ADJUDICATION OFFICER DECISION

Adjudication Reference:  ADJ-00052171

Parties:

Complaint:

Date of Adjudication Hearing:  27/01/2025

Workplace Relations Commission Adjudication Officer:  Aideen Collard

Procedure:

This complaint was referred under Section 39 of the Redundancy Payments Acts 1967-2022 to the Workplace Relations Commission (hereinafter ‘WRC’) on 28th May 2024.  Submissions and vouching documentation was furnished by both Parties.  Following delegation to me by the Director General, I inquired into this complaint and gave the Parties an opportunity to be heard and to present any relevant evidence.  This complaint was heard in Lansdowne House on 27th January 2025.  The Complainant was in attendance and a Director of the Respondent referred to as ‘Director A’ attended on its behalf.  As the Parties were self-represented, a consolidated version of the Redundancy Payments Act 1967 was provided and explained.  This complaint was heard in public, and the Parties were made aware that their names would be published within this decision.  As there was a factual dispute, their evidence was taken on oath.

Background:

The Respondent is a clothing agency operating a menswear store and the Complainant is a former Manager.  The Complainant contends that his employment was terminated by reason of redundancy and seeks payment of his statutory lump sum in accordance with redundancy paperwork provided on behalf of the Respondent.  The Respondent seeks to resile from an earlier position that the Complainant was entitled to payment of statutory redundancy.  It is the Respondent’s position that the paperwork was completed based upon a misconceived position.  It is contended that as the Complainant had left his employment of his own volition and was replaced and the store had continued trading, he is not entitled to redundancy.

Summary of Complainant’s Case:

The Complainant commenced employment with the Respondent as a Manager on 1st September 2021.  He managed two other staff in a menswear retail store including David Kelly, being subject to an identical complaint - ADJ-00052208.  He earned €964 gross per week on the termination of his employment on 29th February 2024.  He had never been furnished with a written statement of his terms of employment or a contract of employment.  There had been discussions in the past about entering into a partnership with Director A but this had never been finalised and he had remained an employee of the Respondent.  In the latter part of 2023, there had been a decline in business and the Respondent had experienced financial difficulties, with large sums owed to Revenue and other creditors and delays in the payment of wages.  In or around November 2023, the Complainant met with Director A who would not disclose the extent of the financial difficulties but said they would need to make cuts including letting Mr Kelly go.  He confirmed that the store was no longer a viable business and a decision had been made to trade on sale for a few months to clear stock before putting the business into liquidation and closing the store in the New Year.  The Complainant was led to believe that he would be made redundant and entitled to payment of a lump sum.

In January 2024, the Complainant went on a period of sick leave following a medical procedure and work-related stress.  On his return from sick leave on 20th February 2024, changes had been made in his absence that he considered would make trading even more difficult.  He met with Director A to discuss the situation the following day.  Director A indicated that he had decided not to close the store and reassured him that he was still entitled to payment of statutory redundancy via the Department of Social Protection which would accrue as a debt against the Respondent.  He made it quite clear that the Complainant was no longer part of his future plan for the store and did not ask him to remain in employment.  The Complainant confirmed his entitlement to statutory redundancy in the circumstances online and did not return to work.

Thereafter, the Complainant received e-mails from the Office Administrator on 1st March 2024 requesting his bank details and stating: “I have started the process today registering with the Dept of Social Welfare to log your redundancies.  They will get back to me in 24 hours (on working day) upon which I have to submit various documents and company accounts (this may take a bit of extra time as have to compile some data).  I will get this all completed as quickly as possible and keep you updated.”  On 8th March 2024, he received a completed form required for an employer’s application for payment of statutory redundancy under the Redundancy Payments Scheme operated by the Department of Social Protection.  This was generated via an online process that allows employers to apply for redundancy payment on behalf of their employees in insolvency situations and accrues as a debt against the employer.  The form was pre-populated with the Complainant’s employment details, a notice date of 1st February 2024, an employment end date of 29th February 2024 and entitlement to a lump sum of €3,600.  The form required his signature confirming: “- All information provided on this form is accurate.  - I have been made redundant by my employer.  - I will be liable for any overpayment that issues and  - The Statutory Redundancy total balance of €3,600 is now due to me (subject to review by the Department).”  The covering email from the Administrator stated: “I have progressed onto the next stage of the application process of redundancy.  I have entered all the relevant information online and it has returned the document attached.  Please check through it and you will need to either print the form, sign and date it and send it back to me.”  In response, the Complainant replied: “I can confirm that all the information provided in the Statutory Redundancy Payment Scheme - Employee Declaration is correct and true.”  A further email stated: “The next and final step of the process is for us to submit certain documentation on company accounts to Welfare.  Our Accountant is due to compile these within the next week or two (it won't be any later than this).  I will keep you advised please send me your signed form/e-mail in the meantime.”  He signed and returned the form accordingly.  Thereafter, the Administrator messaged him on a number of occasions, indicating that there had been a delay but reassuring him that his redundancy payment would be processed shortly.  When the Complainant had still not received his redundancy payment by early May 2024, he made inquiries and heard that Director A was reneging on same.  Upon hearing nothing further, he referred this complaint to the WRC on 28th May 2024.  Although a number of other complaints were open to the Complainant, he confirmed that he was only seeking the statutory redundancy payment promised by the Respondent as was his legal entitlement.  Nor was he seeking to contend that he was unfairly dismissed in the absence of any formal redundancy process.

