Employment Law Update: Unfair Redundany Selection, Redundancy Law, Changes to Employees' Salaries
Individual Employment Law advise from Moloney & Associates Solicitors Limerick should be sought when dealing with any employment law query as we tailor our advise to each individual situation and we provide specific advise in relation to Unfair Dismissals, Bullying and Stress in the Workplace, Unfair Redundancy practices and general employment law issues in many other areas.
Employment Law: Current Issues From Employers:
Question 1:
I have experienced a big drop off in business recently and I need to reduce my wage bill. Can I change my employees’ salaries unilaterally as they all have contracts?
Answer:
As a solicitor practising Employment Law in Limerick that is a question that I have been asked on a number of occasions recently.
Employment Law is essentially the law of contract and one of the core principles of contract law prohibits any unilateral changing of the contract so in short you can not just change a contract of employment. Any changes to employees’ contracts must be done with agreement on both sides and this may be very difficult to agree in practice especially if you are seeking pay reductions. If you make unilateral changes to an employees pay then you risk litigation under the Payment of Wages Act 1991 for an unlawful deduction to wages. It could also lead to an action for constructive dismissal as you are breaching an essential and fundamental term of the employee’s contract of employment. Employers need to tread carefully.
Question 2:
Due to the current economic climate I no longer have enough work to keep all of my staff busy and I will be making some redundant. What do I need to know?
Answer
The statutory definition of redundancy is found in the Redundancy Payments Act 1967. A ‘redundancy’ occurs where:
a) An employer has ceased or intends to cease to carry on the business for the purposes of which the employee was employed by him, or has ceased or intends to cease to carry on that business in the place where the employee was so employed, or
b) Where the requirements of that business for employees to carry out work of a particular kind in the place where he was so employed have ceased or diminished or are expected to cease or diminish, or
c) Where an employer has decided to carry on the business with fewer or no employees whether by requiring the work for which the employee had been employed (or had been doing before his dismissal) to be done by other employees or otherwise, or
d) Where an employer has decided that the work for which the employee had been employed (or had been doing before his dismissal) should henceforth be done in a different manner for which the employee is not sufficiently qualified or trained, or
e) Where an employer has decided that the work for which the employee had been employed (or had been doing before his dismissal) should henceforth be done by a person who is also capable of doing other work for which the employee is not sufficiently qualified or trained.
The Employment Appeals Tribunal provided a very helpful analysis of the concept of redundancy in St Ledger v Frontline Distributors Ireland Limited [1995]
“Impersonality runs throughout the five definitions in the acts. Redundancy impacts on the job and only as a consequence of the redundancy does the person involved lose his job.” In addition, the tribunal pointed out that “change” also runs through all five definitions. This means change in the workplace. The most dramatic change of all is a complete closedown. Change may also mean a reduction in needs for employees, or a reduction in number.
Therefore, it is the job and not the person that redundancy refers to. Any employee over the age of 16 with 104 weeks of continuous service is entitled to a statutory redundancy payment.
The statutory redundancy payment is two weeks gross pay per year of service up to a ceiling of €600 per week plus one week of pay, which is also subject to the same €600 ceiling and these monies are tax free.
Question 3:
Selection Criteria for Redundany. Can I use redundancy as a means to get rid of dead wood from the company and anyone with a poor track record?
Answer:
Firstly I would have to say as an Employment Law Solicitor that this is a very difficult thing for a company to do without exposing yourself to potential litigation and as such you should be very careful with your policies and seek specific employment law legal advise at an early stage.
Irish legislation does not provide any pointers in relation to selection criteria but an employer needs to be careful as the Employment Appeals Tribunal will closely scrutinise the criteria chosen. The criteria must be fairly chosen and employer must be able to stand over the objectivity of the decisions taken and the manner is which the criteria were applied. Decisions should be made with reference to measurable data and be impersonal in nature.
If an employer uses redundancy as a crude tool to let certain staff members go then it is likely that litigation will follow.
Some useful tools in the selection criteria would include some combination of the below but an employer needs to act cautiously;
Last In First Out (LIFO) is somewhat crude a tool and should be used sparingly as it may infringe rules regarding age discrimination. It also does not take in to account the requirements of the role or the particular attributes of each candidate.
Attendance Records/Sick Leave: an employer should exercise extreme caution here as if poor attendance or prolonged illness is due to maternity leave, pregnancy complications or a genuine disability then am employer could leave themselves open for a discrimination claim.
Qualifications and Training: The qualifications or training being examined should be relevant to the role in question and should be verified.
Employers should not use disciplinary records or poor performance as a means of selection unless these issues have been raised previously and are documented.
Please note that the above is a general overview of the law and specific employment law legal advise should be sought at all times.
Employment Law Article
Moloney & Associates Solicitors Limerick © 2009