Collective Redundancies Update

Introduction

There have been two recent and significant developments in the law relating to collective redundancies.

Firstly, the Employment (Collective Redundancies and Miscellaneous Provisions) and Companies (Amendment) Act 2024 (“the 2024 Act”) commenced on 1 July 2024. The 2024 Act introduces a number of new elements to the law in relation to collective redundancies.

Secondly, the Labour Court delivered its decision in the case of Jane Crowe v. Debenhams Retail (Ireland) Limited & Debenhams Retail (Ireland) Limited (In Liquidation), PED/24/1-4 (“Crowe v. Debenhams”) which provides clarity around the obligations of employers under collective redundancies legislation.

1. The Employment (Collective Redundancies and Miscellaneous Provisions) and Companies (Amendment) Act 2024

The Protection of Employment Acts 1977 – 2007 deal with collective redundancies. Collective redundancies occur where a certain number of employees are all made redundant within a thirty-day period. The number of redundancies required to trigger a collective redundancy situation depends on the size of the organisation.

The 2024 Act commenced on 1 July 2024 and amends the existing legislation which will be cited going forward as the Protection of Employment Acts 1977 – 2024.

The Protection of Employment Acts 1977 – 2007 places certain obligations on employers in a collective redundancy scenario. Sections 9 and 10 provide that the employer is required to:

• consult with and provide information to the affected employees; and
• notify and provide information to the Minister for Enterprise Trade and Employment.

The 2024 Act extends these obligations beyond the employer to now encompass “responsible persons”, i.e., liquidators, provisional liquidators, receivers or any other person appointed by the Court where that person has assumed full responsibility for the management of the business concerned. The 2024 Act therefore enhances protections for employees facing redundancy caused by their employer’s insolvency.

Similarly, penalties for failure to comply with the abovementioned obligations now extend to responsible persons. These penalties include criminal convictions and fines of up to €250,000.

Prior to the 2024 Act, employees could bring claims before the WRC where employers breached the consultation and information obligations under sections 9 and 10. The 2024 Act adds a third cause of action for employees in a collective redundancy situation. Employees can bring a claim to the WRC where an employer/responsible person effects collective redundancies prior to the expiry of the period of 30 days beginning on the date of the notification to the Minister (section 14). The WRC can award up to 4 weeks remuneration for each breach.

The 2024 Act also establishes the Employment Law Review Group to monitor, review and advise the Minister in relation to Irish Employment and Redundancy Law. This is a positive and perhaps somewhat overdue development given other areas of law already have dedicated groups carrying out this functionality (for example, the well-established Company Law Review Group which reviews and makes recommendations on Irish Company Law).

2. Crowe v. Debenhams

In April 2024, the Labour Court delivered its decision in Crowe v. Debenhams. This decision provides clarity on the precise nature of the obligations to consult with and inform employees. It must be noted that this decision pre-dates the enactment of the 2024 Act. Also, it is to be borne in mind that Debenhams has appealed this decision on a point of law to the High Court so there may well be further developments in this case.

Background

The Complainant had worked as a shop assistant with Debenhams since 1996. In April 2020, the UK parent company informed the Debenhams Ireland that it could no longer provide funding. The Irish Board decided to cease trading and employees were made redundant.

A number of employees brought claims before the WRC submitting that the consultation and information obligations set out in sections 9 and 10 of the Protection of Employment Acts 1977 – 2007 were not discharged by Debenhams.

(i) Obligation to Consult

Section 9 of the Protection of Employment Acts 1977 – 2007 provides an employer shall initiate consultations with employees’ representatives with a view to reaching agreement. Consultations shall be initiated at the earliest opportunity and in any event at least 30 days before the first notice of dismissal is given.

Article 2 of Directive 98/59 EC states where an employer is contemplating collective redundancies, he shall begin consultations with the workers’ representatives in good time with a view to reaching agreement.