Summary of Respondent’s Case:

Director A supplemented a written submission with oral evidence on behalf of the Respondent.  He outlined how he and the Complainant had been friends and the Complainant had commenced employment with the Respondent as a Manager of its menswear store on 1st September 2021.  From September 2023, owing to a number of operational and external factors, the business began to experience cash flow issues and was struggling to pay suppliers and other liabilities.  In particular, there were staffing and stock / cash control issues which have left him feeling aggrieved.  He had personally loaned the Respondent €45,000 between September and November 2023 along with monies from his other company to cover bills and wages and ensure continued trading.  He and the other Director had never received any remuneration from the store since it opened.  In November 2023, he had met with the Complainant and informed him that due to the cashflow issues, the Respondent would need to make cutbacks and asked him to dismiss Mr Kelly. 

The Respondent’s cash flow problems persisted until the end of February 2024.  However, in January 2024, Director A came to an arrangement with the main supplier that would enable the store to remain open including refinancing and implementing changes.  The Complainant who had gone on sick-leave in January 2024, returned for one day on 20th February 2024 and walked out citing stress as the reason for his departure before going to work for his brother’s business.  When they met the following day, the Complainant had informed him that he would not be returning and asked for statutory redundancy.  Director A had assumed that he was entitled to redundancy and accordingly caused the paperwork and correspondence above to be issued.  However, he subsequently received professional advice to the effect that as the Complainant had left of his own volition, the store had continued trading and as his position was refilled, his role had not been made redundant and thus he was not entitled to a redundancy payment.  Director A also contended that he had never given the Complainant written notice of redundancy.  The other two members of staff had also left around the same time and all three were replaced in March 2024.  Director A was of the view that the replacement staff appointed had a better skillset to undertake the various roles in the store going forward and the business was slowly recovering as a going concern.  Having paid out significant monies to save the business, he was unwilling to pay out anything to the Complainant.

Findings and Conclusions:

The Complainant contends that his employment was terminated by reason of redundancy and seeks payment of his statutory lump sum in accordance with redundancy paperwork provided on behalf of the Respondent.  The Respondent seeks to resile from an earlier position that the Complainant was entitled to payment of statutory redundancy.  It is the Respondent’s position that the paperwork was completed based upon a misconceived position.  It is contended that as the Complainant had left his employment of his own volition and was replaced and the store had continued trading, he is not entitled to redundancy.

The Redundancy Payments Acts 1967-2022 and Regulations made thereunder provide that in order to qualify for a statutory redundancy lump sum payment, an employee must (1) have at least two years’ continuous service, (2) be in employment which is insurable under the Social Welfare Acts, (3) be over the age of 16 and (4) have been made redundant as a result of a genuine redundancy situation.  It is the latter requirement that is in issue between the Parties.  In order to determine this issue, it is necessary to set out the relevant portions of the Redundancy Payments Act 1967.  In particular, Section 7 provides as follows:

“7(1) 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.

(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

(b) the fact that the requirements of that business for employees to carry out work of a particular kind in the place where he was so employed have ceased or diminished or are expected to cease or diminish, or

(c) the fact that his employer has decided to carry on the business with fewer or no employees, whether by requiring the work for which the employee had been employed (or had been doing before his dismissal) to be done by other employees or otherwise, or

(d) the fact that his employer has decided that the work for which the employee had been employed (or had been doing before his dismissal) should henceforward be done in a different manner for which the employee is not sufficiently qualified or trained, or

(e) the fact that his employer has decided that the work for which the employee had been employed (or had been doing before his dismissal) should henceforward be done by a person who is also capable of doing other work for which the employee is not sufficiently qualified or trained,”

Section 19 of the 1967 Act provides for the payment of a lump sum by the employer as follows:

“19(1) Upon the dismissal by reason of redundancy of an employee who is entitled under this Part to redundancy payment, or where by virtue of Section 12 an employee becomes entitled to redundancy payment, his employer shall pay to him an amount which is referred to in this Act as the lump sum.

