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Bogus Redundancy Proves Costly

The High Court recently increased an employee’s award in a ‘bogus redundancy’ case which illustrates how costly and drawn out redundancy can be when employers get it wrong.

The High Court increased the award made by the Employment Appeals Tribunal (EAT) from €160,000 to €298,000. The judge also ordered the employer to pay the employee’s costs of taking his unfair dismissal claim which took 3 years and came before the EAT, the Circuit Court and ultimately the High Court.

In the EAT, the employee had successfully argued that the new role he was encouraged to apply for was practically identical to his ‘redundant’ role and therefore his dismissal was unfair. Following the award of €161,420 (14 months’ salary) to the employee, the employer appealed the EAT’s decision to the Circuit Court. The Circuit Court judge agreed with the EAT and described the consultation process entered into with the employee in advance of the termination of his employment as being “something of a sham”. The judge increased the award to €214,540 (18 months’ salary), in addition to the redundancy package already received (€101,000).     

The employer again appealed the decision, this time to the High Court. The High Court judge also found that the employee had been unfairly dismissed and increased the award once again to the maximum award of 104 weeks remuneration, being €298,000. However, the judge’s view was that, given that it was not a redundancy situation, the employee was not entitled to a redundancy or other related payment. He therefore reduced the award by the amount of the redundancy package already received and ordered the employer to pay the remaining €197,000. The judge warned that redundancy “cannot be used as a cloak for the weeding out of those employees who are regarded as less competent than others or who appear to have health or age related issues”.  

In addition to having to pay the employee a total sum of €298,000, the employer was obliged to cover the cost of his legal fees for the appeals before the Circuit and High Courts. This decision is another in a series of decisions in recent times which illustrate the high cost for employers of contested redundancy and related litigation.

Contributed by Maryrose Dillon, Alicia Compton.

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