Sometimes poor trading conditions in your industry can put a strain on your business. When you experience a dip in trade, you may find yourself in the difficult position of having to lay off employees.
Small businesses who experience this type of reduction in the amount of work they need completing, may need to avail of the layoff provisions in the Redundancy Payments Acts 1967 – 2014.
What is lay off?
Section 11 of the redundancy payments legislation sets out a clear lay-off meaning. We can break that down into three elements:
- The employer is unable to provide the work for which the employee is employed to do.
- The employer has a reasonable belief that the work stoppage will be temporary.
- The employer provides the employee with advance notice of the work stoppage.
The importance of providing notice of lay-off
As you can see above, one of the key elements of lay-off is providing notice. One of the first questions employees ask in lay-off scenarios is if an employer can lay you off without notice.
As an employer, the law states you must provide notice to your employees before laying people off.
So while you can make lay-offs without providing notice, it is a breach of the redundancy payments legislation and will expose your business to various claims from disgruntled staff.
The easiest way to comply with the requirement to provide notice is to issue a temporary lay-off form known as an RP9.
If you don’t provide the temporary lay-off form, Ireland’s redundancy legislation provides staff with the possibility of claiming a statutory redundancy payment from your business.
Misinterpreting the law on lay off in Ireland can therefore have costly consequences.
What does the contract of employment say?
Before you can lay off staff you should confirm that your employment contract contains a clause giving you the right make lay-offs.
If employees are laid off from work and there is no lay-off clause in the employment contract, you will need to secure the express agreement of employees to the proposed lay-offs. That is unless you can demonstrate that it is custom and practice in your business to implement lay-offs.
It is also important to ensure that the employment contract specifies that any periods of lay-off are unpaid. If you fail to include this vital provision, you risk suffering a lay-off compensation claim for unpaid wages.
What about short-time working?
Short-time working in Ireland arises when there is a shortage of work but not a complete cessation of work which happens in a lay-off scenario.
Short time working rules are likewise set out in section 11 of the Redundancy Payments Acts 1967 – 2014. Short-time working contains a number of elements.
- The employee will be working less than half of their contractual weekly hours or receiving less than half their weekly pay.
- The reduction in hours or pay is due to a shortage of work.
- The employer has a reasonable belief that the situation is temporary.
- The employer provides the employee with notice of the reduction.
Like a lay-off situation, employers must provide employees with a short-time working notice.
Employers can also use the RP9 form to comply with this notice requirement.
Reduced working hours v short-time working
It is important to know the difference between reduced working hours and short-time working.
'Reduced working hours' applies in a scenario where the employee will still be paid more than one-half of their normal weekly pay or will be working more than one-half of their normal weekly hours.
Unlike lay-off and short-time, there is no legislation governing reduced working hours and you must have employee consent to any such reduction in working hours.