Covid-19 – Q&As on Redundancy and Lay Off

This note is part of a series that the lawyers of Reddy Charlton will issue on the major legal, personal and business issues that will confront us all during the Covid-19 crisis.

Can an employee on lay off or short time trigger redundancy?

Normally yes, but during the current Covid-19 Pandemic emergency period, no.

Under the Redundancy Payments Act, an employee who is on lay off or short time can trigger redundancy if on lay off or short time for:-

• for 4 or more consecutive weeks; or
• for a series of 6 weeks or more within a 12 week period

However, the Emergency Measures in the Public Interest (Covid-19) Act 2020 has temporarily suspended an employee’s right to trigger redundancy during the “emergency period”. The “emergency period” is currently defined as ending on the 31 May 2020, but this period may be extended.

Does this provision affect an employer’s right to trigger redundancy?

No, an employer is entitled to trigger redundancy at any time during the Covid-19 emergency period provided a redundancy situation exists. Prior to making the decision to implement any redundancies, employers should consider whether the collective redundancy provisions apply. Whether or not there is the requirement for a collective redundancy process, the employer should still initiate a consultation process in a redundancy scenario. Failure to do so may leave an employer open to a successful claim for Unfair Dismissal.

How does lay off affect continuity of employment?

Continuity of employment continues as normal during a period of lay off.

This means that an employee, who does not have the requisite service of 104 weeks to qualify for a redundancy payment, may cross that service threshold while on lay off.

As an example, an employee who has 102 weeks’ service is placed on lay off for a period of 4 weeks. That employee is subsequently made redundant.

As the employee now has continuous service of 106 weeks, she is entitled to a redundancy payment as she has more than 104 week’s service.

How does lay off affect reckonable service and the amount of redundancy payment?

Periods of lay off are not allowable as reckonable service, provided that the period of lay off was within a three year period prior to the redundancy.

When calculating service for the purpose of establishing the redundancy payment due to an employee, only reckonable service counts.

Taking the example above, the employee’s reckonable service for the purpose of calculating redundancy would be 102 weeks as the weeks on lay off do not count.

How is a statutory redundancy payment calculated?

A statutory redundancy payment applies to employees who have 104 weeks’ continuous service. Eligible employees are entitled to:

• two weeks’ pay for each year of service; plus
• one additional bonus week’s pay

Statutory redundancy is subject to a ceiling of €600 per week. The payment is calculated by reference to reckonable service on a pro rata basis.

How can Reddy Charlton help?

During this Covid 19 crisis, Reddy Charlton Solicitors are eager to support, encourage and guide your business. If you have any queries or seek further information on this topic, please contact Laura Graham at lgraham@reddycharlton.ie