Complainant

Respondent

Parties

Breda O'Reilly

Castleview Community Playgroup CLG (in Voluntary Liquidation)

Representatives

Self-represented

Did not attend the hearing

Act

Complaint Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under Section 39 of the Redundancy Payments Act, 1967

CA-00047482-001

02/12/2021

This is a complaint about the failure of the respondent to pay the complainant redundancy pay based on all her years of service.  On October 28th 2021, she was paid €9,693 by the Department of Social Protection, based on 10.27 years of service and her weekly pay of €450.  She worked for the respondent for almost 21 years, from September 1999 until June 2020.

The complainant is a playgroup leader and she commenced working for the respondent in 1999, firstly on a community employment (CE) scheme, and from October 23rd 2002, as a permanent employee.

The playgroup was initially set up as a sole trader.  The employer’s registered number was 9593874G.  In her evidence at the hearing, the complainant said that, to accept children under the newly established Early Childhood Care and Education Scheme (ECCE), on January 1st 2010, the playgroup was set up as a company limited by guarantee (CLG).  The employer’s registered number of the CLG is 9730849Q.

On June 30th 2020, the CLG was placed in voluntary liquidation by the directors.  The complainant applied for a redundancy payment, based on her service from 1999.  The liquidator prepared a redundancy form for the complainant, but he based the calculation of her redundancy payment on her service with the CLG which was established in January 2010.  The complainant claims that she is entitled to redundancy based on her start date in 1999.  At the hearing, she produced evidence of P60s which show that she worked in the playgroup from 1999 and that she became a permanent employee on October 23rd 2002.

The liquidator did not attend the hearing; however, on June 27th 2022, he sent a letter to the WRC outlining his response to the claim.  He said that, as there are no records related to the period in which the playgroup was a sole trader, he could not stand over that period of the complainant’s service.  He said, “there will be no funds available in the liquidation for any payments to employees or creditors.”  He also said that he does not oppose any award under the Redundancy Payments Act that the Workplace Relations Commission may decide. 

Time Limit for Submitting a Claim for a Redundancy Payment

Section 19(1) of the Redundancy Payments Act 1967 – 2014 provides that an employee whose employment ceases because of redundancy, is entitled to a redundancy payment:

Upon the dismissal by reason of redundancy of an employee who is entitled under this Part to redundancy payment … his employer shall pay to him an amount which is referred to in this Act as the lump sum.

In accordance with section 24 of the Act, an employee who is made redundant may make a claim for a redundancy lump sum up to 52 weeks following the termination of their employment.  The complainant submitted a claim for a lump sum to the liquidator shortly after the playgroup closed on June 30th 2020.  The liquidator then submitted a claim to the Department of Social Protection and, on October 28th 2021, the complainant received a lump sum of €9,693, based on her service from January 1st 2010.  When she queried this with the liquidator, he informed her that he could not stand over the years that she worked for the playgroup when it was a sole trader.  I am satisfied that the complainant submitted a claim for a redundancy payment within the statutory time limit of 52 weeks and it now falls to me to consider if her entitlement to a redundancy lump sum is based on all her service with the respondent from September 1999.

Reckonable Service

The complainant’s case is that her redundancy lump sum has been based only on her service from January 1st 2010 and she has asked me to examine her claim that her service is reckonable from when she commenced in the playgroup on a CE scheme in September 1999.

Section 4(1) of the Redundancy Payments Act 1967, as amended, sets out the “classes of persons” to whom the Act applies:

Subject to this section and to section 47, this Act applies to —

(a) employees employed in employment which is insurable for all benefits under the Social Welfare Consolidation Act 2005[.]

Sub-sections (b) and (c) are not relevant to the complainant in this case, and section 47 is also not relevant.  The complainant meets the criteria under sub-section (a) above as she was employed in insurable employment from October 2002 up to the date of the termination of her employment due to redundancy in June 2020.  Employees in CE schemes do not pay PRSI and therefore, the complainant was not in insurable employment from September 1999 until she became a direct employee of the respondent in October 2002.   

