Budget 2012 provides that the employer rebate of statutory redundancy payments is reduced from 60% to 15% with effect from 1 January 2012. But what does the rebate reduction from 60% to 15% mean for employers?
Employers who are currently considering carrying out redundancies within their workplace should consider the implications of waiting until next year to do so. This will make redundancies a more costly exercise for employers from 1 January 2012 as they will receive less financial support from the State, while remaining under the existing statutory obligation for employers to pay two weeks’ pay for every year of service and one further week’s pay to a maximum earnings limit of €600 per week.
Employers need to ensure that if they chose to bring forward the termination date, the redundancy process must be fair and the situation giving rise to the redundancy must be genuine. Alternatives to the redundancy should be considered. In the event that these alternative are not successful, employers should select those employees for redundancy fairly.
Significantly, an employer who proposes to dismiss an employee by reason of redundancy must engage in consultation with their employee and give that employee notice in writing of the proposed dismissal on the requisite form – part A of Form RP50. This statutory notice must be given at least two weeks before the date of dismissal or longer in circumstances where an employee is entitled to a longer contractual notice period or a longer notice period in accordance with the Minimum Notice and Terms of Employment Acts 1973-2005.
Where an employee accepts payment in lieu of notice, the date of termination of employment for the purposes of the Act is deemed to be the date on which notice, if it had been served out, would have expired. This date is not only of relevance in calculating the final statutory lump sum owing to employees but is of particular significance for employers who would like to avail of the current 60% rebate. This means that employers must issue the notice on or before this Friday, 16 December 2011.
If a company is carrying out a collective redundancy, unless the 30 day consultation period has already begun and due notification has been given to the Minister, it is difficult to see how an employer will be able to avoid the rebate reduction in January 2012.
Until now, Ireland has been out of step with its European counterparts in terms of its redundancy rebate. In the UK, there is no rebate available to employers from the government though there is a Redundancy Fund used to pay a redundancy payment rebate to small employers and make redundancy payments direct to redundant workers, when the employer is in financial difficulty or insolvent.
It is therefore not surprising that the Government has chosen to take this step. However, employers who are struggling to meet costs and survive in this recessionary time must now consider whether they can afford to carry out the redundancy and what implications this might have for the employee in terms of an ex gratia payment and otherwise.
WANT TO USE THIS ARTICLE IN YOUR PUBLICATION OR WEB SITE? You are welcome to use this article anytime, just be sure to republish it intact and include the following author/copyright information and links:
© Copyright Naomi Gardiner, 2011 – Naomi Gardiner, solicitor and owner of Naomi Gardiner Solicitors, specialises in health and safety and employment law advice. She is also a published author and a General Legal Practitioner. She is a member of the Health and Safety Lawyers Association of Ireland and the Employment Law Association of Ireland.
We are featured on the Bank of Ireland “All about Business” Website!
Have a look -http://www.allaboutbusiness.ie/featured_business/320