevitably vary depending on the circumstances and legal advice should be taken.

Is new legislation relating to the rights of employees in liquidation scenarios anticipated?

In June 2020, the coalition parties entered into a commitment in the Programme for Government to review whether the legal provisions surrounding collective redundancies and the liquidation of companies effectively protect the rights of workers. The Company Law Review Group has also been asked to report on additional matters, including a review of the Companies Act 2014 with a view to addressing the practice of trading entities splitting operations between trading and property, and examining legal provisions pertaining to sales to connected parties. Publication of the report is expected in early 2021.

The dispute in relation to the liquidation of Debenhams Ireland (which has been the subject of Labour Court mediation and state intervention in the form of the proposed provision of €3million education/training fund) has focussed minds on the Duffy-Cahill Report. The Duffy-Cahill Report was commissioned in the wake of several high profile liquidations, including Clerys department store, albeit not investigating a specific liquidation. The Joint Committee on Enterprise, Trade and Employment debated the Duffy-Cahill Report on 4 November 2020, and it is expected that opposition parties will continue to press for legislation in this area.

Are unilateral contractual changes an alternative solution to collective redundancies?

Throughout the Covid-19 crisis, some employers have attempted to seek agreement to long-term changes to terms and conditions, such as pay cuts and changes to work practices, with a view to avoiding collective redundancies. As employees are entitled to refuse unilateral attempts to alter fundamental contractual terms, a difficulty potentially arises – if a small number of people reject arrangements that would save the jobs of a significant majority who agree to those terms, can those persons effectively veto a proposal and force a collective redundancy scenario?

An approach that has been taken in the UK is to propose to dismiss employees in the event that they refuse to accept revised terms and conditions after a period of consultation. In such circumstances, an employer would seek to defend unfair dismissal claims on the basis that the circumstances amounted to a “substantial ground justifying dismissal.” This defence has not been utilised extensively in Ireland, but there is authority to support the implementation of this approach in Ireland and in particular the proposition that where a reasonable employer is facing real financial hardship, an otherwise reasonable proposal aimed at securing the jobs of all staff should not be subject to a veto by a small number of employees.

Whether the defence would be successful is likely to be highly dependent on the facts of the case. Legal advice should be taken before considering the implementation of such a strategy. It is not anticipated that the WRC/Labour Court will grant a charter to disproportionately impose the burden of a financial crisis on employees.

An additional and important requirement to consider is the fact that an obligation to enter into a statutory collective consultation process – and accompanying notifications to the Minister –  may be triggered by a proposal to dismiss in the event that employees refuse to accept revise terms and conditions.

Can an employee trigger a redundancy?

Ordinarily, where an employee has been laid-off of kept on short-time for extended periods (either four or more consecutive weeks or six weeks within a period of thirteen weeks), an employee can give his employer notice in writing of his intention to claim a redundancy payment in respect of lay-off or short-time. This can trigger a process that ultimately leads to a redundancy scenario.

During the Covid-19 emergency, this right has been temporarily dis-applied until at least 31 March 2021. Employers who have implemented lay-offs should monitor developments in this area, as it is expected that the right will be reinstated if businesses are able to resume trading.