Navigating the 3 R’s of Termination

Law & Regulation
Navigating the 3 R’s of Termination by Sarah Fagan

Navigating the 3 R’s of Termination: Redundancy, Resignation, and Retirement

by Sarah Fagan

The Labour market is fluid, with employers frequently dealing with job transitions such as Redundancy, Retirement, or Resignation. Each of these instances has distinct consequences for both the employee and employer. In this article, we will explore the various employment terminations, as well as the legality, entitlements, and support required in order to ensure all employee rights are adhered to and any potential risks are avoided by the employer.

Redundancy:

The issue of redundancies for Organisations is complex and multifaceted, with various influences at play. Economic uncertainty, Brexit fallout, technological advancements, industry-specific challenges, global competition, and company-specific issues, such as challenging financial management or failure to adapt to changing market conditions have all contributed to job losses.

An unfortunate consequence of these influences is redundancies taking place leaving an employer to terminate an employee’s contract due to necessary restructuring of the organisation, changes in job requirements, or the closure of a business.

The rights of an employee due to redundancy are governed by the Redundancy Payments Act 1967-2014, the Redundancy Payments Act, 1967 and the Protection of Employment (Exceptional Collective Redundancies and Related Matters) Act, 2007.

From a legal standpoint it is incumbent on all employers to follow correct procedures ensuring that natural justice is applied from the outset.

Steps involved in the Redundancy Process

Ensuring a genuine redundancy case exists is the first step in demonstrating why certain roles may be impacted due to the business case. Following that it is essential to use fair selection criteria in selecting an employee’s role for redundancy. If the Organisation has used an agreed selection procedure or has used a specific one in past redundancy situations the employer will need to have a specific reason in departing from this agreed selection procedure or custom. Having established that certain positions are no longer required, employees of that category must be considered against the criteria for selection.

The decision to make redundancies should be the last resort. All other suitable alternatives should be explored prior to initiating redundancies during the consultation period. One of the conditions looked at in determining whether a dismissal by redundancy is fair or not is whether the conduct of the employer was reasonable.

An employer may have an ‘at risk’ meeting with the employees prior to making the decision to dismiss due to redundancy. This can be viewed as being fair and reasonable. The purpose of these meetings is to inform the employees that there is a possibility that redundancies may arise, and that the Organisation is looking at all suitable alternatives to making redundancies. Employers should at this stage give employees an opportunity to explore other options that they may see as an alternative to redundancy.

Following on from the ‘at risk’ meeting, employers should engage in consultation with the affected employees to discuss whether any alternatives have been discovered and to consider the proposals of the Organisation itself and whether they can reduce the number of or prevent the redundancies.

If at this stage it is found that there are no suitable alternatives, it is then that formal notice of redundancy would be given. Upon issuing formal notice of redundancy the employer must ensure that those impacted have full recourse to an appeal mechanism.

The redundancy process can be long and arduous for both the employer and employee, in particular where a collective redundancy situation arises. Employee termination requires understanding from a legislative viewpoint but also from a ‘human’ perspective. Getting guidance on how to navigate redundancies appropriately is extremely important and expert advice is always advised.

Resignation

Resignation is a voluntary act by the employee to terminate their employment which does not necessarily have to be viewed negatively. The reasons for resignation can vary, such as pursuing a new opportunity, personal reasons, or dissatisfaction with current job conditions.

How to Deal with an Employees Resignation.

As an employer, you must explore the background to the resignation to understand if any risks exist, thus having a good understanding of why an employee is leaving is important. Conducting an exit interview allows the Organisation to learn the reasons for leaving in more detail and enables the employee to provide feedback on various aspects of the Organisation which can be a useful driver for Organisational improvement and retention strategies.

If, upon further exploration a resignation was as a result of an incident at work or complaint regarding unfair treatment then there may exist a risk of constructive dismissal. While the burden of proof in a claim of constructive dismissal is quite high taking steps such as seeking to address any concerns through appropriate procedures before the employee’s departure or requesting the employee to reconsider their resignation may assist in mitigating the risk of constructive dismissal.

