What is redundancy and why it happens


In this chapter I will discuss what redundancy is and why it happens and also the benefits of a good redundancy process on the staff being made redundant and on the staff remaining in the company.

Redundancy is defined as a dismissal caused by either the company is closing down, downsizing or the employees job is no longer needed or been done. The responsibility of the employer is to show evidence that redundancy is required. They cannot just decide redundancy is required. They must produce viable evidence. The main areas to that need to be very strongly considered when a company is trying to develop a fair and good redundancy process are the selection criteria and the employers conduct. Redundancy is defined by section 7(2) of the Redundancy Payments Act 1967 which provides that an employee shall be taken to be dismissed by reason of redundancy if the dismissal if attributable wholly or mainly to: the fact that his employer has ceased or intends to cease to carry on the business for the purposes of which the employee was employed by him, or has ceased or intends to cease, to carry on that business in the place where the employee was so employed, or the fact that the requirements of that business for employees to carry out work of a particular kind in the place where he was so employed have ceased or diminished or are expected to cease or diminish, or the fact that his employer has decided to carry on the business with fewer or no employees whether by requiring the work for which the employee has been employed (or had been doing before his dismissal) to be done by other employees or otherwise, or the fact that his employer had decided that the work for which the employee has been employed (or had been doing before his dismissal) should henceforth be done in a different manner for which the employee is not sufficiently qualified or trained, or

the fact that his employer has decided that the work for which the employee has been employed (or had been doing before his dismissal) should henceforth be done by a person who is capable of doing other work for which the employee is not sufficiently qualified or trained.

Selection Criteria

When an employer is implementing redundancies affecting some of their employees, Using a correct selection criteria to choose which roles are to become redundant is probably one of the toughest parts of a redundancy process for management. An employer is required to select fairly for redundancy where their is more than one employee in similar doing the same job. The selection criteria applied should be considerately relevant and applied in a decent way. Pilbeam and Carbridge (2006, p532) ‘ whatever selection criteria are decided upon, they need to be applied fairly and equilablty’. The selection criteria must be recognized and scrutinized for fairness and lack of prejudice initiation initial stages of the process. There are no exact rules as to what signifies correct selection criteria. Openness and informative should be used in relation to the selection process and secrecy or confusion about the selection criteria should be avoided. The following selection criteria employee’s gender, marital status, family status, sexual orientation, religion, age, disability, race or membership of the traveling community will immediately make the selection process and redundancy unfair and will amount to discrimination under the Employment Equality Acts 1998-2008. It is also best to avoid particular criteria, such as performance reviews and attendance records.

Employer’s Conduct

One of the conditions for determining whether a dismissal for redundancy is fair is whether the employer’s conduct was reasonable. There is no statutory obligation on employers to consult with an individual employee in advance of a decision to terminate his or her employment for redundancy. However, an employer who does not engage in some form of discussion with an employee in advance or who fails to consider if there are any options other than redundancy will be in a difficult position in the event that the termination is challenged. Recent decisions of the Tribunal indicate that in the current economic climate, where it is likely to prove difficult for employees to secure alternative employment, an employer is expected to go to greater lengths then ever before to satisfy the Tribunal that its conduct was reasonable. The employer will be expected to show what consideration it gave to possible alternatives to redundancy. This would include considering proposals that the employee put forward. The potential for redeployment within the organization must certainly be explored. In most cases a redundancy process can be very stressfull to the managers involved. Secord (2003,p364) ‘ It is seldom a pleasant or easy task and one that many would wish to avoid. Handling redundancy situations can be stressful particularly for operational managers who feel a sense of divided loyalties and a conflict of emotions’.

A good redundancy process

The following account is off a company who used good redundancy process. It was a US Financial Services Company. When they announced the company was closing for new business and that they required compulsory redundancies, as some employees jobs will no longer be carried out. Firstly this company kept all the staff informed and involved, by have representatives of staff go to board meetings with management and explaining to everyone what and how they were going to select the staff that will be made redundant. Throughout the consultation process staff could put questions and requests. The entire staff understood why the redundancies were needed and to a point they was empathy toward the company and management. The employer’s conduct went a long in ensuring they was no unfairness and through discussions with employee’s on an individual basis everyone understood that there was no other alternative other redundancy. This company was unable to redeploy staff to any other area of business. The company used 3 methods of how selection would take place. They used what they called opened and closed pools and no selection. Open pool was defined as a job which was created out of close for new business strategy and allowed employees with experience in this area to add themselves to this pool. They were only two opened pool positions. Closed pools were defined as where there is currently more people doing the job than is now required. An example of this if there is currently ten staff working on the IT helpdesk and after the close of new business the requirement was for five staff to be on the IT helpdesk. The ten staff was put in the closed pool and from there the selection process was experience, knowledge and qualifications. The company explained this were some people were for obvious reason disappointed on not being picked. They understood why they weren’t picked and why someone else was. The staff in the no selection pool understood and was taking in individual and explained that their no longer existed after the company closed for new business. This was a tough discussion but the openness of the meeting meant there was no doubt by the employee that why were unfairly been made redundant. When the staff that was being made redundant were informed the company brought recruitment agencies, lawyers and experts in social welfare to help the staff that were being made redundant. Internet access and time off for interviews were allowed and advice/ workshops on CV writing and interview tip were scheduled and held for staff. While the though of being redundant was a very nervous time for people. The company could not be faulted in way they went about with the redundancies. The company also took into consideration that a large percentage of the workforce being made redundant had less than two years service and would not qualify for the statutory redundancy. They announced that all staff on 2 years would receive 12 weeks redundancy money. Also because of how good the company handled the redundancies the staff remaining also felt that should this happen again the company would be fair and use a good redundancy process. The only area the redundancy could not prevent was the sense of sadness among the staff going and staying as this company had developed a sense of friendship and camaraderie among the staff. Many of whom are still friends to today and meet up regularly.