Tara Smyth is an associate in A&L Goodbody's Employment group and acts for a range of clients across a variety of business and industry sectors, advising on all aspects of Irish employment law – both contentious and non-contentious. In this article, Tara outlines key steps for employers who are considering redundancies.

Collective redundancies are on the rise - from the recent large-scale redundancies in the technology sector which attracted significant media attention to business closures across various industries affected by global developments and inflationary pressures, there has been a noticeable increase in collective redundancies in Ireland in recent years.

Such collective redundancies can pose significant challenges – and even potential criminal liability - for employers who must comply with a number of strict legal obligations as set out in the Protection of Employment 1977 (the 1977 Act), including in relation to informing and consulting with employee representatives.

The Labour Court has recently issued two important decisions regarding information and consultation obligations in respect of the 2020 closure of the Debenhams stores in Ireland and while  Debenhams has lodged an appeal, on a point of law, in the High Court in respect of one of these decisions, these provide useful guidance to employers contemplating collective redundancies on what the obligation to ‘inform and consult’ requires in practice – serving as an important reminder that this is not a mere box-ticking exercise.

In this first Tuesday Q&A, we take a closer look at this legal obligation to inform and consult with employee representatives in light of the Labour Court’s recent decisions and set out some key questions to help employers identify when this obligation is triggered and what complying with it means in practice.

When is a collective redundancy triggered?

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:

What key legal obligations arise in a collective redundancy scenario?

Where a collective redundancy is triggered, the 1977 Act provides for a number of procedural steps that must be followed by employers, including the obligation to inform and consult with employee representatives in relation to the proposed redundancies:

• Obligation to consult (Section 9):Where an employerproposes to create collective redundancies, they must consult with employee representatives with a view to reaching agreement on a number of matters set out in legislation, in particular, how these proposed redundancies may be avoided, their number reduced or their consequences mitigated. This consultation process must be initiated at the earliest opportunity and in any event, at least 30 days before the first notice of dismissal is given.
• Obligation to inform (Section 10): In addition, the employer must supply the representatives with all relevant information relating to the proposed redundancies. The legislation lists certain information which must be provided in writing, including: the reason for the proposed redundancies, the period over which these are to be effected, the number of employees at risk of redundancy, any selection criteria the employer proposes to apply, details of any enhanced redundancy terms which may be offered etc.

What are the consequences for failing to comply?

Where an employer fails to inform and/or meaningfully consult with employee representatives in line with their legal obligations under the 1977 Act, the WRC – or the Labour Court on appeal - may award compensation of up to four weeks’ remuneration in respect of each such breach.

In addition, where an employer serves notice of termination on an employee before this minimum 30-day consultation period expires, this may amount to a criminal offence which, upon conviction, may result in a fine of up to €250,000.

When is the obligation to consult triggered?

The obligation to consult with employee representatives in relation to the proposed redundancies is triggered where a strategic decision or event compelling the contemplation of collective redundancies is made. This includes the making of a decision which raises the potential for collective redundancies in that the decision could (but not necessarily will) result in the making of redundancies.

The consultation process must then commence in good time following this strategic decision or event, even where the employer does not yet have all relevant information available. What constitutes “in good time” is assessed on the facts and in the circumstances of each case – however the more fragile the entity, the sooner this must be commenced, as the passage of time may limit options which can be explored as part of the consultation process and therefore render the process less meaningful.

When does the consultation process commence?

While it is generally accepted that collective consultation – and the minimum 30 day consultation period – commences with the issuing of the statutory information letter to employee representatives which sets out the information required to be provided under the 1977 Act (see above), the Labour Court has highlighted that this is not automatically so and will in fact depend on the circumstances of the specific case, in particular the content of that letter.

In view of the significant potential penalties for issuing notices of termination prior to the expiry of the 30 day consultation period, employers should therefore ensure that the statutory information letter sent to employee representatives at the outset of the consultation process explicitly states that the 30 day consultation period commences with the issuing of that letter and, where in doubt, it may be prudent to instead treat this period as commencing on the day of the first consultation meeting.

Does consultation have to reach agreement?

No. The obligation is to consult with employee representatives ‘with a view to reaching agreement’. While employers must meaningfully engage with employee representatives in relation to the proposed redundancies, and therefore consider any counter-proposals they may put forward, there is no requirement that employers ‘reach agreement’ with employee representatives, or accept any such counter-proposals where these are not viable.

What information must be provided to employee representatives – and when?

The obligation is to provide employee representatives with “all relevant information” in relation to proposed redundancies – not just the information specifically listed in section 10 of the 1977 Act. Importantly, this information need not be provided at the outset of the consultation process but rather can be provided at any stage during consultation.

The legislation does not define or provide any further detail in relation to when information requested by employee representatives is “relevant”, however, the Adjudication Officer in the Debenhams cases noted that this obligation must be viewed in light of the purpose of collective consultation and so, where information is necessary to enable employee representatives to formulate constructive counter-proposals with respect to how the proposed redundancies may be avoided, reduced or their effects mitigated, this information is ”relevant” and must therefore be provided. While not specifically endorsed by the Labour Court on appeal, this guidance may be useful to employers in determining whether or not information requested by representatives must be shared during the consultation process and where representatives can credibly assert the requested information is necessary to formulate constructive counter-proposals, it may therefore be prudent to consider providing the same to the extent possible – bearing in mind and balancing potentially competing interests and obligations, for example, where this information is commercially sensitive or subject to a non-disclosure agreement.

For further information on this topic please contact any member of ALG’s Employment team.

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