What is Redundancy?

Adjusting for the Future www.insighthr.ie

The Big Picture - Ireland 2012 • National economic crisis on-going • Challenging trading conditions • Dramatic increase in employee claims progressed through EAT from 2008 • Downsizing programmes continually criticised by EAT & Rights Commissioners • Awards very unpredictable • Increase in personal injury claims linked to downsizing programmes www.insighthr.ie

EAT Report 2011 • 36% of all claims related to redundancy • 24% of all claims related to Unfair Dismissals • 76 weeks in Dublin & 77 weeks in provincial areas • Average award of €18, 000 • Increased use of legal professionals www.insighthr.ie

Cost Saving Options for Employers • • • • • • • •

Reduction in pay and/or benefits Reduction in working hours Lay-off Redundancy (focus of today’s seminar) Reduction/elimination of overtime Unpaid career break Early retirement programme Outsourcing functions www.insighthr.ie

What is Redundancy? • The employer ceases to carry out the business for the purpose of which, or in the place where the employee is employed. • The requirements of the business for the employee to carry out work of a particular kind has ceased or changed. www.insighthr.ie

What is Redundancy? • The employer decides to carry out the business with fewer or no employees • The employer decides that the work should be done in a different manner for which the employee is not suitably qualified or trained www.insighthr.ie

What is Redundancy? • The employer decides that the work should be done by a person who is also capable of doing other work for which the employee is not sufficiently qualified or trained.

www.insighthr.ie

Collective Redundancies • 5 employees where 21- 49 are employed • 10 employees where 50-99 are employed • 10% of the employees where 100-299 are employed • 30 employees where 300 or more are employed www.insighthr.ie

Employer Obligations Collective Redundancy • Notify the Minister in writing of proposed redundancies • Appoint employee representatives • Provide information in writing to representatives • Consult with employees over 30 days • Meaningfully engage with employees www.insighthr.ie

Redundancy Selection Criteria • Last in first out (LIFO) – Simplest process – objective & fair – Cheaper from the employer’s perspective – Loss of essential employees and/or skills can be an issue • Selection Matrix – Complex paper work process – Must be objective and fair – Allows employer to retain key skills – Long-term view taken by the business www.insighthr.ie

Selection Criteria for a Matrix • • • • •

Qualifications and skills Length of Service Work performance *appraisal system crucial* Attendance *must be mindful of equality issues* Disciplinary Records Criteria must satisfy the test of objectivity and be carefully applied www.insighthr.ie

Impact on a Business • • • • •

Expensive to implement (15% rebate) Generally disruptive to business Time consuming for management Loss of key skills & experience May expose the business to costly litigation if handled poorly • Potential reputational damage • May demotivate wider work force www.insighthr.ie

Poorly Managed Redundancies Lessons for Employers

www.insighthr.ie

Adrian Lee Services Limited - 2009 • €200k award to employee • Reason given by employer for dismissal not genuine • History of a fractious employment relationship between the parties • Salary reduced & employee demoted • Dismissed for his performance under the cloak of redundancy www.insighthr.ie

The Temple Bar Gallery & Studios • • • • •

EAT determination August 2012 Award of €30,000 to employee Redundancy ruled to be a “sham” Employee “unfairly” dismissed Company criticised for failure to adequately consult • Newly created position in effect same job with a different job title. www.insighthr.ie

David L’Estrange Limited • EAT determination 2010 • €40,000 award to employee • Alternative position later advertised should have been offered • Redundancy should not have been effected while employee on maternity leave • Procedures used were flawed www.insighthr.ie

Getting It Right

www.insighthr.ie

Key Watch Points • Understand relevant legislation • Identify one person who will be accountable for the entire process • Plan and manage communications • Consult employees (1 week – 30 days) • Engage with trade unions (if recognised) • Seek alternatives to redundancy • Be mindful of how redundancy affects lives and families www.insighthr.ie

The Importance of Getting It Right • Seek professional advice (legal/HR) in advance of any programme • Check contractual provisions • Check custom & practice • Provide notice to all employees simultaneously • Consider equality issues i.e. disability, maternity, nationality etc. www.insighthr.ie

The Importance of Getting It Right • Same message to all stakeholders • Prepare management team in advance • Anticipate employee queries & concerns • Have a plan A, B & C • Clear time frames & plan of action for every phase of the programme www.insighthr.ie

Positioning for the Future • Communicate clearly with ‘survivors’ post redundancy programme • Paint a positive picture of the future • Reassure employees • Outline in writing any changes in work practices and/or duties as a result of redundancies • Watch absenteeism www.insighthr.ie

Adjusting for the Future • • • •

Change is not without risk It can be costly if managed poorly Forecast and plan change effectively Ensure the business is capable of functioning effectively after downsizing & cost cutting • Ensure you have support because it is difficult & you will not be popular www.insighthr.ie

INSIGHT HR

Thank You

Questions & Answers

www.insighthr.ie