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11.11.2020

Is your business prepared to handle redundancies?

By Amie Doran

The financial impact of the COVID-19 crisis on the business sector has been staggering. As a result, it seems inevitable that many businesses will need to look at their headcounts in 2021.

Making redundancies is challenging on many levels. As an employer, you must ensure that you comply with this technical area of employment law to avoid further complicating a difficult situation.

Redundancy is a form of dismissal

It’s important to remember that redundancy is a form of dismissal. The practical impact of this is that you must ensure your redundancy process complies with redundancy, employment equality, and unfair dismissal laws.

Unfair dismissal legislation requires employers to apply fair procedures before terminating employment. It’s not enough to simply explain to affected employees that their roles have become redundant.

A redundancy process must:

  1. Establish that a genuine redundancy situation exists.
  2. Apply the principles of fair procedures before confirming the dismissal.

Some of the key questions employers need to ask to ensure a redundancy process is fair include:

  • Is there a genuine redundancy situation? Are there alternative options available that would avoid the need to make redundancies?
  • Do you have a consultation process to engage with at-risk employees?
  • Does the consultation process give employees an opportunity to suggest alternative redundancy options? Does the consultation process allow enough time to review the employees’ suggestions?
  • Have you a fair selection process in place if some but not all employees in a certain role need to be made redundant? Are employees permitted to review the selection criteria and scoring?
  • Have you considered if affected employees can be reassigned to any suitable alternative work? This may include any associated businesses.
  • Have employees been afforded the opportunity to appeal the decision to make their role redundant?
  • Are you aware of the proper notice periods to the employees (and the Minister in the case of collective redundancies)?
  • Have you got the expertise to document all stages of the redundancy process?

Risks of failing to comply with the law

It may be the case that a restructure is the only way to protect the future of your business. The above issues demonstrate how redundancy is one of the most technical areas of employment law.

If you don’t get the redundancy process right, you may be exposed to further financial costs from claims under:

  • redundancy,
  • employment equality, and
  • unfair dismissals legislation.

An employee may make a successful unfair dismissal claim. If so, the Workplace Relations Commission may award up to two years’ gross salary in compensation.

There are also other associated redundancy risks to consider. For instance, a disgruntled former employee may make claims and go public about their negative experiences. This could damage your reputation as a business and employer.

Another risk that many employers forget is the motivation of employees who keep their roles. It’s not uncommon for such employees to experience what’s called ‘survivor syndrome.’

It’s important to redouble efforts to promote a positive working environment to help these employees after such a stressful experience.

Need our help?

As the economic consequences of the pandemic become clearer, we know many employers will be making tough choices to ensure the future of their business.

For help with restructuring and redundancies, speak to an expert consultant now on 01 886 0350 or request a callback here.

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