The prospect of being made redundant is a very real one for thousands of employees across the country, writes John Cradden. Make sure you know your rights, in case it happens to you

AS the downpour of bad economic news turns into a flood, the prospect of being made redundant is becoming uncomfortably close to reality for growing numbers of workers.

Unemployment hit a 10-year high in December, with the number of people claiming jobseekers’ payments jumping by a record 70pc in 2008.

The Central Statistics Office (CSO) estimates that the unemployment rate has now reached 8.3pc.

In the same month, the Department of Enterprise, Trade and Employment was notified about some 3,350 redundancies—a 94pc increase on the figure for December 2007.

Over the course of 2008, there were 40,607 redundancies—almost 60pc higher than the 2007 total.

A total of 753 Irish companies were listed as corporate failures in 2008—a rise of over 100pc on the 2007 figure of 370 failures, according to financial consultants FGS.

A recent poll, conducted over Christmas, shows that almost nine out of 10 workers are worried for their futures, according to employment law consultancy Peninsula Ireland.

No surprise, then, that the thoughts of many of us are turning to what our rights are and what we would be entitled to if we were made redundant.

The first thing to know is that to qualify for a redundancy payment, no matter what the reason, you must be aged 16 or over and have worked continuously for your employer for two years.

The same rule still applies in most cases if you work part-time.

Any absences that you have taken, such as for holidays, illness, maternity, parental or carer’s leave, will not count as gaps when calculating your total length of service.

However, if you were absent for more than 52 weeks due to an injury at work, 26 weeks due to illness or spent any time on strike during the last three years, these absences will not be counted as service.

If you qualify, employers must by law pay you a minimum of two weeks’ pay for every year of service, and one week’s further pay.

This calculation of a week’s pay is capped at €600 per week, which equals €31,200 a year. Statutory redundancy pay is tax free.

Some employers may offer more than the statutory minimum, such as a number of weeks’ pay for every year of service.

This is often called an ex-gratia payment and it can also take the form of the gift of a company asset, such as a car or laptop, as well as a lump-sum payment.

Understanding the taxation aspects of any redundancy package is very important, says Peter McInnes, head of employment law at McDowell Purcell Solicitors.

"Statutory redundancy is tax free but there are also certain tax reliefs that can be applied to ex-gratia payments."

Employees who have not yet served at least two years may still receive some form of payment. But this is entirely up to the employer and they are not legally obliged to pay anything.

But if the employer has serious financial problems and cannot or will not make even the statutory redundancy payment, employees are still protected.

If your employer can’t make this payment, the Department of Enterprise, Trade and Employment will step in and make the payment through the Social Insurance Fund.

You are entitled to at least two weeks’ notice if you are being made redundant. Your employer must also allow you reasonable paid time off during your notice period in order to look for a new job.

Employers are strictly obliged to follow a number of procedures when it comes to making workers redundant, whether it’s a group of workers or individuals. One of them is that they must be consulted.

"There are specific consultation obligations under collective redundancy legislation but there should also be consultation even in individual redundancies," says Mr McInnes.

"If anything in the process is unclear, an employee is entitled to have it made clear."

Employees also have the option to appeal against their redundancy.

"Typically disputes about redundancy revolve around two primary issues: is it a genuine redundancy at all or, even if it is, has the employee been fairly selected for redundancy?," says Mr McInnes.

With news of redundancies dominating the headlines, he says it would be difficult for employees to argue that there is no need for redundancy and that their dismissal has been motivated by other factors.

"Claims of unfair selection are more likely in the current climate."

There has been a rise in the number of cases of this kind being brought to the Employment Appeals Tribunal, according to Mr McInnes.

But he also notes an increase in employees seeking injunctions in the High Court against their dismissals in all forms of cases, including redundancy.

"This is a very high-risk strategy as the courts are generally not well disposed to interfering in what might be regarded as a ‘no fault’ dismissal," he says.

John Cradden