Q&A: What would new redundancy proposals mean for workers and employers?

Minister for Enterprise Simon Coveney brought proposals to Thursday’s Cabinet meeting which will, when they become law, strengthen the hand of workers being made redundant by insolvent companies.

What prompted the new redundancy proposals?

The economy might be performing strongly but the number of collective redundancies increased as 2022 progressed, with some high-profile tech companies saying they had hired too many staff during the pandemic and now had to cut numbers.

There have also been some high-profile cases of employees struggling to deal with employers who were going out of business, such as in the case of Debenhams workers or, at present, the Nuremore Hotel in Carrickmacross, Co Monaghan, where about 90 workers are losing their jobs, and liquidations of a number of different companies are before the courts.

[ Sinn Féin proposal to safeguard workers’ redundancy rights ]

What compensation do workers get in a situation like that?

The basic statutory redundancy amounts to two weeks’ pay for every year of service plus an additional week’s pay. Anyone who is 16 or over and who has worked for an employer for at least two years will be entitled to that. The value of the person’s pay for the purpose of the calculation is capped at €600 per week. The payment is tax-free.

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There are a number of other entitlements, such as holiday pay, that will also be due to the person.

But if the company is in liquidation what do the people get?

They are guaranteed to get their statutory entitlements, with the Department of Social Protection paying the money initially. A liquidator will then repay the department if sufficient funds are raised from the disposal of assets.

So what’s changing?

In the normal run of events, companies must inform the Minister for Enterprise of their intention to make a significant number of their employees redundant; the triggering number depends on the size of the company.

Workers must also be given 30 days’ notice and this time is intended to be used for consultation so that workers, or their representatives, can suggest alternative courses of action. Companies that were insolvent were exempt from this requirement but that will change.

What will happen if the company has gone into liquidation?

The employers’ obligations will now have to be taken on board by the liquidator “or similar appointee”.

The intention is also to improve the workers’ position so that they get better access to the documentation they require to better participate in the process and secure better outcomes for themselves where that is possible.

And what if the company, or liquidator, doesn’t comply?

The proposal is that where an employer makes workers redundant before the 30-day consultation period finishes, they will be able to take a case to the Workplace Relations Commission. This would apply to all collective redundancies under the new rules. Where a liquidator does not observe their obligation under the new regulations, the commission would have the power to prosecute them.

What do workers’ representatives make of the proposals?

They are yet to see the detail but Irish Congress of Trade Unions general secretary Owen Reidy says implementation of Mr Coveney’s proposals would represent progress.

“Any change to the existing status quo that puts greater obligations on employers, whether they go insolvent or whether they’re just restructuring, to adhere to the 30 days’ consultation is a positive thing,” he said.

“That 30-day period being used for the employer to talk to the workers and unions to try and seek alternatives” is important, said Mr Reidy, “but in cases where the company is insolvent it is important too in that it gives people time to explore the legalities of the process and to look at whether the company going bust has a link to some other entity, maybe a multinational parent.”