Redundancy generally occurs when you restructure your business and you need to reduce your employment numbers as a result. If you're closing your business, you'll also likely need to make employees redundant before ceasing operations.
This guide explains what you need to do.
What is the difference between voluntary and compulsory redundancy?
If an employee volunteers to take a redundancy package, that's voluntary redundancy. But if you select employees for redundancy, this is sometimes referred to as compulsory redundancy.
Voluntary redundancy
It's the term used to describe a situation when you ask employees to volunteer for redundancy to reduce the size of your workforce. Employees who agree to volunteer for redundancy can claim a statutory redundancy payment. That's provided they fulfil continuous reckonable service requirements plus any additional pay incentive you might offer.
Finding volunteers for redundancy
Depending on your circumstances, you may be in a position to offer a voluntary redundancy pay incentive to encourage employees to volunteer for redundancy. If you’re not offering a voluntary redundancy package, you must still comply with redundancy laws.
This means you must provide a minimum redundancy payment to employees who have completed a period of continuous service with your business.
What’s a voluntary redundancy package?
To encourage employees to volunteer for redundancy, employers typically put together a voluntary redundancy package which includes an additional ex-gratia payment on top of the employee’s entitlement to receive a statutory redundancy payment.
Can voluntary redundancy be refused?
If you offer employees a voluntary redundancy package and they refuse to accept the proposed payment, you can still make compulsory redundancies at a later stage.
Employees risk losing the additional ex-gratia payment as part of the voluntary redundancy package if they refuse the offer. However, they can still claim their entitlement to statutory redundancy pay.
Compulsory redundancy
If you're not offering a voluntary redundancy package, carrying out a redundancy process under the Redundancy Payments Acts 1967 - 2014 is sometimes referred to as compulsory redundancy.
To ensure the process complies with redundancy legislation, you must be able to demonstrate the following:
- There’s a genuine need for the redundancies.
- You applied a fair and transparent selection policy in selecting employees for redundancy.
- The consultation process leading up to completion of the redundancies is fair.
- Employees selected receive their statutory redundancy pay.
Need our help?
For further complimentary advice on redundancy from an expert, call us any time day or night on 0818 923 923.
