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Coronavirus - Guidance for Employers - Ireland

  • Ireland
  • General

20-03-2020

Dealing with the repercussions of COVID-19 – Guidance for Employers

The events of the past few weeks have brought uncertainty and unease into our lives, over both public health and the economy. With the situation developing rapidly, employers will also need to consider what contingency plans they should be putting in place to facilitate business continuity.

On this front, we need to be mindful of the situation elsewhere. China closed down whole cities and regions, while Italy has locked down the whole country to prevent the further spread of Covid-19. We have already seen pubs, bookmakers and a number of restaurants agree to close for the next two weeks at least. More temporary closures could follow if, say, there is an outbreak in a specific business, a cluster of businesses in a specific location, or further government restrictions.

The Government is appealing to employers to try to find ways of continuing to pay their staff, where possible. However, for many employers, paying employees in these circumstances simply won’t be feasible on either a temporary or an ongoing basis and they will need to take measures to ensure their businesses stay afloat. One option may be to ask employees to use their annual leave or agree to take some unpaid leave. However, it may also be necessary to consider introducing further, and potentially more drastic, measures under the Redundancy Payments Acts 1967-2014, which provide for the concepts of lay-off and short-time.

To assist employers in these uncertain times, we answer some key questions below.

In what circumstances can employees be laid-off?

Lay-off arises where an employer is unable to provide work to an employee for a temporary period. In these circumstances, the employer may place the employee on lay-off.

The employer must have a reasonable belief that the lay-off will be temporary, however, and must provide the employee with notice. There is no prescribed period of notice. The unprecedented repercussions of the COVID-19 pandemic, is likely to justify a short notice period.

Can employers put their employees on short-time?

Short-time, on the other hand, arises where an employee’s normal weekly pay or hours are at least halved due to a diminution in work.

In this instance, the employer must, again, have a reasonable belief that this reduction will be temporary and prior notice must be provided.The legislation does not stipulate a minimum period of notice. Again, exceptional circumstances, such as the COVID-19 pandemic, are likely to justify a short notice period.

Are employees entitled to pay during lay-off and short-time?

Whether or not the employee is entitled to be paid during a period of lay-off depends on their contract. However, even if the contract is silent on whether lay-off is paid, right to unpaid lay-off may be implied on the basis of custom and practice in the business and a number of Irish cases support the position that employees do not need to be paid during lay-off.

The Department of Employment Affairs and Social Protection announced a new scheme (for employees whose employer is unable to continue to pay them, or who have had their hours reduced) called the COVID-19 Pandemic Unemployment Payment.

However, the Government is appealing to employers to try to find ways of continuing to pay their staff, where possible, even if this means simply continuing to pay them the current COVID-19 Pandemic Unemployment Payment rate of €203. The Minister for Employment Affairs and Social Protection recently announced that the government will refund employers who temporarily laid off their employees but are continuing to pay them €203 per week in these circumstances. It is hoped that this continuity of pay will maintain the link between employers and employees and will facilitate their eventual return to work. It should be noted that this refund scheme does not appear to apply to employees on short-time.

The refund itself will be processed by Revenue in due course. Further information can be found on the government website: https://www.gov.ie/en/publication/933a1b-employer-covid-19-refund-revenue-guidance/

When does redundancy arise?

If an employee is laid off or kept on short-time for four or more consecutive weeks – or for six or more weeks in a 13-week period – they can give their employer notice of their intention to claim redundancy. Unless the employer provides counter-notice within four weeks of this, saying that they will provide at least 13 weeks’ normal work, the employee will be entitled to a statutory redundancy payment, if eligible.

From the employer perspective, if it is not sustainable to keep employees on lay-off or short-time, they may need to take the more permanent measure of implementing redundancies.

A redundancy occurs where a role ceases to exist. Unfortunately, this could arise if the role is no longer required because of a significant downturn in business.

If an employee has at least 104 weeks’ continuous employment with an employer, they will be entitled to a statutory redundancy payment.

This is calculated as two weeks’ pay per year of service plus a bonus week. For the purpose of this calculation, a week’s pay is capped at €600.

While there are various procedural requirements, which should be followed in any redundancy, the requirements become even more stringent in the case of collective redundancy.

This occurs where, during any period of 30 consecutive days, the numbers facing redundancy amount to:

• Five where 21 to 49 are employed;

• Ten where 50 to 99 are employed;

• Ten per cent of all employees where between 100 and 299 are employed: or

• Thirty employees, where 300 or more are employed.

In a collective situation, the process is much more prescriptive and involves, among other measures, notifying potentially affected employees at least 30 days before the first notice of redundancy.

The Minister for Employment Affairs and Social Protection must also be notified at least 30 days before the first redundancy termination.

Can employees be required to take annual leave?

The government guidance states that employers should continue full pay by, as an example, allowing employees to take annual leave. This does not go so far as to allow an employer to require employees to take annual leave.

Under the Organisation of Working Time Act 1997, an employer does have the discretion to determine the dates of annual leave. However, this is subject to a number of requirements, including the requirement for an employer to engage in a one month consultation period with the employee where requiring the employee to take leave on certain dates prior to the leave. In that regard, employers cannot legally oblige an employee to take annual leave on certain dates without having engaged in this consultation.

In our view, this can be addressed by providing two options to employees. The employer could say to employees that they can either (1) take unpaid leave or (2) take annual leave which means they will receive full salary. In all likelihood, employees will opt for option (2).

The messaging around this will be key. Rather than trying to rely on a legal entitlement, it may be more effective to appeal to employees on another level i.e. ask for their additional support in uncertain times and explain the importance of everyone pulling together to support each other and the business etc.

For support on legal issues facing your business in light of the outbreak of Covid-19, please visit our Coronavirus hub to get our latest information and guidance.

This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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