(2) Schedule 3 shall apply in relation to the lump sum.”

S.I. No. 695/2004 - Redundancy Payments (Lump Sum) Regulations 2004 sets out the current rates.

Based upon the evidence, I find on the balance of probabilities that the Complainant meets all the requisite criteria for redundancy outlined above and am satisfied that a genuine redundancy situation arose under Section 7(2)(a), (b) and/or (d) of the Redundancy Payments Act 1967.  It is common case that the Respondent was experiencing significant financial difficulties from the latter half of 2023 until the end of February 2024 such that creditors were unpaid and staff wages delayed.  Given his direct knowledge of the level of business in the store as Manager, I am further satisfied on the Complainant’s evidence that business had diminished in the latter half of 2023 into 2024.  Notwithstanding the absence of a formal process including written notice, it is not in issue that Director A had indicated an intention to close the store in late 2023, the natural consequence of which would be to make the Complainant redundant and this had been verbally communicated to him.  Notwithstanding the subsequent decision to keep the store open, Director A did not ask him to remain in the Respondent’s employment.  The Respondent then furnished him with a completed form required for an application for payment of statutory redundancy from the Redundancy Payments Scheme operated by the Department of Social Protection.  He had signed and returned the completed form in the expectation of payment of statutory redundancy.  Numerous representations were then made to him on behalf of the Respondent over a three-month period confirming that albeit delayed, he would receive such payment.  However, it appears that the process was not followed through to completion and payment.  Director A had also opted to fully replace all three staff in March 2024 and was clearly of the view that they were better skilled to undertake the roles going forward. 

In all the circumstances, I cannot accept the Respondent’s contention that the Complainant had left of his own volition.  I am further satisfied that at the time that Director A informed the Complainant of his impending redundancy in late 2023, there had been an intention to close the store and the business within the meaning of Section 7(2)(a) of the Redundancy Payments Act 1967.  Although a requirement for employers under Section 17 of the Act, a written notice is not a statutory prerequisite to dismissal by reason of redundancy.  In any event, I am satisfied that the completed redundancy form constituted same.

Lest there be any doubt about the timing of the redundancy in light of Director A’s subsequent decision to keep the store open, I am further satisfied that the Respondent’s business had diminished within the meaning of Section 7(2)(b) of the Act until at least the end of February 2024 such that a genuine redundancy situation arose.  Not only had the business been experiencing financial difficulties but there was credible evidence of a reduction in business and the conditions required by Section 7(2)(b) were present such that “the requirements of that business for employees to carry out work of a particular kind in the place where he was so employed have ceased or diminished.”  In this respect, the notice date inserted in the redundancy application on behalf of the Respondent was 1st February 2024 and the employment end date was 29th February 2024.  It is further noted that the process required the Respondent to provide a Statement of Affairs and declare that the employee’s position was redundant to the Department of Social Protection.  Coupled with Director A’s evidence that financial difficulties had persisted until the end of February 2024, I am more than satisfied that the diminishment of business was extant at the time.

Further, it was Director A’s position that he had opted to keep the store open with a full changeover of staff whom he regarded as better skilled to meet its business needs going forward.  Accordingly, the conditions required under Section 7(2)(d) are also met in that he had decided that “the work for which the employee had been employed (or had been doing before his dismissal) should henceforward be done by a person who is also capable of doing other work for which the employee is not sufficiently qualified or trained.”

Whilst I have some sympathy with the plight of Director A, in all the circumstances I must find that the Complainant is entitled to payment of his statutory redundancy lump sum.  It should also be borne in mind that had the Respondent’s position been accepted, it would have been liable to a finding of unfair dismissal.  It is also arguable that based upon its representations, the monies became due and owing as a matter of contract to the Complainant but it is unnecessary to make a determination in relation to same.

Decision:

Section 39 of the Redundancy Payments Act 1967 requires that I make a decision in relation to this complaint in accordance with the relevant redress provisions.  Based upon the aforesaid reasoning, I allow this appeal.  Accordingly, I find that the Complainant is entitled to a redundancy lump sum payment of €3,600 as calculated pursuant to the Redundancy Payments Acts 1967-2022 in the following particulars:

Gross Weekly Pay:  €964

Date of Commencement of Employment:  1st September 2021

Date of Notice of Termination:  1st February 2024

Date of Termination of Employment:  29th February 2024

Dated:   18th March 2025

Workplace Relations Commission Adjudication Officer:  Aideen Collard

Key Words:  Redundancy Acts 1967-2022 - Genuine redundancy - Non-payment of redundancy lump sum