Collective Redundancies – What’s Changed?

The Employment (Collective Redundancies and Miscellaneous Provisions) and Companies (Amendment) Act 2024 (the 2024 Act) came into force on 1 July 2024.  It introduces enhanced protection for employees where there are collective redundancies in an insolvency situation.

The existing Protection of Employment legislation has been amended by the 2024 Act so that it is consistent with the case law of the Court of Justice of the European Union – by now specifying that the obligations on an employer in relation to collective redundancies must also be complied with by a liquidator or similar appointee when implementing collective redundancies as part of an insolvency process.

Protection of Employment

While now officially known as Protection of Employment Acts 1977 to 2024, for the purposes of brevity and clarity in this article, we shall refer to the 1977 Act.

Prior to 1 July 2024, there was an exemption in the 1977 Act from the notification requirements for collective redundancies where the redundancies were caused by the employer’s insolvency.  This exemption has been removed.  Now all collective redundancies, including those in insolvency situations, are subject to the thirty-day notification period before the redundancies can take effect.

Responsible Persons (RPs)

The 1977 Act imposed a number of obligations on employers when dealing with collective redundancies. The 2024 Act has sought to expand the obligations on employers in certain circumstances and introduces the concept of a “responsible person” (RP).

The definition of an RP includes:

• a liquidator,
• a provisional liquidator,
• a receiver (who assumes management of the business),
• or any other person appointed by the Court, where they assume full responsibility for the management of the business concerned.

The obligations around consultation, information and notification apply to RPs as well as employers.

RPs are obliged to engage collectively with employee representatives in a collective redundancy scenario over a prescribed minimum thirty-day period for the protection of employees.  Interestingly, in a scenario where an employer has commenced a consultation process with employees, an RP can continue that consultation process once appointed.

Once the consultation period has begun, it is the duty of the RP to furnish the employee representatives with all of the relevant information pertaining to the proposed redundancies.

Finally, the RP must notify the Minister for Enterprise, Trade and Employment in writing of their intention to implement collective redundancies at the earliest opportunity and no less than thirty days before the first dismissal takes effect.

If an RP does not comply with the consultation, information and notification requirements, the 2024 Act provides that upon summary conviction, an RP may be liable to a Class A fine not exceeding €5,000.  Should an RP seek to effect redundancies before the thirty-day period following notification to the Minister expires, they may also be subject to a fine of up to €250,000.

There is however a defence for an RP in circumstances where, having exercised all reasonable professional care and skill, the RP had reasonable grounds for believing that the employer had complied with the obligations in relation to consulting and supplying employees and the Minister with information.

These obligations already apply generally to employers in a collective redundancy scenario.

Notification by Electronic Means

The notification to the Minister of proposed collective redundancies can now be sent electronically or by registered post (which was the case previously), which is a useful  development.

Employment Law Review Group

The 2024 Act also establishes an Employment Law Review Group which will review, monitor and advise the Minister on all aspects of employment and redundancy law.  It remains to be seen what impact, if any, this Group will have on the employment law landscape.

Thoughts

Further to the Government’s Plan of Action on Collective Redundancies following Insolvency, the 2024 Act seeks to enhance the rights of employees in the context of collective redundancies either during or following an insolvency process.

The 2024 Act therefore imposes new obligations on RPs which are prescriptive. The penalties for non-compliance are serious, for employers and RPs alike, and RPs will now need to ensure compliance with the changes in order to avoid potentially costly fines or compensation awards to employees.