This country-specific Q&A provides an overview to employment laws and regulations that may occur in Ireland.
This Q&A is part of the global guide to Employment & Labour Law. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/practice-areas/employment-and-labour-law-3rd-edition/
Does an employer need a reason in order to lawfully terminate an employment relationship? If so, describe what reasons are lawful in your jurisdiction?
Under common law, an employer can terminate an employment relationship for no reason provided the employer terminates in accordance with the contract of employment, including giving notice. However, "no fault" dismissals carry certain risks. An employee could seek to restrain their dismissal by way of an injunction in particular circumstances, therefore legal advice should be obtained before terminating employment without cause.
Under statute, the dismissal of an employee is presumed to be unfair unless the employer can show substantial grounds justifying the dismissal. To bring a claim under the Unfair Dismissals Acts 1977-2015, an employee must normally have one year's continuous service, but there are limited exceptions to this qualification.
The following are considered fair reasons for dismissal:
- reasons relating to the capability, competence or qualifications of the employee
- reasons relating to the conduct of the employee
- an employee being unable to work or continue to work without the employer contravening its legal obligations
Certain dismissals are automatically unfair for any of the following reasons:
- membership or proposed membership of a trade union or engaging in trade union activities
- religious or political opinions
- legal proceedings against an employer where the employee is a party or witness
- race, colour, sexual orientation, age or membership of the Traveller community
- pregnancy, giving birth or breastfeeding or any matters connected with pregnancy or birth
- availing of rights under legislation to maternity leave, adoptive leave, paternity leave, carer's leave, parental leave or force majeure leave
- unfair selection for redundancy
- making a protected disclosure (i.e. whistle-blowing)
In addition to proving that there were fair reasons for dismissing an employee, an employer must also show that it followed fair procedures in effecting the dismissal and that it acted reasonably in all the circumstances.
An employee can try to restrain their dismissal by a statutory injunction if they can demonstrate substantial grounds to contend that their dismissal would not have occurred but for having made a protected disclosure.
In addition, dismissal based on any of the nine discriminatory grounds is unlawful under the Employment Equality Acts 1998-2015. These nine grounds are gender, civil status, family status, age, disability, religious belief, race, sexual orientation and membership of the Traveller community.
What, if any, additional considerations apply if large numbers of dismissals (redundancies) are planned?
Special rules apply to collective redundancies, which arise where during any period of 30 consecutive days, the number of employees being made redundant are:
(a) five employees where 21-49 are employed;
(b) ten employees where 50-99 are employed;
(c) 10% of the employees where 100-299 are employed; or
(d) 30 employees where 300 or more are employed.
The employer is also required to provide certain prescribed information in writing to the Minister for Employment Affairs and Social Protection at the earliest opportunity and, in any event, at least 30 days before the first notice of dismissal is served.
The employer is also obliged to consult with the employees' representatives with a view to reaching agreement about avoiding the proposed redundancies, reducing the number of employees affected, mitigating their circumstances by redeploying or retaining and deciding the basis on which it will be selected for redundancy. Individual employee consultation is also advisable before implementing any redundancies.
Employees with more than two years' service are entitled to a statutory redundancy payment. This payment is calculated based on two weeks' pay for every year of service and one further week's pay, subject to a maximum weekly earnings limit of €600. The statutory redundancy payment is tax-free. In addition, employees may also be entitled to an enhanced redundancy payment based on implied or express terms in their contracts.
What, if any, additional considerations apply if a worker’s employment is terminated in the context of a business sale?
On a share sale, there is no change of employer so no additional considerations apply.
The European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (TUPE) may apply on the transfer of assets of the business where there is a transfer of an economic entity, which retains its identity. Where TUPE applies, all rights and obligations arising from the contract of employment (with the exception of certain pension rights) are automatically transferred to the transferee. Transfer-related dismissals are unlawful, unless the employer can show economic, technical or organisational reasons entailing changes in the workforce. An employee may bring a claim for unfair dismissal and, if successful, may be awarded up to two years' gross remuneration, re-engagement or re-instatement.
