Ireland: Collective Redundancies - Definition Of "Establishment"

Last Updated: 3 June 2015
Article by John Lynch

Workplace Relations Act 2015 – New Adjudication System and Changes to the Organisation of Working Time Act 1997

On 20th May 2015 the above Act was signed into law by the President marking a complete overhaul of the adjudication process for all workplace complaints. It is anticipated that the Act will be commenced with effect from 1 July 2015 and the various functions of the Labour Relations Commission, Employment Appeals Tribunal, the National Employment Rights Authority, the Labour Court and the Equality Tribunal will be consolidated and exercised in the first instance by Workplace Relations Commission in the form of an Adjudicator and by the Labour Court on Appeal. These changes are aimed at speeding up the process of workplace complaints and avoiding the need for employers to defend claims relating to the same dispute in a number of different fora.

Section 86 of the Workplace Relations Act will also amend sections 19, 20 and 23 of the Organisation of Working Time Act 1997. These amendments will bring the Organisation of Working Time Act into line with recent rulings of the Court of Justice of the EU. These provisions now provide that for the purpose of the Act when an employee is absent from work due to illness it shall be deemed to be a day on which the employee was at his/her place of work or at his/her employers disposal, thus enabling an employee to accrue annual leave whilst on sick leave. Further the Act provides that if an employee ceases to be employed they are entitled to be paid compensation in respect of annual leave accrued during the relevant period, but untaken.

Collective Redundancies – Definition of "Establishment"

Under the Protection of Employment Acts 1977 to 2007 where a collective redundancy arises, an employer is obliged to consult with employees at least 30 days before the first dismissal takes place. The legislation provides that a collective redundancy arises where in any period of 30 consecutive days the number of dismissals is:

  • at least 5 in an establishment normally employing more than 20 and less than 50 employees
  • at least 10 in an establishment normally employing at least 50 but less than 100 employees
  • at least 10% of the number of employees in an establishment normally employing at least 100 but less than 300 employees
  • at least 30 in an establishment normally employing 300 or more employees

In the past there has been a lack of clarity as to the definition of an establishment and the legislation fails to provide much assistance. As such we must consider recent caselaw and in particular the decision of the European Court of Justice in what is referred to as the "Woolworths case". In 2008 Woolworths in the UK entered administration and thousands of staff were made redundant. The employees brought a claim to the UK Employment Appeals Tribunal ("EAT") claiming that they were not afforded a consultation period. The applicability of the collective redundancy legislation was examined – was each Woolworth store a separate "establishment" for the purposes of the legislation? The UK EAT held that for the purpose of a collective redundancy an "establishment" referred to the whole organisation irrespective of the number of branches or locations. The determination was appealed and the ECJ has recently held that, when deciding whether or not collective redundancy consultation obligations are triggered, the number of proposed redundancies should be measured in the "local employment unit" to which the potentially redundant employees are assigned to carry out their duties, rather than the whole organisation.

The Employment Permits (Amendment) Act 2014 (the "Act")

A new and improved work permit regime came into operation on the commencement of the Employment Permits (Amendment) Act 2014 on 1 October 2014. There are now nine categories of employment permit each with a separate application form. The categories are: Critical Skills (previously called the Green Card), Intra-Company Transfer, Dependant/Partner/Spousal, General (previously called the Work Permit), Contract for Services, Reactivation, Internship, Sports and Cultural and Exchange Agreements.

The Act addresses the deficiencies identified in the case of Hussein v The Labour Court where a foreign national could not enforce employment rights where the High Court found that his contract of employment was unlawful, due to his failure to have any employment permit. The Act provides that it is a defence for the foreign national to the charge of having been without an employment permit where the foreign national can show that all reasonable steps to comply with the requirement were taken by him/her.

Non-Compete Clauses – What is a reasonable restriction?

Levinwick Limited v. Hollingsworth [2014] IEHC 333

A non-compete clause in an employment contract will be enforceable if it is reasonable – but what is reasonable?

This case examined the reasonableness of the non-compete clause in the defendants contract of employment. The defendant was a Pharmacy Manager with the plaintiff company in Celbridge, Co. Kildare. 10 months after his employment with the plaintiff came to an end he sought to take up the role of Pharmacy Manager with another pharmacy also based in Celbridge. The non-compete clause in his contract of employment stated that the Defendant would not take up similar employment with a pharmacy within a two mile radius of the plaintiff's pharmacy for a period of 24 months after the termination of employment.

The court dismissed the action by the plaintiff and held that the nature of the defendant's role as pharmacy manager did not give rise to such a personal connection with customers in the pharmacy that the restriction was necessary to protect the goodwill of the plaintiff's business.

Post-termination restrictive covenants are enforceable but it is important that advice is taken when drafting the clause to ensure that it achieves your objective. Whilst you cannot stop a person working, you can certainly take steps that will reasonably protect your business.

Discrimination in the Workplace – Is obesity a disability

Karsten Kaltoft v. Kommunernes Landsforening

Being severely overweight may now be considered a disability if it restricts the employee's ability to participate in his or her normal duties. This is the position following the ECJ's significant ruling in the Kaltoft case. The ECJ held that the Danish childminder Mr. Kaltoft, was entitled to protection on the basis that his obesity amounted to a disability. However it did qualify this by stating that the obesity only constituted a disability if it affected an employee's ability to take part fully in everyday professional life and the court gave the example of reduced mobility.

In light of this employer's will need to consider making reasonably accommodation for an employee if he or she is considered obese for example by considering larger office furniture, wider car parking spaces etc.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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