Employee Rights on Redundancy.

With more than 100 people having lost their jobs in Northern Ireland following the collapse of Thomas Cook and the resulting closure of its 23 outlets here; it is important to bear in mind the statutory rights available to employees in a redundancy situation.

Whilst the decision and reasons behind the closure of a business are ultimately a matter for the employer to determine; the employer must consult with any affected employees where it is proposing to make redundancies and follow a fair procedure when dismissing staff by reason of redundancy.

Where an employer is proposing to make redundant 20 or more employees at one establishment within a 90 day period, it must conduct meaningful consultation in good time with a recognised trade union or employee representatives with a view to reaching agreement in relation to ways to avoid redundancies, the reasons for redundancies, how to keep the number of dismissals to a minimum and how to limit the effects on those dismissed. This collective consultation obligation extends not only to those employees who are at risk of redundancy but also to those whose jobs may otherwise be affected by the redundancy exercise. Legal debate continues as to what constitutes consulting in “good time” and where for example, there is a gap between the date a strategic decision is made to close a business and the date consultation begins, it will be for an Industrial Tribunal to decide whether the consultation did indeed begin in good time in the particular circumstances of the case. Failure to properly consult with employees may result in a Tribunal making a ‘protective award’ of up to 90 days pay for each affected employee; a potentially significant liability for any employer or indeed the Department for the Economy in the event the employer is insolvent and unable to discharge its liabilities.

In the event of dismissal, employees have the statutory right to receive a minimum period of notice of the termination of employment i.e. one week for every complete year of service, up to a maximum of 12 weeks’ notice. Employees with two or more complete years of service also have the right to receive a statutory redundancy payment which is based upon their gross weekly wage, age and length of service. A free online redundancy calculator is available at https://www.gov.uk/calculate-employee-redundancy-pay. Enhanced notice and redundancy payment entitlements may be provided for under an employee’s contract of employment.

If an employee believes they have been unfairly selected for redundancy, that they have not been properly consulted, afforded a fair process or received the correct notice or redundancy payment entitlements; they should exercise their right to appeal within the employer’s internal redundancy procedure in the first instance. Employees also have the right to pursue a claim to an Industrial Tribunal. The time limit for any unfair dismissal, redundancy payment or protective award claim is only 3 months from the effective date of termination of employment and as such legal advice as to the merits of any claim should be sought at the earliest opportunity.

Where an employer becomes insolvent, certain debts owed to employees may be paid from the National Insurance Fund. These debts include arrears of pay (including any protective award issued by an Industrial Tribunal), holiday pay and pay in lieu of notice. Employees may also be entitled to redundancy pay. The employees’ rights and remedies in respect of these debts (subject to certain limits) then transfer to the Department for the Economy and applications can be made via the Redundancy Payments Service.

Louise McAloon is a Partner in Worthingtons Solicitors, Belfast specialising in employment law. For legal advice, please telephone 028 90434015 or email [email protected].