What, if any, is the minimum notice period to terminate employment?
The statutory minimum notice an employer is required to give an employee with more than 13 weeks' continuous service are as follows:
Duration of employment: Minimum notice
Thirteen weeks to two years: One week
Two years to five years: Two weeks
Five years to ten years: Four weeks
Ten years to fifteen years: Six weeks
Fifteen years or more: Eight weeks
The statutory minimum notice an employee is required to give their employer is one week.
Employment contracts may provide for longer notice periods to be given by both parties.
Is it possible to pay monies out to a worker to end the employment relationship instead of giving notice?
An employer may pay an employee in lieu of notice where the contract provides for it or otherwise where the employee consents to it.
Can an employer require a worker to be on garden leave, that is, continue to employ and pay a worker during his notice period but require him to say at home and not participate in any work?
Yes, an employer may place an employee on garden leave where there is a contractual right to do so or with the consent of the employee.
Does an employer have to follow a prescribed procedure to achieve an effective termination of the employment relationship? If yes, describe the requirements of that procedure or procedures.
In order for an employer to terminate employment lawfully it must do so on fair grounds. An employer must also act reasonably and follow its own procedures together with statutory and constitutional requirements.
Where an employee's performance, capability or competence is in issue, the employer will usually be required to follow a progressive series of warnings and offer appropriate measures and/or support to assist the employee in improving his/her performance. The employer should clearly communicate the extent of improvement required and provide the employee with objectively measurable and realistic targets before dismissal is contemplated.
Where an employee's conduct is called into question, the employer may be required to conduct an investigation to gather information before commencing a disciplinary process. The employer is expected to follow its disciplinary procedure, which should be drafted in accordance with the Code of Practice on Grievance and Disciplinary Procedures and the constitutional requirements of fair procedures and natural justice. These procedural requirements include: access to evidence of the allegations against the employee, an entitlement to be accompanied at meetings (including a right to legal representation in exceptional cases), an opportunity to respond to the allegations, cross-examination of witnesses, confidentiality and proportionality.
Where there are grounds for redundancy, employees should be placed at risk of the potential redundancy of their role. An objective and fair redundancy selection process should be followed in consultation with the employee(s) whose role(s) is at risk of being made redundant. Consultation should take place in relation to the redundancy proposal itself, the proposed selection criteria and basis of assessment, alternatives to redundancy and the severance payments that would be made to the employee in the event that their role is made redundant.
Employees should be afforded the right to appeal against any dismissal.
Different individuals of appropriate seniority and authority should carry out the investigation, disciplinary hearing and any appeal.
If the employer does not follow any prescribed procedure as described in response to question 7, what are the consequences for the employer?
An employee may apply to the High Court for an injunction to restrain an unfair dismissal process and/or to compel the employer to perform a fair process. If successful, the employer may be unable to dismiss and/or replace the employee pending the outcome of the substantive wrongful dismissal proceedings, which could result in an award of damages and/or specific performance of the contract.
Alternatively, the employee could bring a statutory claim for unfair dismissal, discriminatory dismissal or penalisation (depending on the circumstances) and be awarded compensation of up to two years' remuneration, re-instatement or re-engagement. An employee may be awarded up to five years' remuneration whether the dismissal arises from the employee making a protected disclosure. Where the dismissal is gender-related, there is unlimited jurisdiction in relation to compensation.
How, if at all, are collective agreements relevant to the termination of employment?
Where there is a collective agreement, the employer would be obliged to comply with any process, obligations or conditions prescribed in the agreement in relation to termination of employment, depending on the circumstances. A collective agreement may also create a legal obligation to make additional enhanced payments to employees on termination.
Does the employer have to obtain the permission of or inform a third party (e.g local labour authorities or court) before being able to validly terminate the employment relationship? If yes, what are the sanctions for breach of this requirement?
