Complainant

Respondent

Parties

Noreen  McManamon

Kieran Thompson T/A Newport House Hotel

Representatives

Myles Gilvarry Gilvarry & Associates

Pearce O'Malley Pearce O'Malley & Company

Act

Complaint/Dispute Reference No.

Date of Receipt

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

CA-00050950-001

01/06/2022

The parties agreed the following dates apply to the redundancy claim:

Commenced employment: 19.03.1982

Employment terminated: 11.04.22 as stated by the Complainant Representative at the resumed hearing.

Gross Rate of Pay: €590

Weeks worked each year: 26-with the remaining period one of lay-off. This does not include a period of annual leave but as each year prior to the final year is to be treated as a full 52 week year, there is no adverse effect on the Complainant from excluding any leave paid at the end of the working year from the calculation.

The hotel had closed during Covid and remained closed but it was only in 2022 that the intentions regarding re-opening became clear and the hotel ceased trading.

Mr Gilvarry explained that a difference had arisen as to how the redundancy lump sum should be calculated in circumstances where the Complainant worked on a seasonal basis on the nearest dates approximating to 1 April to 30 September each year. The lack of certainty arose around whether it is the gross pay or 50% of the gross pay which is to be used as the basis of the calculation. While it was hard to find a precedent for this case, he referred to ADJ-00018763; An Post vs McNeill and the decision of the UK EAT in support of the proposition that the service should be counted as full years. Mr Gilvarry also pointed to the clause of the Act which refers to treating the final three years of lay off for the purposes of calculating the lump sum. The Complainant submitted an RP79 to the former employer. No reply was received.

Mr O’Malley restated the commitment to making the redundancy payment. The details were sent to the insolvency section of the DSP and they had recently confirmed that they were processing the claim. He had submitted a query in May as to how he was to calculate the lump sum i.e., based on gross pay or 50% of gross pay. The basis of the calculation to be used would result in quite different lump sum payments according to his calculations. On the date of the hearing, he had no response to his query.

General right to redundancy payment.

7.— (2) For the purposes of subsection (1), an employee who is dismissed shall be taken to be dismissed by reason of redundancy if for one or more reasons not related to the employee concerned the dismissal is attributable wholly or mainly to—

(a) the fact that his employer has ceased, or intends to cease, to carry on the business for the purposes of which the employee was employed by him, or has ceased or intends to cease, to carry on that business in the place where the employee was so employed, or

1.       As the business in which the Complainant was employed has ceased trading, by virtue of her continuous service in excess of 104 weeks the Complainant has established a right to a redundancy payment. There was no offer of employment made to her between April 2020 to April 2022.

For guidance in deciding the calculation of the statutory lump sum, the following extracts from the Redundancy Payments Act are applicable in this case.

SCHEDULE 3

Amount of Lump Sum

         Section 19.

1. (1) The amount of the lump sum shall be equivalent to the aggregate of the following:

(a) the product of two weeks of the employee’s normal weekly remuneration and the number of years of continuous employment from the date on which the employee attained the age of 16 years with the employer by whom the employee was employed on the date of dismissal or by whom the employee was employed when the employee gave notice of intention to claim under section 12, and

(b) a sum equivalent to the employee’s normal weekly remuneration.

(2) In calculating the amount of the lump sum, the amount per annum to be taken into account shall be that obtaining under section 4(2) of the Redundancy Payments Act 1979 at the time the employee is declared redundant.

2. If the total amount of reckonable service is not an exact number of years, the “excess” days shall be credited as a proportion of a year.

3. (a) For the purpose of ascertaining, for the purposes of paragraph 1, the number of years of continuous employment, the number of weeks in the period of continuous employment shall be ascertained in accordance with this Schedule and the result shall be divided by 52.

(b) In ascertaining the number of weeks in the period of continuous employment, a week which under this Schedule is not allowable as reckonable service shall be disregarded.

Section 19(2) is unqualified and provides for the normal weekly wage(remuneration) of the redundant person which will be used as one part of the calculation of the lump sum. The Section also makes it clear that the total calculation will be the total number of week divided by 52 plus a proportion of a year for any weeks in excess of a full year.

If follows that the final gross weekly rate of pay of the Complainant is to be used as the basis of the calculations and is not to be subdivided by 52 for full years of 52 weeks including lay off to arrive at a lower figure. To do so would be to reduce the Complainants rate of pay by the period of lay off instead of using her normal weeks pay as the basis of the calculation. The same gross pay is to be used for any proportionate periods of weeks worked.

2.      Reckonable Service (Relevant Extract)

7. For the purposes of this Schedule, a week falling within a period of continuous employment and during which (or during any part of which) the employee concerned either was actually at work, or was absent therefrom by reason of sickness, a dismissal within the meaning of the Unfair Dismissals Act, 1977, and in respect of which redress has been awarded under section 7 (1) (a) or 7 (1) (b) of that Act, holidays or any other arrangement with his employer shall, subject to paragraph 8, be allowable as reckonable service.

8. During, and only during, the 3 year period ending with the date of termination of employment, none of the following absences shall be allowable as reckonable service—

(a) absence in excess of 52 consecutive weeks by reason of an occupational accident or disease within the meaning of the Social Welfare (Consolidation) Act 1993,

(b) absence in excess of 26 consecutive weeks by reason of any illness not referred to in subparagraph (a),

(c) absence by reason of lay-off by the employer.

From the above sections of schedule 3 of the Act, it is clear that, while the Complainant was laid off during each year of her employment for a period of twenty-six weeks per annum, only those periods of lay off which occurred during the final three years prior to the termination of her employment in April 2022 are to be factored out of the calculation of the statutory lump sum. There was the added complication of Covid occurring during that period which created a special period of lay off in addition to the normal contracted lay off. For the periods 2020 2021 and 2022 it will be the special payment for employees laid off during Covid which will apply. The calculations below are based on the three calendar/tax years prior to termination including the final year of 2022.

It should be noted that, while no complaint was presented in respect of pay in lieu of notice, the Complainant was entitled to such notice prior to termination of her employment on grounds of redundancy.

CA-00050951 The appeal by Noreen McManamon against the failure of the Respondent, Newport House Hotel, to pay her statutory redundancy is allowed. Ultimately it will be the responsibility of the Department of Social Protection to approve the amount payable. The following represent the relevant dates of insurable employment which flow from the application of the Redundancy Payment Act 1967 as amended to the facts as provided at the hearing of the complaint:

Weekly pay for the purposes of calculating statutory redundancy €590

Date of Commencement 19.03.1982-number of weeks employment prior to lay off at the end of September in 1982: 28.

Years of continuous employment at 52 weeks inclusive of period of lay off 1983-2019 inclusive x gross pay.

Periods of lay off in the final three years of employment to be excluded from the calculation on the basis of the normal contracted working weeks, adjusted for lay off due to Covid:

2020 to 26 weeks lay off based on normal contracted working weeks per annum to be excluded from the total calculation. The period of lay off from 01.04.20 to 30.09.20 to be classified as layoff due to Covid and statutory entitlement to be calculated accordingly as part of the payment due to the Complainant

2021 26 weeks lay off based on normal contracted working weeks per annum to be excluded from the total calculation. The remaining 26 weeks from 01.04.2020 to 30.09.2020 or the nearest applicable date to be classified as a period of lay off due to Covid and statutory entitlements for that period to be calculated accordingly as part of the payment due to the Complainant.

2022 to 11.04.2022 14 weeks lay off based on normal contracted working weeks per annum to be excluded from the total calculation of service. There is no accrued entitlement to a redundancy payment in respect of 2022.

Redundancy calculation-pay for the purpose of calculation