ADJUDICATION OFFICER DECISION

Adjudication Reference:  ADJ-00052208

Parties:

Complaint:

Date of Adjudication Hearing:  11/11/2024

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 30th May 2024.  Submissions and vouching documentation was furnished on behalf of the 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.  On the first hearing date, the Respondent was not in attendance and was afforded a further hearing date.  This complaint was heard in Lansdowne House on 11th November 2024.  The Complainant was in attendance and a Director of the Respondent referred to as ‘Director A’ attended on its behalf.  Director A consented to an amendment of the Respondent’s name to ‘Shalbay Ltd’.  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, the evidence was taken under oath.

Background:

The Respondent is a clothing agency operating a menswear store and the Complainant is a former Sales Assistant.  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 Sales Assistant in its menswear store on 13th September 2021.  He worked under Gerry Magee, Manager (being subject to an identical complaint - ADJ-00052171).  He earned €450 gross per 20 hour 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.  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.  When he did not receive his wages for October 2023, he rang Director A.  Thereafter he was blocked and was paid late every month by cheque into his account personally by Director A.  Director A had also indicated an intention to sell off the stock and close the store in the New Year.  He was informed by email of 27th February 2024 from the Office Administrator confirming: “I’ve spoken to ‘Director A’ & he has advised that your last day will be Thursday 29th February.  Your February salary will be paid that day.  Someone will be there at the end of the day to collect your keys.  Your redundancy is being processed & I’ll contact you in regard to any documentation required from you.”  He would not have left his employment of his own volition and left on the basis that he was told that he was being made redundant.  He confirmed that he had received Jobseekers’ Benefit immediately which would not have been the case had he left his employment voluntarily.  Both Mr Magee and the other member of staff left their employment around the same time.  The Complainant subsequently became aware that Director A had asked Mr Magee to let him go on a number of occasions beforehand.  He also learned that the store had remained open and trading.  He went to work for another menswear store in another area.

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 process adopted is open to 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 his employment details, a notice date of 12th February 2024, an employment end date of 29th February 2024 and entitlement to a lump sum of €2,673.  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 €2,673 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 the Complainant 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 30th 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 met with Mr Magee and informed him that due to the cashflow issues, the Respondent would need to make cutbacks and asked him to dismiss the Complainant. 

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.  Contrary to the Complainant’s position, Director A contended that he had in fact given notice of his resignation to Mr Magee on 12th February 2024.  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)(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 a Sales Assistant, I am further satisfied on the Complainant’s evidence that business had diminished in the latter half of 2023 into 2024.  It is not in issue that Director A had instructed Mr Magee to dismiss him or that he had received the email of 27th February 2024 from the Respondent as cited above, confirming his redundancy and the last day of employment as being 29th February 2024.  Notwithstanding the decision to keep the store open, the Respondent furnished the Complainant 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.  The Complainant 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 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 form on behalf of the Respondent was 12th 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 of the Complainant’s redundancy. 

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 €2,673 as calculated pursuant to the Redundancy Payments Acts 1967-2022 in the following particulars:

Gross Weekly Pay:  €450

Date of Commencement of Employment:  13th September 2021

Date of Notice of Termination:  12th February 2024

Date of Termination of Employment:  29th February 2024

Dated:  14-03-2025

Workplace Relations Commission Adjudication Officer:  Aideen Collard

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