As explained in response to question 2 above, where collective redundancies are proposed the employer is required to provide specific information in writing to the Minister for Employment Affairs and Social Protection at least 30 days before the first dismissal takes effect. Employee representatives must be sent a copy of this notice.
Sanctions for breach of this requirement include a declaration that the complaint was or was not well-founded, the employer may be required to comply with this notification obligation at least 30 days before the first dismissal takes effect, and/or the employer may be ordered to pay the employee compensation of a maximum of four weeks remuneration.
In the case of exceptional collective redundancies (ie where the employees being made redundant are replaced by employees who are carrying out essentially the same functions but under materially inferior terms and conditions), the employer may face liability of up to five years' gross remuneration for each affected employee and/or fines on indictment of up to €250,000.
What protection from discrimination or harassment are workers entitled to in respect of the termination of employment?
Employees who are dismissed in relation to discrimination or harassment on any of the nine grounds set out in response to question 1 above may bring a claim of discriminatory dismissal against their former employer.
What are the possible consequences for the employer if a worker has suffered discrimination or harassment in the context of termination of employment?
If they are successful in their claim, an employee who has been dismissed in relation to discrimination or harassment any of the nine grounds may be awarded compensation, which is generally subject to a maximum of two years' gross remuneration, re-engagement or re-instatement. There is no obligation on the former employee to mitigate their loss, as compensation is not assessed on loss of earnings. There is also no minimum service requirement for discriminatory dismissal claims.
Are any categories of worker (for example, fixed-term workers or workers on family leave) entitled to specific protection, other than protection from discrimination or harassment, on the termination of employment?
Fixed-term employees and part-time employees are protected from being treated less favourably (including protection from dismissal) than their permanent comparators unless there are objective grounds justifying such action and it is intended to achieve a legitimate aim so the different treatment is appropriate and necessary to achieve that aim.
Dismissal on the grounds of pregnancy or the employee exercising certain rights to protective leave (e.g. maternity, paternity, adoptive, parental or carer's leave) is automatically unfair. In addition, any notice of termination served on an employee during maternity leave is void and an employee returning from protected leave has the same right to return to the same job or - if it is not reasonably practical – a suitable alternative to the job held prior to going on maternity leave.
Banded hours employees and employees who are dismissed in relation to asserting their rights under the Employment (Miscellaneous Provisions) Act 2018 are protected from dismissal.
Are workers who have made disclosures in the public interest (whistleblowers) entitled to any special protection from termination of employment?
Workers who make protected disclosures are protected from penalisation, such as termination as a consequence of making that protected disclosure. An employee who is dismissed as a result of making a protected disclosure may seek interim injunctive relief from the Circuit Court pending their hearing of their unfair dismissal claim. An employee may awarded up to five years' gross remuneration if they succeed in their claim that they were dismissed as a result of making a protected disclosure. To succeed in such a claim the employee must demonstrate that but for making the protected disclosure, they would not have been dismissed.
What financial compensation is required under law or custom to terminate the employment relationship? How do employers usually decide how much compensation is to be paid?
When an employer wishes to terminate the employment relationship, the employer will be obliged to pay the employee's notice whether or not they are required to work their notice. Notice entitlements are summarised in response to questions 4 and 5 above.
In redundancy situations, employers are required to make statutory redundancy payments, which are calculated on the basis set out in response to question 2 above. Although there is no statutory requirement to make additional severance payments, it is common for employers to have established customs and practices in relation to enhanced redundancy payments, which generally are paid in consideration of employees entering into compromise agreements. There may also be sectoral employment orders, which imply certain obligations in particular industries, and/or collective agreements, which create contractual obligations to make certain payments on termination. Where an ex gratia payment is made on termination, it may be made in a tax efficient manner in certain circumstances.
Can an employer reach agreement with a worker on the termination of employment in which the employee validly waives his rights in return for a payment? If yes, describe any limitations that apply.
