Recent Developments in Collective Redundancy Law

Ireland’s open economy is highly integrated with the global trade system. With a new administration in the United States taking a new approach to longstanding trade agreements, there is a possibility that certain sectors and industries within the Irish economy may be exposed to increased US tariffs. These outside economic signals suggest there may be a turbulent period ahead for certain Irish Organisations and their Employees. With rising international trade tensions, many Organisations may need to consider reorganisations, and against this backdrop, this article will examine recent legal developments in the area of collective redundancy.

What is a Collective Redundancy?

A collective redundancy situation arises where redundancies over any period of 30 consecutive days affect a minimum number of Employees based on a specific threshold of Employee numbers in their totality. The baseline figures are:

• five persons in an establishment normally employing more than 20 and less than 50 Employees.
• ten persons in an establishment normally employing at least 50 but less than 100 Employees.
• ten per cent of the number of Employees in an establishment normally employing at least 100 but less than 300 Employees.
• thirty persons in an establishment normally employing 300 or more Employees.

Legislative Development

Employment (Collective Redundancies and Miscellaneous Provisions) and Companies (Amendment) Act 2024

The Employment (Collective Redundancies and Miscellaneous Provisions) and Companies (Amendment) Act 202 (the “Act”) was introduced to clarify the redundancy obligations of Organisations that are insolvent or seeking insolvency protection advice. The Act came into effect from 1 July 2024.

The core aims of the Act are to:

• amend certain provisions of the Protection of Employment Act 1977 to provide further protection to Employees who are made redundant by way of a collective redundancy, and
• to amend certain provisions of the Companies Act 2014 to further improve the quality and circulation of information to workers as creditors in corporate insolvencies.

The changes are designed to bolster the protection of Employees in collective redundancy situations and in particular in situations where the Employer is insolvent. The enhancement of protection includes amendments to the Companies Act 2014 that will improve the quality and circulation of information to Employees as creditors in corporate insolvency situations.

Amendments to Protection of Employment Act 1977 (1977 Act):

• Appointment of a ‘responsible person’ who will take on certain obligations under the 1977 Act where an Employer is insolvent. A responsible person can include a liquidator, a provisional liquidator, a receiver or any other person appointed by a court where they assume full control of the business.
• Where a responsible person proposes to create collective redundancies, they will be required to, with a view to reaching an agreement, initiate consultations with Employees’ representatives. Consultations should be at the earliest opportunity and in any event at least 30 days before the first notice of dismissal is given.
• The responsible person must supply Employees’ representatives with all relevant information relating to the proposed redundancies.
• The responsible person must supply the information that should be provided in writing to Employees’ representatives. The Minister for Enterprise, Trade and Employment (the “Minister”) must be provided with copies of all such information as soon as possible.
• The responsible person must notify the Minister in writing of their proposals at the earliest opportunity and in any event at least 30 days before the first dismissal takes effect.
• The prohibition on effecting redundancies under a collective redundancy before the expiry of the 30 day notice period beginning on the date of the notification to the Minister will apply to all collective redundancy situations including insolvency situations. As it stands, there is an exemption from this requirement for insolvency situations.

Amendments to the Companies Act 2014:

The Act places specific obligations on company directors and/or liquidators to notify Employees of certain events in an insolvency process such as the presentation of a winding up petition, appointment of a provisional liquidator or service of a statement of affairs and related matters.

The amendments aim to clarify the redundancy obligations of Organisations that are insolvent or seeking insolvency protection advice.

The Act effectively makes the obligations on the responsible person, and the corresponding penalties similar to those of an Employer seeking to implement collective redundancies.

High Court Decision in Debenhams Case

This High Court decision handed down in March 2025 overturned a Labour Court decision to award Employees of the insolvent Debenhams retail outlets with four weeks’ pay for failure to comply with the consultation requirements under collective redundancy legislation.

Background

Section 9 of the Protection of Employment Acts provides that an Employer must initiate consultations with Employees’ representatives where it proposes to effect collective redundancies. Consultations must begin ‘at the earliest opportunity’ and in any event at least 30 days before the first notice of dismissal is given.

Timeline

8 April 2020 – UK Parent Company of Debenhams notifies Debenhams Ireland that it will no longer fund the Irish operations.

9 April 2020 – Board of Debenhams Ireland send a letter to Employees advising that the Organisation must cease trading and that the board intended to make an application to the High Court to have a provisional liquidator appointed.

14 April 2020 – Debenhams Ireland wrote to the Employees’ representative providing information relating to the proposed redundancies, that the Organisation was insolvent and that a liquidator would be appointed.

16 April 2020 – High Court appointed joint provisional liquidators and the first consultation meeting took place on Friday 17 April 2020.

A deciding factor in the High Court’s decision was the backdrop of Covid-19 lockdown measures which were in effect at the time.

Employee Claim

Almost 800 Debenhams Employees lodged complaints in the Workplace Relations Commission (WRC) leading to a “test case” being heard. The claim alleged that Debenhams breached its obligations by failing to begin the consultation process at the earliest opportunity, failing to provide adequate information and failing to meaningfully consult with Employee representatives.

WRC Decision

The WRC found against the liquidator in ruling that the consultation process was not commenced ‘at the earliest opportunity’ and awarded the Employee four weeks’ compensation.

Labour Court Decision

On appeal, the Labour Court upheld the WRC’s ruling in finding that there had been a delay in commencing the consultation process.

High Court Decision

The High Court noted that the obligation to consult at the earliest opportunity, must be considered ‘within the practicalities of life on the ground at that time’. The fact that the liquidator and the Employer were required to make these decisions during a period of ‘unprecedented lockdown due to Covid‘ was considered. It was also noted that the Easter bank holiday weekend took place during the period in question. The High Court found no evidence that the delay narrowed the options of Employees and on the question of compensation found that it was not within the jurisdiction of WRC and Labour Court to penalise an Employer by awarding compensation to Employers. To award compensation, the claimant must establish that they suffered a loss. Ultimately, the High Court ruled that there was no evidence that the claimant suffered any financial or other loss as a result of the alleged delay.

Key Takeaway for Employers

The decision provides welcome clarity for Employers in the context of consultation obligations. While the legislation states that the consultation period must begin ‘at the earliest opportunity’, this obligation has to be considered within the practicalities of life on the ground at that time. It is also significant that the High Court confirmed that awards of compensation are only available to claimants who establish their loss. The collective redundancy legislation does not therefore authorise the WRC and Labour Court to award compensation to penalise Employers.

Reorganisations Require Careful Planning

Reorganisations involving either individual or collective redundancies are a complex and sensitive process, governed by legal frameworks that aim to protect both Employees and Employers. As this article demonstrates, there are frequent updates to employment law and it can be a challenge to keep up. While navigating the legal requirements and managing the emotional impact of redundancies can be challenging, Organisations simply must ensure they follow the correct procedures to minimise the risk of costly claims.

If your Organisation is facing the possibility of collective redundancies, it is crucial to seek expert guidance to ensure compliance and fairness throughout the process. Adare’s professional HR consultancy can help you manage consultations, select fair redundancy criteria, and navigate the legal technicalities effectively.

Our updated ebook, “Collective Redundancies 2025,” provides a clear overview of the current requirements under the Protection of Employment Acts, 1977 – 2024, including the recent amendments. Ensure your processes align with the latest Irish employment law.

Download your complimentary eBook now!