Setting up in Ireland?
28 March 2018
Here’s what you need to know about the six key differences between employment law in Ireland and the US
1. Unfair dismissal and redundancy
There is no concept of termination at will in Ireland. This is a significant difference to the position in the US. Unfair dismissal is one of the most common types of claim in Ireland and should be considered when terminating an employee’s employment.
In most cases, an employee with over 12 months’ service qualifies for the right bring a claim for unfair dismissal when his or her employment is terminated. The employee must show that the reason for the dismissal is unfair and/or that the procedure used to dismiss them was unfair (for example when making redundancies). There are a number of exceptions to the 12 month service requirement (for example, pregnancy, birth, family leave, trade union membership, making a protected disclosure and penalisation). In the event of a successful claim, the tribunal can make an order for re-instatement or re-engagement. Alternatively, a tribunal can make a compensatory award of up to two years’ total remuneration. It is not difficult for employees to bring these types of claim in the tribunal - there are no tribunal fees and each party bears their own costs.
Unfair dismissal on grounds of redundancy is a common claim in Ireland. In addition to a claim for unfair dismissal compensation, after 104 weeks’ service an employee may be entitled to a statutory severance payment in the event that his or her employment is termination as a result of a restructuring or closure. This severance payment is based on two weeks’ pay per year of service, plus a bonus week. A week’s pay is capped at €600 for these purposes. Employers must undertake a documented consultation process with affected employees and all alternatives must be considered before the employment is terminated. This cost should be taken into account when considering embarking on any restructuring in Ireland. Employers in Ireland also have collective redundancy obligations which apply depending on the number of employees affected. In these cases, certain information must be provided to the Irish government in advance and a specific consultation process must be followed. Failure to follow these requirements can lead to fines of up to €250,000.
2. Fair procedures
A fair procedure must be followed in all situations where disciplinary action is contemplated or where sanctions may be applied. While many of the principles come from case law, the common law and the Irish constitution, a Code of Practice on disciplinary and grievance matters has been published by the Irish employment law disputes body. Fair procedures include ensuring that the employee: receives full details of all allegations and evidence in advance; is given the opportunity to review and comment on the evidence; is allowed to be accompanied to meetings (sometimes by lawyers); is provided with copies of notes of the meetings; has an opportunity to appeal any decision. Issues of bias, pre-determination and proportionality will also be considered when looking at whether a fair procedure was followed. Failing to follow a fair procedure can lead to claims for equitable relief by way of injunction in the Irish civil courts. This can be a very costly and public claim to defend and often results in the parties reaching a settlement.
Equality laws in Ireland prohibit discrimination in relation to access to employment, promotion and training as well as other issues arising while in employment. There are nine grounds on which discrimination is prohibited:
- sexual orientation
- marital/civil status
- family status
- membership of the travelling community
Employees do not need any qualifying period of employment in order to bring a discrimination claim. Individuals who are not employees can also bring discrimination claims. For example, an applicant for a job could bring a claim on the basis that the recruitment and selection process was discriminatory. In a successful claim, a compensatory award of up to two years’ total remuneration can be made. Employees can also make a claim if they have been victimised for bringing a discrimination claim. In Ireland, the highest number of discrimination claims are brought on the grounds of gender (particularly pregnancy and maternity), race, age and disability.
In respect of disability, employers in Ireland have an obligation to reasonably accommodate a person with a disability. Disability has a broad definition under Irish law and includes, for example, alcoholism. Disability discrimination is a major area of focus for large employers in Ireland because of the obligation to accommodate people with disabilities in the workplace. Employers must carefully manage absences and properly document and manage action taken to reasonably accommodate a disabled employee.
The TUPE legislation in Ireland is very similar to the UK equivalent because it derives from an EU Directive. However, there are certain differences between the UK and the Irish legislation. TUPE has a significant impact on mergers and acquisitions. If an undertaking is being acquired by another business and TUPE applies, the employees in that undertaking will automatically transfer to the new business on their existing terms and conditions. Employers must also comply with information and consultation obligations as part of the transfer process. TUPE applies to asset transfers but not share transfers because in a share transfer there is no technical change in the employer. Because the acquiring business could take on significant employee related liabilities in a takeover or acquisition situation, due diligence exercises must involve analysing and considering all matters relating to the transferring employees. It is common to deal with potential liabilities by way of warranties and indemnities in the asset purchase agreement. Certain breaches of the TUPE legislation can result in a compensatory award of up to two years’ remuneration.
5. Industrial Relations
Irish citizens have a constitutional right to form associations and become members of trade unions. This means that certain sectors in Ireland have collective bargaining arrangements in place, particularly in the public sector. However, employers have a right not to recognise a union and many multinationals do not. Even where there are no collective bargaining arrangements in place, in certain circumstances employers can still be obliged to engage with trade unions under Irish industrial relations legislation. Certain sectors are obliged to comply with employment agreements which have been registered by the employment courts for that particular industry. This is an extremely complex area of employment law in Ireland.
6. Data Protection
Ireland is a particular hot spot for data protection because of the number of multinational tech companies there. Data protection legislation derives from the EU and applies to personal data. This can cause particular issues for multinationals who transfer employee personal data outside of the EU or EEA. Transfers with the US can take place under a legal regime called the Privacy Shield, but this regime may be open to challenge (on similar grounds to its predecessor, the Safe Harbour regime).
Data protection legislation in Ireland can give rise to issues for HR and legal teams when considering how employee data is used, how it is stored, when it needs to be destroyed and dealing with data subject access requests. This is particularly the case with the advent of the General Data Protection Regulation (GDPR) in the EU which places even more emphasis on a data controllers accountability for personal data. A breach can attract significant fines.
Ireland also has requirements in terms of minimum wage, minimum notice periods, the provision of contracts of employment, working time, annual leave, public holidays, maternity, adoptive leave, paternity and parental leave. There are also special legislative protections in place for part-time and fixed-term employees as well as agency workers. Employers are also responsible for deducting tax from employees at source and remitting it to the tax authorities.