Employers who are currently considering implementing a
redundancy exercise should consider the implications of waiting
until next year to do this. Budget 2012 provides that the employer
rebate on statutory redundancy payments will be reduced from the
current rate of 60% to 15% with effect from 1 January 2012. This
will make redundancies a much more costly exercise for employers
from the start of next year.
Employers implementing redundancies need to ensure that they
comply with the Redundancy Payment Acts 1967-2007 and that the
redundancy process which is carried out is fair in order to
minimize the risk of, and to defend, claims. This normally involves
engaging in consultation with employees, carrying out a fair
selection process and considering alternatives to redundancy.
There are additional requirements for collective redundancies
(i.e. where a certain minimum number of employees are made
redundant within a 30 day period with the numbers depending on the
size of the workforce). These requirements include issuing a
notification to the Minister for Jobs, Enterprise and Innovation
and carrying out a 30 day consultation period with employee
representatives. Given that the rebate reduction will take effect
from 1 January 2012, it will not be possible for employers to
implement a collective redundancy exercise now and avail of the 60%
rebate on statutory redundancy payments unless they have already
commenced their 30 day consultation process and notified the
Minister.
Although not always possible or indeed appropriate and depending
on the specific wording of employees' contracts of employment,
employers currently undergoing or considering redundancy exercises
could potentially consider paying employees in lieu of notice, or
implementing voluntary schemes whereby employees waive their right
to notice in order to bring forward termination dates to before 31
December 2011 in order to avail of the higher rebate. That said,
given the two week statutory redundancy notice requirement under
the Redundancy Payment Acts 1967-2007, notice would have to be
issued on or before Friday, 16 December next.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
