Key considerations for Employers – Layoffs or Short-time as a result of Covid-19

Shannon Chamber HR is a dedicated HR and Employment Law Support Service for members of Shannon Chamber provided in partnership with Adare Human Resource Management, experts in Employment Law, Industrial Relations, Human Resources and Health & Safety at preferential rates.

Each week, Derek McKay, Managing Director at Adare Human Resource Management shares a feature article on a relevant and topical HR / Employment Law issue to help provide insights and advice.

This article of the series looks at considerations for Employers regarding layoffs and short-time.

According the CSO[1], nearly half (47%) of people working in Ireland have had their employment situation affected because of the current health crisis. Over one in ten (14%) lost their job while a third (33%) have been temporarily laid off due to the Covid-19 pandemic. Those affected most were in the age group 35-44 years, where two-thirds (66%) reported changes to their employment status and the impacts have been felt right across the country with 44% of worker in the west and south stating they have affected.

It’s not surprisingly then, given this impact, that many employers are in a situation where short-term layoffs or short time are needed to help secure the future of the business.

The Redundancy Payments Acts 1967-2014 make provision where a period of layoff or short-time can be applied when the employer believes that such measures are temporary and that they are unable to provide an employee with work for which they are contracted either in a full time capacity or for a lesser period as laid out in the definition of short time.

Definitions

  • Lay off and short time are temporary situations where an Employer is no longer able to retain the Employee in their normal capacity. This may be viewed as a favourable alternative to redundancy.
  • Lay off occurs where Employees are not required to work for a specified period of time, until trading conditions improve, or until the reasons behind the lay-off no longer exist. Advance notice of lay off must be given.
  • Short time occurs where an Employee’s working week decreases to less than half of his/her normal weekly hours or his/her pay is less than half of his/her normal take home pay; and the situation is not considered to be permanent and advance notice is given.
  • After a period of 4 consecutive weeks (or a broken period of six weeks) on lay off or short time the Employee may request redundancy. If at this time the Employer cannot guarantee that within 4 weeks of the Employee’s notice that they can provide 13 weeks unbroken employment, the Employer must pay redundancy to the Employee provided they qualify for a statutory redundancy payment. Where the Employee decides to claim for a redundancy payment he must do so not later than four weeks after the lay-off or short-time ceases. After that, the Employee is debarred from claiming a payment in respect of that particular period of lay-off or short-time. An Employee who claims and receives redundancy payment due to lay off or short time is deemed to have voluntarily left his or her employment and therefore not entitled to notice under the Minimum Notice and Terms of Employment Acts.

Key Considerations for Employers

There are a couple of things we would advise employers to consider. Firstly, within the signed statement of terms and conditions of employment is there an express term and condition that lay-off or short time can be applied. Where an express term does not exist, Employers must consult with the employee to seek their agreement to apply a period of lay-off or short time.

Secondly, Employers in this particular situation should act in a reasonable manner, explain the rationale, apply fair and objective selection procedures and provide a reasonable period of notice where possible. Fortunately, the supports provided by the Government to-date have helped negate somewhat the financial impacts of these situations.

Another consideration for Employers is changes to the Redundancy Payment Act that were introduced in March. To try and protect Employers who placed Employees on lay-off or short-term because of Covid, the Government introduced emergency measures in the Public Interest (Covid-19) Act 2020 that temporarily reduced the scope of the operation of the Redundancy Payments Act 1967 by the addition of Section 12A to the Redundancy Payments Act.
 
The insertion of this section temporarily suspended the provisions in the Redundancy Payments Act that allowed those on a period of layoff or short time, (for 4 weeks or more, or for 6 weeks in the last 13 weeks), to give notice of their intention to claim for redundancy from their Employer.
 
This provision was then temporarily suspended for the duration of the emergency period that was provided in the Emergency Measures Act as “the period beginning on 13th March 2020” with the end date extended to 17th September 2020, which is fast approaching and is unlikely to be extended further.

It is important to note that the Employee’s right to claim redundancy has not been removed but deferred for the emergency period in circumstances of temporary lay-off or short-time employment.

Remember, during lay off or short-time working, Employees still are employed by your Organisation and their contract of employment remains in force. This means that Employees are entitled to benefit for any public holidays that occur during the first 13 weeks of lay off. Employees do not accrue annual leave during lay off but they are entitled to take annual leave that they accrued before being laid off.

 

Conclusion

It is inevitable businesses will need to implement changes but these changes cannot come at the expense of the Employees’ statutory rights. Employers need to remember that all the same rules apply, but how they implement them may require more thought and consultation with their Employees – it simply won’t be acceptable to use the current health crisis as an excuse for ignoring Employees’ rights.

Why Shannon Chamber HR?

  • Access to solutions-focused advice and support on HR and Employment Law queries for your Organisation provided by the experienced expert-lead team at Adare Human Resource Management, giving you peace of mind that you can effectively manage any employment or HR issues that may arise. For information on the full range of services and supports provided, click here.

Contact:
For further information on the HR and Employment Law support services provided, to arrange a meeting or to receive a quote, contact the team at Shannon Chamber – admin@shannonchamber.ie / 061 360 611

[1] ‘Employment and Life effects of COVID-19 Survey’ – Central Statistics Office, April 2020