€120,000 Paid to Employee in Compensation for lack of Consultation.

By Angela Canavan

This case is a stark reminder to employers of the importance of proper consultation with employees when a potential redundancy occurs. This recent WRC case, once again reiterates that not following proper procedure and a flawed process can cost employers dearly.

An employee, Mr Ray Walsh, took an unfair dismissal case against his employers Econocom Digital Limited, when he was made redundant following the closure of the sales operation of the Irish entity in July 2020. Mr Walsh and his manager were both made redundant at the time.

The employee was invited to an online Teams meeting on 27 April 2020. The invitation to this meeting provided no indication of the purpose of the meeting. The meeting was short, and the employee was informed that his job was going to be made redundant. The employee was given no explanation for the decision or an opportunity to suggest or consider alternative options to terminating his contract of employment. Later that day, he was provided with a breakdown of his statutory redundancy entitlements, which he described as “derisory and devaluing”. He made several requests including an enhanced payment based on four weeks’ pay per year of service, some leeway on his private health insurance and employer pension contributions, assistance with an outplacement service and legal and tax advice. These requests were refused. Other matters/requests were agreed, and his notice period was extended from 8 weeks to 12 weeks.

The Adjudicator found that although she was satisfied that the Complainant’s role was redundant and that any appeal against that decision was likely to be a wasted exercise, the employer failed to follow fair procedures in dismissing the Complainant and treated him with disrespect. She stated that the employer “departed from the standard of reasonableness that a reasonable employer would have shown when dealing with an employee in similar circumstances.” The Adjudicator found that the Complainant had been unfairly dismissed by the Respondent.

This is an interesting case because the adjudicator agreed the role was redundant, but the process was unfair. The employee was awarded €120,000 in compensation, equivalent to one year’s gross pay. In making the award, the Adjudicator noted that the Complainant had found another job in August 2021, just over one year after his redundancy. She also took into consideration the fact that he had received a statutory lump sum redundancy payment of €19,152 at the time of his departure.

The Lesson for Employers

  • Employees should be provided with the opportunity of consulting with their employers to investigate possible alternatives and redundancy should never be presented as a fait accompli.
  • Employers, even if they believe it is futile to enter such consultation, should always engage and seek alternative suggestions to redundancy, particularly in large organisations where different roles are available.
  • Where no alternative is available, and all avenues have been exhausted, employers should seriously consider the complainant’s request for enhanced terms and assistance in helping them transition to further employment.

CB & Associates are a team of HR Consultancy experts that specialize in redundancy/restructuring. If you require assistance with these topics, call 01 6235908