Section 7 of the Redundancy Payments Act 1967 is amended by inserting the following after subsection (2):

"(2A) For the purposes of subsection (1), an employee who is dismissed shall be taken not to be dismissed by reason of redundancy if -

(a) the dismissal is one of a number of dismissals that, together, constitute collective redundancies as defined in section 6 of the Protection of Employment Act 1977,

(b) the dismissals concerned were effected on a compulsory basis,

(c) the dismissed employees were, or are to be, replaced, at the same location or elsewhere in the State, (except where the employer has an existing operation with established terms and conditions) by -

(i) other persons who are, or are to be, directly employed by the employer, or

(ii) other persons whose services are, or are to be, provided to that employer in pursuance of other arrangements,

(d) those other persons perform, or are to perform, essentially the same functions as the dismissed employees, and

(e) the terms and conditions of employment of those other persons are, or are to be, materially inferior to those of the dismissed employees.".