Redundancy generally occurs where you lose your job due to circumstances such as the closure of the business or a reduction in the number of staff. The reason could be the financial position of the firm, lack of work, reorganisation within the firm or the firm may be closing down completely.
Redundancy can occur where one of the following things happen:
- Your employer ceases to carry on the business or ceases to carry on the business in the place where you have been employed. (For example, if the firm moves location, this can be a substantial change in your working conditions and therefore may be a reason for redundancy. However, if there is a change of ownership under the transfer of undertaking legislation where employees are re-employed with no change to their working conditions then it is not a redundancy situation.)
- Your employer's requirements for employees in your category has ceased or diminished
- Your employer has decided to carry on the business with fewer or no staff. In deciding whether your employer is continuing the business with fewer or no staff, close members of your employer's family are not taken into account
- Your employer has decided to let your work be done in a different manner in future and you are not sufficiently qualified or trained to do the work in the different way
- Your employer has decided that your work will in future be done by another person who can do other work as well and you are not sufficiently qualified or trained to do that other work.
If you have worked for your employer for 2 years you may be entitled to a redundancy payment. Redundancy payments legislation provides for a minimum redundancy payment for employees who have a set period of service with their employer. You and your employer may agree a redundancy payment which is above this statutory minimum.
There are specific procedures your employer must follow when making you redundant such as giving you at least 2 weeks' notice and paying your redundancy payment on the date you finish work.
If you are dismissed and it is not a redundancy situation you should find out more about your rights under the unfair dismissals legislation. Apart from some exceptions, you must have at least 12 months' continuous service with your employer in order to bring a claim for unfair dismissal. In most cases your employer has to prove that the dismissal was a fair one, that is, that there were fair grounds for the dismissal and that fair procedures were followed.
Redundancy is considered a fair ground for dismissal but selection for redundancy based on certain grounds such as pregnancy or religious or political opinions is considered an unfair ground. You are entitled to bring a claim for unfair dismissal if you think that you were unfairly selected for redundancy or consider that a genuine redundancy situation did not exist. However, if you make a claim for unfair dismissal, you cannot also claim redundancy.
When you lose your job you have certain entitlements. You are entitled to a statutory minimum period of notice if you have worked at least 13 weeks for your employer. Your written contract of employment may provide for a longer period of notice. When you leave work you are entitled to receive a payment for annual leave which you have earned but not taken. The ending of employment is the only situation where it is legal to pay an employee instead of giving annual leave. If you leave work just before a public holiday you may be entitled to an additional day’s pay for the public holiday.
Your employer must give you forms P45 and P60 which are statements of your pay and the tax and PRSI deducted by your employer. You get a P45 when your job ends and you get a P60 at the end of each tax year.
Dealing with Redundancy
Redundancy can be both devastating and liberating. On the one hand it's very tough realising there are going to be job cuts and you've been chosen to go before someone else. On the other hand you may like a change in direction anyway and suddenly losing your job doesn't seem such a bad idea after all. You can actually turn it into a very positive experience.
But the fact remains, being made redundant from your job can be mentally, physically and emotionally draining. It's a dramatic change, and one which you need to deal with emotionally head on. There are five emotional stages in any bad news situation and redundancy is no different. The five stages are as follows:
1. Disbelief and Denial - "I can't have lost my job"
In an attempt to lessen the shock, we refuse to accept the facts. We tell ourselves that the boss or company will have a change of heart and everything will return to normal.
2. Anger - "I can't believe they did this to me"
When reality sets in, we may lash out at whomever we feel is responsible for the loss or at the people closest to us.
3. Bargaining - "If only I can talk to my boss maybe I can get my job back"
We want to negotiate, either directly with the boss or with ourselves, by promising to do better this time, if given the chance.
4. Grief and Depression - "What is the point of carrying on?"
We internalise the loss and succumb to emotions that interfere with rational thought or activity, and which may cause physical illness.
5. Acceptance - "Ok, I've lost my job but it's time to move on"
We gain control of our emotions and begin the healing process by accepting that we've lost our job, and starting to look toward the future.
All of these stages are normal and should not be suppressed. However, the sooner you can get to the acceptance stage, the better off you will be. Only then will you be able to change focus and begin projecting the positive image and optimistic attitude that is necessary for success.
One of the most important factors to consider is your financial situation. Financial planning should start when you first become aware that you might lose your job. And for many people in Ireland today, there is a risk that they might lose their job whether or not their employer has given them formal notice.
Financial planning cannot solve the problem of loss of income that that long-term unemployment brings, but it can help you survive a period of short-term unemployment and retain your credit rating with the banks.
As soon as you are at risk of becoming redundant:
- Talk to your mortgage lender
- Start doing a household budget - cut out discretionary expenditure, such as:
- Make your lunch instead of eating out
- Check your standing orders and direct debits - are you still donating to some worthless charity which mugged you on the street during the Celtic Tiger?
- Get in a tenant under the Rent a Room scheme
- Shop in Lidl or Aldi instead of Marks & Spencer or Superquinn
- Get rid of Sky + and other expensive subscriptions
- Do up a budget
- Tear up your credit card or lock it away
- Drink tap water instead of bottled water
- Open an account with your local credit union
- Make an appointment with MABS - it can take a few months to get an appointment. You can cancel it if you don't need it.
Further information concerning financial planning when you are redundant can be found from the following websites:
DETE Layman's Guide to Redundancy Payments Scheme
Pensions Board - What happens to my Pension when I leave?
DSFA range of benefits available to people who are unemployed
Once you become aware that you are facing redundancy, you should immediately start the process of looking for work. If you are happy in the field you have come from, then start letting people in your business area know of your intentions. If you have been unhappy in your previous roles, then this might be the opportunity to review your career and the time to consider changing your career direction.