Pitfalls of Restructuring and Parental Leave

Pitfalls of Restructuring and Parental Leave

Employers Beware: Pitfalls of Restructuring and Parental Leave

With businesses surviving the worst that was on offer in 2020 in respect of the Covid-19 pandemic, business owners have had an opportunity to “take stock” over the holidays whilst contemplating what 2021 may have in store.


Some business owners hold a cautious view in respect of the economic forecast for 2021 whilst others have been buoyed by a significant uptake in commercial activity in their sector.  In both instances, Employers have taken steps to restructure their business to gain economic efficiencies or to anticipate an economic downturn in 2021.  Such steps ought to follow the prescribed requirements under the Employment Relations Act 2000, however, many Employers fall foul of the Parental Leave and Employment Protection Act 1987 (“the Act”) whilst planning and implementing the restructuring.


There are a number of hurdles to navigate when dealing with Parental Leave in the context of a restructuring.


Once an Employee has advised the Employer that the Employee wishes to take Parental Leave, the Employer is required under Section 36 of the Act to notify the Employee (within 21 days of receipt of the notice) to respond to the Employee in the prescribed form (Parental Leave Confirmation Letter):


  • (i) stating whether the Employee is entitled to take Parental Leave; and
  • (ii) stating that until the end of the Employee’s Parental Leave, the Employee’s position in the employment of the Employer can be kept open or cannot be kept open (as the case may be).


Employers often fail to give this notice to the Employee’s within the prescribed time or to do so in the prescribed form.


Of greater importance however, is the need for the Employer to recognise the significance of Parental Leave under the Act and the protections afforded to the Employee.


There is a presumption that the Employee’s position can be kept open under Section 41 of the Act.  In addition, Section 49 of the Act states that the dismissal by reason of pregnancy or parental leave is prohibited.


The Employer is however entitled to special defenses relating to dismissal during Parental Leave under Section 51 of the Act.


In Section 51(a)(ii) for example, it states that where termination takes place during the Employee’s absence or Parental Leave, it shall be a defense for the Employer to prove that a redundancy situation (Section 41 of the Act) occurred in the Employer’s business after the Employer gave the Employee the Parental Leave Confirmation Letter.


In restructuring proposals that are provided by the Employer to the Employee in anticipation of a restructuring, it is often the case that the Employer inadvertently cites factors in support of a redundancy situation that pre-existed the Parental Leave Confirmation Letter.  The Employer is at risk at that point as it may be held that the special defense afforded to the Employer under Section 51 of the Act is then no longer available.  If this is the case and if the Employer persists with the restructuring without taking these issues into consideration, the Employer may become vulnerable to a grievance being lodged.


For these reasons, it is particularly important for sections of the applicable legislation to be adequately considered and referenced in the preparation of documentation exchanged between the parties in a restructuring.