Correct procedure for Accepting an Employees Resignation

Employers should follow the correct procedure below to ensure the smooth exit of the employee.

Acknowledge the Resignation: When an employee submits their resignation, acknowledge it promptly and schedule a meeting to discuss the resignation to understand if risks exist, and next steps.
Confirm Resignation in Writing: Request the employee to provide a written resignation letter confirming their decision to resign, with details such as the effective date, notice period and any other relevant details.
Review Notice Period: Check the employment contract to determine the notice period required ensuring alignment with contractual notice period.
Communicate Acceptance: Once you have reviewed the resignation letter and confirmed compliance of notice period, communicate your acceptance of the resignation to the employee in writing. This acceptance letter should reiterate the employee’s last working day as per the notice period.
Discuss Handover and Transition: During the acceptance meeting or shortly after, discuss the handover process and transition plan. Clarify the employee’s responsibilities during their notice period and ensure a smooth transfer of their duties and experience/knowledge to other team members.
Conduct an Exit Interview: Offer the employee the opportunity to participate in an exit interview. This interview can provide valuable feedback and insights into the employee’s experience with the Organisation and may help identify areas for improvement.
Address Outstanding Payments and Benefits: Calculate and process the employee’s final payment, which should include any outstanding wages, accrued holiday entitlements, and other benefits owed to them as failure to do so could result in a WRC claim.
Organisational Property: Remind the employee to return any property, such as laptops, access cards, keys, and documents, before their last working day.
Maintain Professionalism: Throughout the resignation process, maintain a professional and respectful approach.
Keep Records: Keep detailed records of the resignation process, including the acceptance letter, exit interview (if conducted), and any discussions related to the handover and transition.

Retirement

Retirement is a significant milestone in an individual’s life, and ensuring legal compliance during this period is crucial for both employers and employees. There are specific regulations and procedures that must be followed to facilitate a smooth and lawful retirement process and essential steps to ensure legal compliance.

Age of Retirement

Currently, there is no compulsory retirement age for Irish employees. The Equality (Miscellaneous Provisions) Act 2015 provides that an employer must objectively justify the mandatory retirement age. The Code of Practice requires that compulsory retirement ages must be ‘capable of objective justification both by the existence of a legitimate aim and evidence that the means of achieving that aim are appropriate and necessary’. This could include:

Intergenerational fairness (allowing younger workers to progress).
Motivation and dynamism through the increased prospect of promotion.
Health and Safety (generally in more safety/critical occupations).
Creation of a balanced age structure in the workforce.
Personal and professional dignity (avoiding capability issues with older employees).
Succession planning.

Under the Code, good practice regarding impending retirement involves “an employer notifying an employee (in writing) of their intention to retire him/her on the contractual retirement date within 6-12 months of that date”.

Written notifications should be followed with a face-to-face meeting which addresses issues such as

Clear understanding of the retirement date and any possible issues arising.
Exploration of measures (subject to agreement) which would support the pathway to retirement, for example flexible working, looking at alternative roles up to the date of retirement.
Transitional arrangements in regard to the particular post, and
Assistance around guidance and information.

Alignment to the Code of Practice is essential but as a standard it is best practice to specify a retirement age in contracts of employment where you are seeking to ensure that a compulsory retirement age forms a part of the employee’s terms and conditions.

It is also important for the Organisation to be consistent in enforcing their retirement age to correspond with the contract. If an Organisation deviates from this contractual condition, it may set precedence for the future. In order to defend against a compulsory retirement age claim taken by an employee, an Organisation must be able to prove that a normal retirement age exists in the Organisation and that an employee should have been aware of this or was actually aware of this.

Navigating the 3 R’s of termination, through Redundancy, Retirement, or Resignation, can be emotionally and financially challenging for both employees and employers. Understanding the legalities and entitlements associated with each scenario is essential to ensure a positive experience for all concerned.

Sarah Fagan

Recently appointed Managing Director of Adare Human Resource Management.

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