Adjusting for the Future
www.insighthr.ie
The Big Picture - Ireland 2012
• National economic crisis on-going
• Challenging trading conditions
• Dramatic increase in employee claims
progressed through EAT from 2008
• Downsizing programmes continually
criticised by EAT & Rights Commissioners
• Awards very unpredictable
• Increase in personal injury claims linked
to downsizing programmes
www.insighthr.ie
EAT Report 2011
• 36% of all claims related to
redundancy
• 24% of all claims related to Unfair
Dismissals
• 76 weeks in Dublin & 77 weeks in
provincial areas
• Average award of €18, 000
• Increased use of legal professionals
www.insighthr.ie
Cost Saving Options for Employers
•
•
•
•
•
•
•
•
Reduction in pay and/or benefits
Reduction in working hours
Lay-off
Redundancy (focus of today’s seminar)
Reduction/elimination of overtime
Unpaid career break
Early retirement programme
Outsourcing functions
www.insighthr.ie
What is Redundancy?
• The employer ceases to carry out the
business for the purpose of which, or
in the place where the employee is
employed.
• The requirements of the business for
the employee to carry out work of a
particular kind has ceased or
changed.
www.insighthr.ie
What is Redundancy?
• The employer decides to carry out
the business with fewer or no
employees
• The employer decides that the work
should be done in a different manner
for which the employee is not
suitably qualified or trained
www.insighthr.ie
What is Redundancy?
• The employer decides that the work
should be done by a person who is
also capable of doing other work for
which the employee is not
sufficiently qualified or trained.
www.insighthr.ie
Collective Redundancies
• 5 employees where 21- 49 are
employed
• 10 employees where 50-99 are
employed
• 10% of the employees where 100-299
are employed
• 30 employees where 300 or more are
employed
www.insighthr.ie
Employer Obligations Collective Redundancy
• Notify the Minister in writing of
proposed redundancies
• Appoint employee representatives
• Provide information in writing to
representatives
• Consult with employees over 30 days
• Meaningfully engage with employees
www.insighthr.ie
Redundancy Selection Criteria
• Last in first out (LIFO)
– Simplest process – objective & fair
– Cheaper from the employer’s perspective
– Loss of essential employees and/or skills can
be an issue
• Selection Matrix
– Complex paper work process
– Must be objective and fair
– Allows employer to retain key skills
– Long-term view taken by the business
www.insighthr.ie
Selection Criteria for a Matrix
•
•
•
•
•
Qualifications and skills
Length of Service
Work performance *appraisal system crucial*
Attendance *must be mindful of equality issues*
Disciplinary Records
Criteria must satisfy the test of
objectivity and be carefully applied
www.insighthr.ie
Impact on a Business
•
•
•
•
•
Expensive to implement (15% rebate)
Generally disruptive to business
Time consuming for management
Loss of key skills & experience
May expose the business to costly
litigation if handled poorly
• Potential reputational damage
• May demotivate wider work force
www.insighthr.ie
Poorly Managed Redundancies
Lessons for Employers
www.insighthr.ie
Adrian Lee Services Limited - 2009
• €200k award to employee
• Reason given by employer for
dismissal not genuine
• History of a fractious employment
relationship between the parties
• Salary reduced & employee demoted
• Dismissed for his performance under
the cloak of redundancy
www.insighthr.ie
The Temple Bar Gallery & Studios
•
•
•
•
•
EAT determination August 2012
Award of €30,000 to employee
Redundancy ruled to be a “sham”
Employee “unfairly” dismissed
Company criticised for failure to
adequately consult
• Newly created position in effect same
job with a different job title.
www.insighthr.ie
David L’Estrange Limited
• EAT determination 2010
• €40,000 award to employee
• Alternative position later advertised
should have been offered
• Redundancy should not have been
effected while employee on maternity
leave
• Procedures used were flawed
www.insighthr.ie
Getting It Right
www.insighthr.ie
Key Watch Points
• Understand relevant legislation
• Identify one person who will be
accountable for the entire process
• Plan and manage communications
• Consult employees (1 week – 30 days)
• Engage with trade unions (if recognised)
• Seek alternatives to redundancy
• Be mindful of how redundancy affects
lives and families
www.insighthr.ie
The Importance of Getting It Right
• Seek professional advice (legal/HR)
in advance of any programme
• Check contractual provisions
• Check custom & practice
• Provide notice to all employees
simultaneously
• Consider equality issues i.e.
disability, maternity, nationality etc.
www.insighthr.ie
The Importance of Getting It Right
• Same message to all stakeholders
• Prepare management team in
advance
• Anticipate employee queries &
concerns
• Have a plan A, B & C
• Clear time frames & plan of action for
every phase of the programme
www.insighthr.ie
Positioning for the Future
• Communicate clearly with ‘survivors’
post redundancy programme
• Paint a positive picture of the future
• Reassure employees
• Outline in writing any changes in
work practices and/or duties as a
result of redundancies
• Watch absenteeism
www.insighthr.ie
Adjusting for the Future
•
•
•
•
Change is not without risk
It can be costly if managed poorly
Forecast and plan change effectively
Ensure the business is capable of
functioning effectively after
downsizing & cost cutting
• Ensure you have support because it
is difficult & you will not be popular
www.insighthr.ie
INSIGHT HR
Thank You
Questions & Answers
www.insighthr.ie