Facts: The Complainant was a Fleet Training Manager who was employed with the Respondent for 15 years prior to his dismissal.
The Covid-19 pandemic seriously affected the Respondent’s business. The Complainant was laid off on 16th March 2020 and returned to work on 6th July 2020. He was informed of a possible redundancy in September 2020 and an alternative role was mentioned but considered not to be appropriate. The Complainant was not made redundant at that time, but was laid off again in October 2020. He remained on lay off until his dismissal.
In May 2021, a further meeting was held and this time the Complainant was told that he was to be made redundant. No alternative roles were put to him or discussed. He was offered statutory redundancy and it was clear by the end of this meeting that his redundancy was proceeding, and his role was not simply “at risk”. The Complainant gave evidence that certain aspects of his role were in fact going to continue and that he had not been provided with a new organigram of the company. In his evidence, he gave examples of other roles that he could have carried out, including in relation to CPC which had been part of his role. According to the Complainant, CPC training was now “out the door”. In contrast, the Respondent’s evidence was that there was no alternative role for the Complainant. The Complainant brought a claim for Unfair Dismissal under the Unfair Dismissals Acts (the “Acts”).
Decision: The Adjudicator, Kevin Baneham, found that the Respondent had failed to rebut the presumption that the Complainant’s dismissal was unfair and establish that it was “wholly or mainly on grounds of the redundancy of the complainant’s role.”
The Adjudicator accepted that a meeting took place in September 2020 and an alternative role was discussed but deemed unsuitable. However, he noted that
“this was not the process that led to the decision to dismiss the complainant; this was made months later in May 2021. The outcome of the September 2020 process was not to dismiss the complainant, so how could it justify the decision to dismiss the complainant six months later.”
In May 2021 there was no consultation or process involving the Complainant. The Adjudicator noted that the Complainant had skills that were transferrable and could have been utilised in an alternative role.
The Adjudicator found that the Complainant was unfairly dismissed, noting that:
“There should have been a process involving the complainant and to which he could contribute to. Without this process, the respondent cannot say the dismissal was not unfair wholly or mainly on grounds of redundancy.”
The Adjudicator noted that the Complainant had selected compensation as redress on his complaint form and turned to the question of loss.
The Adjudicator referred to the definition of “financial loss” in section 7 of the Acts which provides as follows:
“…any actual loss and any estimated prospective loss of income attributable to the dismissal and the value of any loss or diminution, of the rights of the employee under the Redundancy Payments Acts, 1967 to 1973, or in relation to superannuation.”
He noted that the Complainant had received a statutory redundancy lump sum payment and was therefore “not entitled to redress for any loss or diminution of a right arising from the Redundancy Payments Act”, but was entitled to compensation “for any actual loss or any estimated prospective loss.”
The Adjudicator set out that redress under the Acts is a distinct right from the right to a redundancy lump sum payment which arises by virtue of an employee’s length of service and is provided for in the Redundancy Payments Act. He referred to section 19 of the Unfair Dismissals Act which provides for repayment of a redundancy lump sum where an employee is reinstated or re-engaged, but not where an award of compensation is made.
The Adjudicator noted that:
“…actual loss, prospective loss and a redundancy entitlement are separate and distinct. Actual and prospective loss is calculated according to loss arising after the (unfair) dismissal, The third category relates to an entirely separate head of loss, that of a lump sum entitlement from accrued service.”
Referring to a long-established practice of deducting the value of any redundancy payment received by an employee from the loss incurred by that employee and reducing the value of any award of compensation accordingly, the Adjudicator stated as follows:
“There is no legal basis for deducting the value of a redundancy lump sum paid to an unfairly dismissed employee in the calculation of actual or prospective loss. Section 19 of the Unfair Dismissals Acts provides that the redundancy lump sum should be repaid where the employee is reinstated or re-engaged, but there is no equivalent provision where compensation is awarded. Where a dismissal is held to be unfair and the employee was paid their redundancy lump sum entitlement, actual and prospective loss should still be assessed. This is not double compensation, as the lump sum entitlement is an entirely separate head of loss.”
The Adjudicator went on to say as follows:
“The fact of a redundancy lump sum being already paid is not listed in section 7 as a ground to reduce an award of compensation for actual or prospective loss. In fact, the definition of ‘financial loss’ suggests the opposite to be true. A practice of deducting a lump sum already paid from actual and prospective loss awarded as redress for unfair dismissal erodes the protections offered by the Unfair Dismissals Acts, especially for longstanding employees.”
In considering the Complainant’s financial loss, the Adjudicator referred to his attempts to obtain new employment through recruitment agencies and his efforts to upskill. He awarded the Complainant compensation of €28,000 which amounted to approximately nine months’ financial loss. The Adjudicator regarded this as a “reasonable period to expect someone in the complainant’s circumstances and during a pandemic to find new employment.” The Adjudicator noted that the award was for actual and prospective loss and was in addition to the redundancy lump sum that the Complainant had already received.
Takeaway for Employers: This is the second decision this year which indicates a dramatic change to the manner in which statutory redundancy payments have been treated to date. In April this year, a similar decision was issued by the same Adjudicator in the case of Kieran Murray v Sherry Garden Rooms Limited ADJ-00028766. A link to this decision and an article we published on it in May are provided below. Neither decision addresses the fact that a statutory redundancy lump sum would have been paid tax free and would no longer qualify as a tax-free payment in circumstances where the dismissal was subsequently found to be an unfair dismissal and not a redundancy.
It is now particularly important that employers ensure that they follow a fair redundancy process because an award of compensation may not now be reduced by any statutory redundancy payment that has been paid to an employee. We anticipate that many employers may change their approach in redundancy situations on foot of these decisions. An appeal to the Labour Court seems likely.
Authors – Nicola MacCarthy, Jenny Wakely and Anne O’Connell
28th October 2022