How to deal with the redundancy process

As an employer, making someone redundant is never a pleasant experience, for the employee or the employer. It is also a thorny legal ground.

If you follow the correct procedures, you will get the correct result. Alan Price of Peninsula Business Services explains what an employer must do to ensure they carry out effective and meaningful consultation with the employee.

To make a position redundant, it’s not enough to be able to satisfy yourself the role is redundant. Tribunals will consider three key areas:

  1. If there was a genuine reason for redundancy,
  2. Was there a fair selection process, and
  3. Was there a fair consultation process carried out.

What’s a genuine reason for redundancy?

Section 7(2)(a) of the Redundancy Payments Acts outlines five grounds where a redundancy can be deemed as genuine.

  1. The employer has ceased or intends to cease to carry on the business.
  2. Requirements of the business for the employee to carry out work of a particular kind has ceased or diminished.
  3. The employer decides to carry out the business with fewer or no employees.
  4. The employer decides work being done is to be done in a different manner, for which the employee is not qualified or trained to do.
  5. The employer decides that the work being done is to be done by a person who is capable of doing other work for which the employee is not sufficiently qualified to do.

Where your reasons for redundancy fall under one (or more) of the above five it is important to follow through with a redundancy procedure. This ensures fair procedure and reduces the risk of unfair selection and any potential unfair dismissal claims.

The selection process

An important factor in the redundancy procedure is the selection criteria. While no set selection method outlined in legislation, the two main methods adopted are:

  1. Last in first out (LIFO).
  2. Selection process – for example, an interview or selection matrix where employees are scored against a list of pre-agreed criteria levels of key skills held by employees as well as other work-related matters such length of service, disciplinary record, punctuality and absenteeism where relevant.

The consultation process

The redundancy process, in general, is advised to be carried out over a two-week period (when it’s not a collective redundancy). The first step is to have a meeting with all employees who are affected, telling them that they are ‘at risk’ of being made redundant. You must tell them:

  1. The proposed redundancy,
  2. The procedure you are going to follow,
  3. The selection criteria you intend to use,
  4. Discuss alternatives that you have looked at and also ask employees have they any suggestions, and
  5. The opportunity to apply for voluntary redundancy should they wish to request same.

After this meeting, the employees should be issued with an ‘at risk letter’. Following on from the first meeting you would hold a further two to three meetings with the employees individually to discuss any updates, and to discuss any suggestions they have. Where no alternative to redundancy can be found, the final meeting should be held with employees to tell them whether or not they are being made redundant and what redundancy payment they will be paid, if they are entitled to one. Employers are then required to issue them with their formal notice of redundancy.

Effective and meaningful consultation

The Employment Appeals Tribunal has repeatedly stated that the provisions of section 6(7)(a) will only be satisfied where an employer has engaged in effective and meaningful consultation with the employee through a series of meetings. Decisions on this matter include Barton -v- Newsfast Freight Ltd. (UD 1269/05) and Gerry Fennell -v- Resource Facilities Support (2011) 22 ELR 26.

Alan Price Peninsula

Alan Price (left) is senior director for the employment law consultancy, Peninsula Business Services; managing director of Peninsula Ireland; and elected director and trustee for the Chartered Institute of Personnel and Development – CIPD. Price also sat for four years as a board director at The Chambers of Commerce Ireland.