A Sales Executive lodged a claim to the WRC alleging that she failed to receive her statutory redundancy entitlement. The Company she worked for went into liquidation. The total sum she was due to receive was €11,604.00.

Representatives from the Company failed to show at the hearing. However, the Company’s liquidator confirmed the Sales Executive’s employment details and that she failed to receive any statutory redundancy payment.

Irrespective of a Company’s ability to pay redundancy entitlements, an employee who has over 2 years’ service with the Company is entitled to same. As a result, and under the Redundancy Payments Act 1967 – 2012, the individual was awarded her statutory entitlement of €11,604.00.

Here at The HR Company we know that many businesses will be looking toward the future needs of their businesses as a result of COVID-19. Many employers may need to consider reducing costs within the business, and employee wage costs may be one consideration.

While we understand that it can be difficult to make these decisions, it is important to ensure that fair and due process is followed when deciding where reductions can be made, especially if exploring the option of redundancies.

The Company mentioned above went into liquidation, making the redundancy process even more complex.

An employee’s employment can be terminated through redundancy but unless the redundancy is fair and legitimate, the WRC may find the employer guilty of unfair dismissal.

Employers need to be mindful that there are criteria to be fulfilled during this process, including understanding if there is a ‘Collective Redundancy’ situation arising.

‘Collective redundancy’ is the making redundant within a period of 30 consecutive days, of a minimum number of employees, that minimum varying with the normal size of the businesses

workforce. The relevant minimum number of proposed redundancies in relation to the size of the overall workforce is as follows:

• 5 employees in a business employing 21-49 employees
• 10 employees in a business normally employing 50-99 employees
• 10% of employees in a business normally employing 100-299 employees, or
• 30 employees in a business normally employing 300 or more employees

When calculating the number employed in your business, you need to look at the average number employed in each of the 12 months prior to the date on which the first redundancy takes place.

Learn more about redundancy during COVID-19 here.

I am unable to pay my employee’s statutory redundancy entitlement. What should I do?

You will need to send the Department of Enterprise, Trade and Employment proof that you are not in a position to pay. The proof should come in the form of:

• A bank statement and letter from your Accountant or;
• Recently audited accounts or;
• A Statement of Affairs.

Once this step has been taken and the information received, you will become a preferential creditor of the Department.

We assist business partners navigate complex HR issues and processes every day. We ensure they remain fully compliant. Do you need HR support? Contact us today.