First published: May 15th 2023
Last updated: May 15th 2023
A restructure or reduction in headcount is a tough situation for both employers and employees.
If your organisation is going through a difficult trading period, you may be looking at ways to reduce expenditure and labour costs are likely to be one of your biggest expenses.
As well as the technical employment law issues that you have to consider, the way you handle a redundancy process will have a big impact on your employee relations with staff who remain on with your organisation once the restructure is complete.
To ensure you’re both compliant and handling the interpersonal aspects of a restructure correctly, your redundancy process should follow the principles and guidance set out in redundancy and unfair dismissal legislation.
Three key redundancy questions
When reviewing a redundancy-related claim, the Workplace Relations Commission (WRC) generally consider these three key questions:
- Was there a genuine reason for the redundancy?
- Did the employer carry out a fair consultation process?
- Did the employer use a fair selection process?
This post will focus on the last issue and the importance of using a fair selection process before confirming what employees are to be made redundant.
Automatically unfair reasons for dismissal
Under unfair dismissals legislation, selecting an employee for redundancy based on certain specific grounds is automatically unfair. These grounds include:
- Trade union activity
- Religious beliefs
- Political opinions.
In addition, you risk receiving a discrimination claim if an employee believes they have been made redundant based on one of the nine protected characteristics set out in the Employment Equality Acts. These protected characteristics include age, gender, race, family status and sexual orientation.
Why employers must use a fair selection process
Fair selection processes are particularly relevant when a restructure involves selecting some but not all employees who work the same or similar jobs for redundancy.
It’s vital to use a fair selection process in these circumstances to avoid allegations that there was a personal or subjective reason for an employee’s selection for redundancy.
You should also ensure that an employee’s selection for redundancy is:
- Not due to one of the automatic unfair reasons for dismissal above
- Not in contravention of an agreed policy or contractual selection process, or
- Not in contravention of past custom and practice in respect of selection.
If you have no procedure in place, the general rules of fairness and reasonability apply. If no redundancy policy or custom and practice exists in respect of selection, you should seek to agree the selection method, and any associated criteria, before commencing the redundancy consultation process.
By securing agreement to the selection method, you reduce the risk of making an unfair selection during your redundancy process.
Common selection methods for redundancy
Examples of objective and reasonable selection methods include:
- ‘last in first out’ (LIFO) where the most recently recruited employees are selected for redundancy
- using a skills selection matrix. The criteria used in the selection matrix should be objective so that employees are fairly selected for redundancy. The criteria could include qualifications, skills, experience and performance. It’s important to explain the implications of using a selection matrix to the staff who are on notice and to offer them an opportunity to query any aspect of the selection criteria that they have concerns about.
The best method to choose will depend on the needs of your organisation and the role being made redundant.
Expert advice on redundancy selection processes
A redundancy scenario is a difficult situation for employers to manage.
For expert help with any queries on this technical area of employment law, call us today on 01 886 0350 or leave your details here and we’ll call you back.