Lay-offs were possibly not one of the more commonly used sections of an employment contract for most sectors.  However, Covid-19 brought the issue of lay-offs and short-time working to the fore as many industries could not continue to operate.  This highlighted the importance of having lay-off provisions within employment contracts.  Further, the recent decision of Patricia O’Malley v Pallomar Limited [2022] (ADJ-00029863) considered the issue of how lay-off provisions interact with notice payments and provides further clarity on this issue.

Background ⚓︎

The Complainant was a restaurant manager who was full time and permanent.  Her employment was terminated further to a period of lay-off during the Covid pandemic on 10 August 2020.  The Complainant was not paid in lieu of notice and brought a complaint.

The facts of the case were largely agreed by the parties that the Complainant was made redundant at the end of her employment with the Respondent.  The Complainant argued that she was entitled to a payment of eight weeks of statutory notice on foot of this redundancy.

The Respondent made two arguments on that front:

1. that the Complainant had no entitlement to a notice payment under the Minimum Notice and Terms of Employment Act (the ‘Act’); and
2. that the Complainant’s notice period was in fact nil in accordance with the second schedule of the Act.

Correct Claim? ⚓︎

It is worth noting that the Complainant had selected the incorrect redress option as adjudication under section 39 of the Redundancy Payments Act, 1967.  The Complainant was given the opportunity to clarify this point and it was clear that the complaint actually related to the non-payment of notice under the Minimum Notice and Terms of Employment Act.  The Adjudication Officer allowed the complaint to proceed on the basis that the Respondent was on notice of the correct complaint, had fully defended the allegation and that it would be unfair to bind the Complainant to simply one box on a statutory form.  Therefore, the hearing went ahead.

Findings ⚓︎

The Adjudication Officer considered the arguments set forth by the Respondent.  He firstly considered the section 4(5) of the First Schedule of the Act which states that “An employee who claims and receives redundancy payment in respect of lay-off and short time shall be deemed to have voluntarily left his employment.”  The Complainant had argued that she had not in fact voluntarily left employment but that she was the subject of a compulsory redundancy process.  The Adjudication Officer’s view was that the key issue was whether the redundancy was in respect of a lay-off.

On this point, the Adjudication Officer had due regard for the meaning of lay-off as defined in the Redundancy Payments Act and the fact that in normal times an employee could trigger a redundancy during a lay-off period, but that further to the Emergency Measures in the Public Interest (Covid-19) Act 2020 had rendered the relevant section of the Redundancy Payments Act illegal.  Therefore, the Adjudication Officer found that the Complainant could not be found to have left her employment voluntarily – as the provision which usually operated around that was essentially defunct during the pandemic for a period and her redundancy could not be triggered by her as an employee at that time.  He found that the Complainant’s redundancy was not in fact “in respect of lay-off” and thus this argument failed.

Turning to the second point, the Respondent had argued that the Complainant had received the Pandemic Unemployment Payment in the thirteen weeks prior to her redundancy and as such she had received adequate payment in lieu of notice.

The Adjudication Officer considered section 5(3) of the Second Schedule of the Act which states:

“…an employer shall pay to an employee, if there are no normal working hours for that employee under the contract of employment in force in the period of notice, in respect of each week in the period of notice, a sum not less than the average weekly earnings of the employee in the thirteen weeks next preceding the giving of notice.”

The Adjudication Officer noted that the Complainant had received notice of redundancy eight weeks before her redundancy would be effective.  The Respondent argued that during this period, when the Complainant would have been on lay-off and receiving the Pandemic Unemployment Payment, her rate of pay for that notice period should also have been nil.

The Adjudication Officer considered other case law on the issue, which highlighted the fact that during a lay-off period, employment is paused temporarily and when an employee is subsequently placed on notice of redundancy, they are in fact not on lay-off anymore but are on notice of dismissal.  He therefore found that “it is clear that the contract of employment temporarily ceased from the date on which the Complainant was laid off and re-activated on the date on which she received notice of redundancy.”  As a result, he states that the thirteen weeks preceding the giving of notice referred to in Section 5(3) of the Second Schedule runs from the thirteen weeks prior to the period of lay-off commencing.

The Adjudication Officer therefore found in favour of the Complainant and ordered a sum of €5,680 – equivalent to eight weeks’ notice – be paid to the Complainant.

Conclusion ⚓︎

This case underlines the fact that notice pay should be paid at the normal rate of an employee’s pay with respect to the period of thirteen weeks prior to any lay-off period where there is a termination at the end of the process.