The Employment (Collective Redundancies and Miscellaneous Provisions) and Companies (Amendment) Act 2023 (Collective Redundancies Amendment Act) came into operation on 1 July 2024.
The legislation, which follows the publication of the government's 2021 Plan for Action on Collective Redundancies, provides additional protections for employees in a collective redundancy situation on their employer's insolvency. The Act also imposes additional obligations on insolvency practitioners in dealing with collective redundancies and makes substantive changes to parts of the corporate insolvency regime.
In this three-part series, we examine the changes introduced under the Act. This part looks at these changes from an employment law perspective and the amendments to the Protection of Employment Act 1977 to 2014 (1977 Act). The other parts consider the changes to the insolvency regime as they relate to employees (access here) and changes to the realisation of assets of companies in liquidation (access here).
Collective redundancies in Ireland
Collective redundancies in Ireland are regulated by the 1977 Act, which sets out an information and consultation process that an employer must follow. A collective redundancy is where the number of employees the employer proposes to dismiss in any 30-day period exceeds the relevant threshold. The applicable threshold varies with the normal size of the employer's workforce at the affected establishment.
Under the 1977 Act, an employer proposing collective redundancies must provide prescribed information to employee representatives and initiate a consultation with a view to reaching an agreement. The employer is required to start the collective redundancy consultation at least 30 days before notices of dismissal are given and in any event at the "earliest opportunity". This means once the employer has taken a strategic or commercial decision to commence a redundancy process it must begin the consultation process.
Notifying the Minister and the prohibition on dismissals
Under the 1977 Act, the employer must notify the Minister for Enterprise, Trade and Employment (Minister) of its collective redundancy proposals at the earliest opportunity and, in any event, at least 30 days before the first dismissal takes effect. In addition, the employer must not serve notice to dismiss any of its affected employees within the 30-day period following the notification of the Minister. If an employer breaches these requirements, it commits an offence, attracting a fine potentially ranging between €5,000 and €250,000.
The Collective Redundancies Amendment Act removes the exemption for insolvent employers to comply with these obligations (i.e. where a business is being terminated following the commencement of a liquidation or bankruptcy). The amending legislation allows an employee to make a complaint to the WRC if they are dismissed before the expiry of the 30-day period following notification to the Minister. An employee may seek compensation of up to four weeks' remuneration for this breach of the rules.
The Collective Redundancies Amendment Act also permits the notification of the Minister to take place via electronic means.
Responsibility of insolvency practitioners
A further change is that the application of various obligations in the 1977 Act will extend to a "responsible person", defined as including a liquidator or receiver.
These obligations include (i) consulting with employee representatives, (ii) providing prescribed information to employee representatives, (iii) notifying the Minister of collective redundancy proposals, and (iv) observing the prohibition on dismissals taking place in the 30 days following that notification.
It will be an offence for a responsible person, including an insolvency practitioner, to fail to comply with obligations (i), (ii) and (iii), and they may face summary prosecution and a fine of €5,000 on conviction for each offence. However, the responsible person will have a defence if they can show that they had reasonable grounds for believing that the employer had complied with the obligations.
The ELRG
Part 3 of the Collective Redundancies Amendment Act provides for the establishment of the Employment Law Review Group or ELRG. The ELRG will advise the Minister on employment and redundancy law-related matters. The Minister previously stated that the ELRG membership would comprise persons from the legal, accountancy, and insolvency professions, as well as worker and employer representatives and ministerial nominees.
Conclusion
The Collective Redundancies Amendment Act enhances employees' consultation rights in a collective redundancy situation following insolvency. However, one consequence of waiting a full 30 days after the notification to the Minister before redundancy dismissals can be effected is that employees may have to wait longer to claim termination payments and unemployment welfare benefits. Meanwhile, Insolvency Practitioners will need to be aware of their obligations under the revised 1977 Act, given the risk of criminal sanction in the event of non-compliance.
Contributed by Gail Nohilly.
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