Collective redundancies have unfortunately increased in frequency in Ireland over the past 6 months. The Covid-19 pandemic as well documented had a huge effect on many industries, in particular, the Service Industry with the dramatic loss of jobs and companies; however, it was unexpected that Ireland’s high profile Technology sector would be next to suffer from hire freezes, new job opportunities stalled or cut, and tougher performance indicators developed. All these warning signals since the pandemic have now resulted in job losses and tighter working regimes across our Technology sector.
For decades, Ireland has successfully secured several technology giants to establish either their Corporate Office or Subsidiaries here, however, the trust by Government in this ever-emerging sector has now turned out to be a possible dangerous over-reliance for employment in Ireland. Global redundancy plans will, in general, always affect Irish Employees. For example, when Irish fintech success, Stripe announced they would be looking for 14% staff cuts globally at the end of 2022 this announcement sent shock waves through all Irish industries. Details were not disclosed on the exact impact on Irish Employees, but unfortunately, redundancies were made. Since then just over 22 Technology Companies have made similar announcements and almost 10 from other sectors have followed suit.
In general, it has been reported that many of collective redundancies have been managed in a fair and equitable manner, but any issues of non-compliance arising can be very damaging to a Company’s reputation. If an Employer does not follow the correct procedure, they leave themselves open to serious financial implications. If it is found that an Employee was unfairly dismissed, they can be awarded up to two years’ gross salary as compensation under the Unfair Dismissal Acts or an adjudicator may agree to reinstatement in some cases.
The Redundancy Process
There are some careful considerations that an Employer must take into account before selecting a position for redundancy. The Employer must demonstrate that a redundancy situation existed. Having demonstrated that a genuine redundancy situation exists, it is essential to use fair selection criteria in selecting an Employee for redundancy.
Selecting roles for redundancy
- To fairly select an Employee’s role for redundancy, an Employer should first establish which positions may be impacted and at risk of redundancy. Having established that certain positions are at risk, Employees in that position must be considered against the criteria for selection.
- When setting out the criteria for selection, Employers should consider if the business made redundancies in past and, if so, what selection methods were previously used.
- The two main methods of selection used are ‘last in first out’, or ‘matrix selection criteria’ that can be based on qualifications, skills, experience or a combination of all three. The criteria used in the selection process must be appropriate and relevant.
- Transparency is required when dealing with redundancies. When selecting a particular role for redundancy, an Employer must apply selection criteria that are reasonable and are applied in a fair manner. An Employee is entitled to bring an unfair dismissal claim if they feel that they were unfairly made redundant or where a genuine redundancy situation did not exist.
- Under the Unfair Dismissals legislation, selection for redundancy based on certain specific grounds is considered unfair. These include redundancy as the result of an Employee’s trade union activity, pregnancy or religious or political opinions. The Employment Equality legislation also prohibits selection for redundancy that is based on any of the following nine grounds: gender, civil status, family status, age, disability, religious belief, race, sexual orientation or membership of the Traveller community. It is important to point out that the burden of proof in a claim for unfair dismissal is on the Employer. While an Organisation may believe they are justified in making an Employee redundant, they risk leaving themselves open to claims if they don’t follow correct policies and procedures.
Risks Associated with Redundancy
Previous experience shows that the Workplace Relations Commission will find in favour of a complaint due to poor or inadequate processes and procedures carried out by the Organisation. Critical to any planned redundancy is the fact that fair procedures apply and an Employer must be able to demonstrate all considerations including that a genuine redundancy situation exists, fair selection procedures are employed and all requirements are met in terms of consultation, procedures and compliance.
If any of the above is not in line with fair procedures or natural justice then an Employee can see redress under the Unfair Dismissals Acts, the Redundancy Payment Acts or the Employment Equality Acts if the dismissal was on any of the nine grounds previously mentioned, which may result in financial liability or other redress on the Employer.
What is the knock-on effect?
The tech sector is not alone in downsizing or right sizing their Organisation with a trimmer workforce and a more defined position. The economic impact as a result of a changing world post the global pandemic and due to geopolitical influences has meant that the need to rethink, resize, and pivot business models has been an inevitable development across many sectors.
But rightsizing and remaining agile can have many pitfalls. The legislative requirements can be far reaching, and the knock-on effects create their own challenges. Ensuring you meet your compliance needs with the cultural and strategic HR transitions needed for those remaining is a balancing act but one that can be achieved through careful planning and effective support. Talk to our experts on compliance requirements, setting out your company culture, and defining career prospects for Employees in order to create the right size, the right balance and right transition now.