I have to let some employees go soon as my business is starting to turn unprofitable. What are their entitlements and my obligations as regards redundancy?
The Redundancy Payments Acts 1967-2007 provide a minimum entitlement to a redundancy payment for employees who have a set period of service with the employer. Not all employees are entitled to the statutory redundancy payment, even where a redundancy situation exists. If an employee does qualify for redundancy there are specific redundancy procedures which employers and employees must follow in order to comply with the legislation.
The statutory redundancy payment is a lump-sum payment based on the pay of the employee. All eligible employees are entitled to:
· Two weeks' statutory redundancy payment for every year of service, regardless of age, and One further week's pay
Pay refers to current normal weekly pay, before tax and PRSI deductions, that is gross pay. The statutory redundancy payment is tax-free.
However, an employee and an employer may agree a redundancy payment above the statutory minimum, and in such circumstances, employees who have not reached the statutory minimum period of service may also receive a payment. For example, statutory redundancy only applies to employees with two years' service. However, an employer might agree to pay a lump sum to employees with less than two years' service. This payment arises through agreement and not through a statutory entitlement. As so often in employment law, the legislation is concerned with ensuring minimum rights, while allowing the parties to agree more substantial rights if they so choose.
How to apply
Employers who pay the statutory redundancy entitlement and give proper notice of redundancy (at least two weeks ) are entitled to a 60 per cent rebate from the Social Insurance Fund. To make a claim for this rebate employers submit form RP50 to the Redundancy Payments Section of the Department of Enterprise, Trade and Employment within six months of the date of termination of employment. This form incorporates "Redundancy Notification" (formerly form RP1 ), "Redundancy Certificate" (formerly form RP2 ) and "Employer's Application for a Rebate" (formerly form RP3 ).
An employer must give an employee at least two weeks' notice of the redundancy using "Redundancy Notification" – section A of form RP50. On the date of the termination of employment the employer must pay the redundancy lump sum due to an employee and give an employee a "Redundancy Certificate" - section B of form RP50.
If an employer has not given an employee a redundancy lump sum an employee may apply for this on form RP77. If there is a dispute about redundancy an employee may bring a claim to the Employment Appeals Tribunal. This must be done within one year of an employee’s dismissal.