In times of economic downturn, restructures and redundancies are likely and for many businesses sadly inevitable.
It is important that a fair process is followed and that the employer has business reasons (that are able to withstand later scrutiny) for the redundancy. If this does not occur, the employee may have a claim of unjustified dismissal which may lead to reinstatement, or financial remedies for lost wages, hurt and humiliation and the costs associated with raising the claim.
Reason for redundancy
A redundancy relates to the position an employee holds not the person. A redundancy may be pursued where a position is surplus to the needs of an organisation. The process should not be used to remove an employee that is not performing or has acted in a way that may be considered misconduct or serious misconduct.
Employers must have genuine reasons for contemplating redundancies, and these can include a significant downturn in revenue, a desire to create efficiencies in the business or a change of strategic focus in the business.
The reason for redundancy needs to be able to stand up to later scrutiny and accordingly, it is important where possible that there is documentation (such as financial accounts) that supports the justification for redundancy.
A fair process
The general process for redundancy remains the same whatever the scale of the change. However, the mode of communication may differ when you are dealing with 300 employees as opposed to 3.
A fair process, at a minimum, will include:
- Following any provisions regarding redundancy contained in the employees’ employment agreements;
- Consulting with impacted employees prior to a decision being made. This should be done by way of a written proposal detailing proposed changes and the reasons for those changes;
- Providing information the employer is relying on in making their decision;
- Considering and consulting on the selection criteria that will be applied in a situation where the employer has more than one employee holding a position and the employee will be maintaining at least one employee in that position;
- Receiving and considering all feedback;
- Considering alternatives to redundancy;
- Deciding whether the employer is proceeding with the proposal as presented or making amendments to the proposal;
- Advising the employee of the decision and considering options for the redeployment of those employees whose positions have been disestablished; and
- If there are options for redeployment or the employee is unsuccessful in receiving an alternate role in the be business (following the selection criteria being applied), providing the employee with notice of their redundancy in accordance with the terms of their employment agreement.
If you are:
- contemplating making employees redundant;
- your employer has presented you with a proposal to make your position redundant; or
- you have been made redundancy without the process described above is followed
If you’d like to learn more, please join our employment law expert Caroline Rieger for an informative webinar on Wednesday 15 July at 12 pm. This webinar will look at how to conduct a fair redundancy process and manage it effectively. Our seminars are an excellent opportunity for you to learn more about specific areas of the law and have your questions answered, register today.