The WRC found in favour of the Complainant in finding there was a breach of section 9 and awarded the Complainant 2 weeks remuneration.

The first issue for determination was when the consultation period started. The parties were at odds as to when this process commenced, with the Complainant submitting it started on 17 April 2020 and Debenhams submitting it started on 14 April 2020. The Labour Court found it was clear from the documents opened to the Court, that the Directors of the Debenhams and the liquidators in their correspondence and engagements, with the Union and the employees, all acted in a manner that supports the Complainant’s submission that the consultation process commenced on 17 April 2020.

The second issue was whether the consultation period started at the earliest opportunity/in good time. In the Fujitsu[1] case, the CJEU held “the consultation procedure must be started by the employer once a strategic or commercial decision compelling him to contemplate or to plan for collective redundancies has been taken.” On 9 April 2020 the Board met and resolved that Debenhams could not keep trading as a going concern, that Debenhams would cease trading with immediate effect, and would issue a letter to Debenhams UK as sole shareholder requesting that they petition the High Court to wind up the company. The Labour Court held this a was commercial decision which compelled Debenhams to plan for collective redundancies. For there to have been any possibility of reaching agreement, the consultation should have commenced at that point in time when it had become clear that collective redundancies were going to be a feature.

The third issue for determination, having decided that the consultation did not happen in good time/at the earliest opportunity, was when the consultation should have commenced. The Labour Court held the earliest opportunity to commence consultations was 9 April 2020 after the Board decided the company was to cease trading. There is no requirement on the employer to have all relevant information available before commencing the consultation process.

The Labour Court upheld the WRC finding that there was a breach of section 9 as the consultation should have started on 9 April 2020 and it did not commence until 17 April 2020. While Debenhams did engage in consultation for 30 days prior to the notice of redundancy issuing, they failed to hold the conversations in good time and the available options had narrowed significantly. The Labour Court awarded the Complainant four weeks’ remuneration.

(ii) Obligation to Provide Relevant Information

Section 10 of the Protection of Employment Acts 1977 – 2004 provides the employer shall supply the employees’ representatives with all relevant information relating to the proposed redundancies. It lists an inexhaustive list of information to be given in writing:

(i) The reason for the proposed redundancies;

(ii) The number, and descriptions or categories, of employees whom it is proposed to make redundant;

(iii) The number of employees, and description or categories, normally employed;

(iv) The number (if any) of agency workers engaged to work for the employer, those parts of the employer's business in which those agency workers are, for the time being, working, and the type of work that those agency workers are engaged to do.

(v) The period during which it is proposed to affect the proposed redundancies;

(vi) The criteria proposed for the selection of the workers to be made redundant; and

(vii) The method for calculating any redundancy payments other than those methods set out in the Redundancy Payments legislation.

It was not in dispute between the parties that the information listed in section 10 was provided. The Labour Court confirmed that the onus on the employer to provide “all relevant information” is not limited to the specific information set out in section 10. Here, the Labour Court found that Debenhams had addressed all issues raised by the Union on behalf of the employees and provided the up to date position in relation to each issue raised. Therefore, the Respondent discharged their duty to provide all relevant information.

As such, the Labour Court overturned the finding of the WRC on this point and found Debenhams complied with the requirements of section 10.

Commentary

The law on collective redundancies set out in the Protection of Employment Acts 1977 - 2024 is very prescriptive in terms of obligations and timelines. Employers, and now, responsible persons, ought to be aware of these recent developments where collective redundancies are in contemplation. The Crowe v. Debenhams decision confirms the rather stringent nature of the legislative obligations on employers and responsible persons. The penalties and consequences for non-compliance are by no means insignificant. They include criminal offences, fines of up to €250,000, and the provision of compensation to employees of up to 12 weeks remuneration.

Please do not hesitate to contact our RDJ LLP Employment Team for further advice and guidance in this area.

[1] Akavan Erityisalojen Keskuslittory and Others v. Fujitsi Siemens Computers Oy (C- 44/08).