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Making Redundancies: 5 Things Every Employer Should Know

Published November 19, 2020 (last updated February 24, 2021) Author: Employsure
Employer Making Redundancies

As businesses try to navigate, survive and recover from the COVID-19 crisis, the sad reality is many will need to consider changing and restructuring the way they operate. For many, redundancies may be required.

Employers have been forced to make a number of difficult decisions over the past several months due to the pandemic. Workplaces have operated at a limited capacity or have shut down altogether.

Before making redundancies, employers must check and double-check they understand their obligations, particularly when it comes to the elements of a valid redundancy process. With all the payments included, redundancy can be quite costly, and you don’t want to get it wrong.

1. Understanding Restructuring

A redundancy is where the employer genuinely no longer needs a specific role in their business, mainly because of a restructure, which is when there are proposed changes to terms and conditions of employment.

A restructure includes changing the business direction as a result of changing market forces or changing the way the company operates in order to reduce costs and increase the viability of the business. Perhaps the business is mechanising a process, outsourcing part of their operations or being sold.

When restructuring, an employer should firstly look at their workplace policies and procedures and their employment agreements as these may contain provisions about changes to the workplace and redundancy that must be taken into account.  In particular, all employment agreements must contain a provision about what will happen to employees if a business is sold or transferred.

As part of your restructure you can consider:

  • adding a new role
  • merging two or more existing roles
  • changing parts of a role
  • amending employment terms and conditions such as hours of work
  • removing roles that are no longer required
  • a combination of the above.

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2. Ensure You Have a Fair and Reasonable Process

Section 4 of the Employment Relations Act 2000 requiresemployers making changes to their business that may result in employees losing their jobs, to follow a fair and reasonable process and to ‘act in good faith’.

This means the employer must genuinely want to lose the role, not the person in it. It also means in carrying out the redundancy process the employer should be open and honest.

The employer should make clear to the employee what is happening; give the employee plenty of notice of meetings; give them a chance to have their say; consider any feedback given; and take the employee’s viewpoint into account before making the proposed changes.

The employer should also consider any alternatives to redundancy including redeployment options. An employer can also offer counselling or career advice as well as time off for interviews once the redundancy has been confirmed.

3. ‘Vulnerable Employees’ Have Special Protections

Some categories of employees are protected from being made redundant if a business is sold or a contract is lost to another person.

These protected categories include cleaning services, food catering services, caretaking, orderly services and laundry services in certain industries.  Please note these categories may be amended in the future.

4. You Need A Genuine Business Reason

Make sure you have genuine business reasons for any proposed workplace changes that may result in a dismissal.

It is not a genuine business reason if you use a redundancy as a means of getting rid of an employee who is underperforming – that is what a performance management process is for. Besides, you could potentially find yourself facing a personal grievance claim if the reason for the redundancy isn’t genuine.

So, what is a genuine business reason? One of the following, for example:

  • realignment of brand
  • technological advancement
  • changing your product or service in accordance with the market changes/customer requirements
  • financial reasons resulting in the need to downsize or reduce costs
  • no longer using a department
  • wanting to outsource certain business functions
  • merging with another business.

5. Alternatives to Redundancy

Redundancies are often not your only option, and Employsure strongly urges you to consider and explore these alternatives before going through with redundancies.

Alternatives to redundancy include:

Redeployment

The obligation to act in good faith requires as part of the consultation process the employer should consider whether there are any other positions within the business the employee has the skills and experience to perform or could reasonably be trained to perform.

Retraining Your Staff

Often it is cheaper to retrain staff rather than recruit new workers, and existing employees have the added advantage of being familiar with the business and the people in it.

Introduce Job-sharing

Other alternatives are to offer employees changed or reduced hours, possibly as part of a job-share arrangement.

Free Guide on Redundancies

If you’re thinking of making a redundancy, don’t. Read this guide first to ensure you better understand your obligations, the rights of your employees, and the processes required to undertake a redundancy. Most importantly, this guide will also outline alternatives to redundancy. 

Want to Learn More About Redundancies?

The redundancy process is tricky, confronting and fraught with danger for employers not familiar with the complexities.

For advice, support and information about genuine and fair redundancies in your business, get in touch or download our guide.

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