Yes, an employee may enter into a form of settlement which waives his/her rights to make claims against the employer provided the agreement is in writing between the parties, the employer make an adequate payment to the employee, the agreement specifies precisely what rights and entitlements the employee is waiving and the employee is given an opportunity to obtain independent legal advice in relation to the meaning and effect of entering into such an agreement.
Is it possible to restrict a worker from working for competitors after the termination of employment? If yes, describe any relevant requirements or limitations.
In general, such restrictions are unenforceable and considered a restraint of trade unless the employer can demonstrate that it has a legitimate interest to protect, that the restriction goes no further than is reasonably necessary to protect that interest and that it is not contrary to public interest.
Therefore, post-termination restrictions should be drafted carefully and limited to what would be considered reasonable in terms of subject matter, duration and geographical scope.
Where an employer has genuine concerns about protecting its business from exiting employees, garden leave clauses allow the employer to enforce restrictions on an employee as the employee continues to have duties of fidelity and obligations towards his/her employer to protect confidential information. Increasingly, confidentiality and non-disclosure clauses and agreements are being used to restrict former employees when they join competitors.
Can an employer require a worker to keep information relating to the employer confidential after the termination of employment?
Yes. In the absence of an express restriction on the disclosure of confidential information to third parties, there is an implied obligation on employee not to disclose information that is so confidential that it amounts to a "trade secret". However, in the absence of an express contractual right, it can be difficult for employers to prove what information constitutes a trade secret. Where employer has confidential information it has a legitimate interest in protecting, it is recommended that they make it an express condition of employment that the employee shall not to disclose that information during or at any time after the termination of employment. Confidentiality clauses are much more likely to be enforceable than non-compete clauses and it is common for employers to put in place specific policies in respect of confidentiality and the restrictions on disclosure of sensitive company information.
Are employers obliged to provide references to new employers if these are requested?
Although there is no legal obligation to provide a new employer with references, an employer has a duty of care to both its former employee and the prospective employer. Given the potential risks of causing damage by giving a misleading reference or damaging the reputation of the former employee, it has become common practice for employers to adopt a standard practice of only providing statements of employment. This would generally include no more than basic factual information, such as the date of commencement and termination of employment and the job title held by the employee.
What, in your opinion, are the most common difficulties faced by employers in your jurisdiction when terminating employment and how do you consider employers can mitigate these?
The onerous requirements of fair procedures and the risk of employees obtaining injunctive relief to restrain unlawful processes is an increasing difficulty for Irish employers. A trend has developed where internal investigations and disciplinary processes have taken on the appearance of a court hearing and become protracted and expensive processes for employers to conduct in a fair manner. It is important that employers review their policies to ensure that they are both compliant and workable in practice.
Helpfully, there have also been some helpful developments in case-law. A recent decision of the Court of Appeal confirmed that the right to legal representation in internal investigations or hearings is only required in exceptional circumstances. Other decisions have provided more comfort to the view that the courts will not restrain 'no fault' dismissals where the employer has complied with its contractual obligations.
Unlike in the UK, Irish employers are unable to have protected conversations with employees, so if an employer communicates anything to suggest that the dismissal is pre-judged it could create a unnecessary risk and liability. Exit negotiations have a tendency to involve lawyers in order for such discussions to take place on a without prejudice basis with the benefit of legal privilege.
Are any legal changes planned that are likely to impact on the way employers in your jurisdiction approach termination of employment? If so, please describe what impact you foresee from such changes and how employers can prepare for them?
The Employment (Miscellaneous Provisions) Act 2018 commenced in March 2019 and makes a number of significant changes to employment rights, including a prohibition on zero hours contracts. This introduces anti-penalisation measures to protect employees, including protection from dismissal, where they exercise their rights under this legislation.
Issues have already been raised about the drafting and interpretation of this legislation, which may impact on the approach taken by employers in terminating employment where any issues relating to this legislation have been raised by the employee(s).