In section 4(2) of the Act, there is a reference to “excepted employments” and a provision for including employees who do not pay PRSI.  This category applies to irregular work, working for a relative or work of an “inconsiderable extent,” presumably meaning that the work is not sufficient to be subject to PRSI deductions:

This Act shall apply to an employee employed in employment which would be insurable for all benefits under the Social Welfare (Consolidation) Act 1993 but for the fact that the employment concerned is an excepted employment by virtue of paragraph 2, 4 or 5 of Part II of the First Schedule to that Act.

Paragraphs 2, 4 and 5 are not relevant to the complainant’s status as a CE worker, but paragraph 6, which is excluded from any reference in section 4(2), provides that an “excepted employment” is, 

Employment under a scheme administered by An Foras Áise-anna Saothair and known as the Social Employment Scheme.

The Law Reform Commission’s annotated version of the revised legislation shows that section 4(2) was amended in 2003 and paragraph 6 of Part 2 of the First Schedule of the Social Welfare (Consolidation) Act 1993 was not referenced.  The effect is that CE schemes are not included in the short list of “excepted employments.”  As a result, workers on CE schemes are specifically excluded from the “classes of persons” covered by the Redundancy Payments Act.  For this reason, I find that the complainant’s service in the playgroup when she was on a CE scheme from 1999 to 2002 is not reckonable for the calculation of her redundancy lump sum.

The Act goes on, at section 7(1), to set out the entitlement to a redundancy lump sum:

An employee, if he is dismissed by his employer by reason of redundancy or is laid off or kept on short-time for the minimum period, shall, subject to this Act, be entitled to the payment of moneys which shall be known (and are in this Act referred to) as redundancy payment provided—

(a) he has been employed for the requisite period, and

(b) he was an employed contributor in employment which was insurable for all benefits under the Social Welfare Acts, 1952 to 1966, immediately before the date of the termination of his employment, or had ceased to be ordinarily employed in employment which was so insurable in the period of four years ending on that date.

Section 7(5) of the Act provides that “the requisite period” is 104 weeks of continuous service.

The First Schedule of the Minimum Notice and Terms of Employment Act sets out the definition of continuous service:

The service of an employee in his employment shall be deemed to be continuous unless that service is terminated by—

 (a) the dismissal of the employee by his employer, or

 (b) the employee voluntarily leaving his employment.

It is apparent that, between October 23rd 2002 and June 30th 2020, the complainant was not dismissed and she did not resign.  Section 7 of this First Schedule deals with the circumstances where a business transfers from one entity to another:

Where the whole or part of a trade, business or undertaking was or is transferred to another person either before or after the passing of this Act, the service of an employee before the transfer in the trade, business or undertaking, or the part thereof so transferred—

(a) shall be reckoned as part of the service of the employee with the transferee, and

(b) the transfer shall not operate to break the continuity of the service of the employee,

unless the employee received and retained redundancy payment from the transferor at the time of and by reason of the transfer.

From the evidence submitted by the complainant at the hearing of this complaint, I am satisfied that she was not made redundant in December 2009, before the establishment of the CLG to which she transferred on January 1st 2010.  I am satisfied therefore, that her service is continuous from October 23rd 2002 until June 30th 2020. 

Conclusion

I find that the complainant’s service with the respondent was continuous from the date that she commenced as a direct employee of the respondent on October 23rd 2002 until she was made redundant on June 30th 2020.  I find also that the calculation of her redundancy lump sum by the liquidator was not in accordance with the First Schedule of the Minimum Notice and Terms of Employment Act 1973 and was incorrect.  I find that the complainant has continuous service with the respondent of 17.7 years and not 10.27 years as submitted by the liquidator.  I find that there was a shortfall in the redundancy lump sum paid to the complainant by the Department of Social Protection on October 28th 2021 and that this shortfall relates to her service from October 23rd 2002 until December 31st 2009.  Finally, I have concluded that the complainant’s service in the playgroup while she was on a CE scheme from September 1999 until October 2022 is not reckonable.  

Subject to her PRSI contribution status, I have decided that the complainant is entitled to a statutory redundancy payment, based on her service from October 23rd 2002 until she was made redundant on June 30th 2020.  I acknowledge that she has received a lump sum of €9,693 based on her service from January 1st 2010 until June 30th 2020 and that the shortfall in her lump sum entitlement relates to her service from October 23rd 2002 until December 31st 2009.

Redundancy, liquidation