Redundancy can be defined as a situation where an employee loses their job because their position is no longer needed or useful to the employer. As in all employment affairs, the employer must act in good faith and follow a fair process during the redundancy process.
The process of redundancy can be an emotional time and cause uncertainty for many employees and this is one reason why the redundancy option, from an employer’s perspective, should be a last option. Redeployment should always be considered in the first instance, where applicable.
To start the redundancy process, the following steps must be followed:
- Employers are to document their proposal in writing. This document needs to clearly explain the changes that will be made to the business, an outline of how the employer will be making their decision, and timeframes for the employer’s decision making process.
- The employer then gives this written proposal to all employees in a similar category of employment and is required to allow employees the ability to meet with the employer to discuss further and to invite the employees to provide their feedback.
- The employer then gathers the feedback and considers all responses received.
- After considering all the feedback, the employer will confirm the new structure of the business. This should be given to all employees in writing followed by a meeting with the employees. The employer is required to advise all employees of their decisions. At this point, the employer would give the employees their notice, in accordance with their Individual Employment Agreement (“IEA”), that his/her position is no longer required. If there is no IEA in place, a reasonable notice period must be given. This can be decided based on the employee’s length of service, the reason for the redundancy, the industry norms and/or the employee’s ability to find other employment. The employer will have to choose whether to pay the employee for their notice period or have the employee work out their notice period. If an employee resigns during this notice period, the employer is not required to pay for the balance of the notice period owing.
- The employer will then make the changes to the business and support the employees throughout
these changes. Support can include (but is not limited to) counselling sessions, career advice, interview training, curriculum vitae support etc. As the redundancy process can be a very stressful time for employees, it is extremely important to make sure that all employees are receiving the support they require.
Regarding final payments of employees that have been made redundant; this pay must include any unused annual leave and wages, along with any other entitlements up to the end of the notice period.
As the redundancy process is particular and must be followed accordingly, it is very strongly recommended to involve human resource expertise if available and/or a solicitor, to provide guidance in drafting necessary documents and on how to conduct required meetings.