The COVID-19 pandemic has presented some of the most significant challenges to employers since the global financial crash in 2008. For many employers, particularly in the retail, transport and tourism sectors, the pandemic has necessitated a reduction in headcount. While redundancy processes may be familiar to some businesses, employers should be mindful that dealing with larger groups of employees may constitute a collective redundancy. A collective redundancy can pose significant challenges for employers in respect of publicity, industrial relations and even potential criminal liability, where the notification and timing requirements set out in the Protection of Employment 1977 ("the 1977 Act") are not adhered to.

We set out below some key questions to help employers identify when a collective redundancy arises, and what this means for the employer and its employees.

When does a collective redundancy arise?

Whether or not a redundancy process will be deemed to be a collective redundancy process depends on how many employees are proposed to be given notice of termination in a 30 day period compared to the total number of employees in an establishment.

Section 6 of the 1977 Act sets out the relevant thresholds as follows:

Timing is therefore a key consideration for employers who may be facing a potential collective redundancy. As stated above, there is a 30 day period during which no employees may be made redundant, which may impact on wide restructuring plans, particularly where redundancies in Ireland may be part of a larger process taking place in other jurisdictions.

Employers should consider whether they are inadvertently and perhaps unnecessarily triggering a collective redundancy. It may be preferable for an employer to stagger the number of redundancies over the course of several months and focus on a number of smaller, individual redundancies instead of a collective process.

What constitutes an "establishment"?

Section 6(3) of the 1977 Act defines an "establishment" as an employer or a company or a subsidiary company within a group of companies which can independently effect redundancies.

Case law from the Court of Justice of the EU has clarified that an "establishment" refers to any place of operations to which the relevant workers are assigned to carry out their duties irrespective of whether it has its own corporate identity or financial autonomy. For example, a hotel may be considered its own establishment despite being only one of several hotels owned by a large company.

What are the key procedural steps to be followed?

The 1977 Act provides for a number of procedural steps that must be followed by employers in the event that a collective redundancy arises. Below is a table summarising the key steps and some points that should be considered by employers.

What are the consequences for failing to follow the procedural steps?

In addition to the risk of unfair dismissal claims, collective redundancies involve significant additional penalties for employers who fail to comply with the procedures. For example, where an employer serves notice of termination on an employee before the 30-day consultation period expires, the legislation provides for criminal prosecution (including a fine of up to €250,000).

Is there a legal obligation to pay more than statutory redundancy?

Perhaps - under the Redundancy Payments Acts there is no obligation on employers to pay more than statutory redundancy but an established pattern or practice of paying enhanced redundancy payments may give rise to an entitlement to an ex gratia payment in addition to a statutory redundancy payment. As with all redundancies, where an ex gratia payment is being made, the employer should insist that the employee enters into a legally binding compromise waiver agreement, to eliminate the risk of any claims arising from the employment or termination.

The issue of enhanced redundancy payments is of particular relevance to employers operating in a unionised environment. Employers who find themselves in dispute with a union over enhanced payments may find themselves before the Labour Court. Case law of the Labour Court suggests that employers are expected to provide enhanced payments to employees wherever that been the established practice in the business or the industry. In many cases, the Labour Court have recommended enhanced redundancy payments even where the employer is in financial difficulty. While Labour Court recommendations are not strictly binding, they carry significant moral weight and failure to comply with a Labour Court recommendation can create PR and industrial relations issues for employers.