Considerations & Risks when managing the redundancy process

The ongoing health crisis continues to disrupt businesses in a way that is forcing employers to look at headcount. Government supports have protected many employees but as these supports begin to ease off, employers will have to make some difficult decisions around redundancies, however redundancy should be considered as a last resort if possible.

Derek McKay, Managing Director at Adare Human Resource Management outlines why it is important that employers follow the legislation and the correct procedure.

Firstly, for a genuine redundancy to take place, there are five headings that need to be complied fth:

  • The organisation ceases to operate the business for which the employee was employed to do,
  • The work the employee was contracted to do has ceased or the requirement for that work has reduced,
  • The organisation has decided to carry on the business with fewer, or no, employees,
  • The work the employee was contracted to do is to be performed in a different way and/ or the employee is no longer qualified to carry out that work,
  • The employee’s work is to be done by a different employee who is sufficiently qualified and capable.

While there may be no other option to help protect an organisation, redundancies can be fraught with risks if not managed correctly. One of the main issues is ensuring it is done in a fair and objective manner and ensure a consultative procedure is put in place with employees who are at risk of being made redundant.

If an employer does not follow the correct procedure, they leave themselves open to serious financial implications. If it is found that an employee was unfairly dismissed, they can be awarded up to two years’ gross salary as compensation under the Unfair Dismissal Acts or an adjudicator may agree to reinstatement in some cases.

There are some careful considerations that an employer must take into account before selecting a position for redundancy. The employer must demonstrate that a redundancy situation existed. Having demonstrated that a genuine redundancy situation exists, it is essential to use fair selection criteria in selecting an employee for redundancy.

Selecting roles for redundancy

To fairly select an employee’s role for redundancy, an employer should first establish which positions are to become redundant. Having established that certain positions are no longer required, employees in that position must be considered against the criteria for selection.

When setting out the criteria for selection, employers should consider if the business made redundancies in past and, if so, what selection methods were previously used.

The two main methods of selection used are ‘last in first out’, which is the riskier of the two or ‘matrix selection criteria’ that can be based on qualifications, skills, experience or a combination of all three. The criteria used in the selection process must be appropriate and relevant.

Transparency is required when dealing with redundancies. When selecting a particular employee for redundancy, an employer must apply selection criteria that are reasonable and are applied in a fair manner. An employee is entitled to bring an unfair dismissal claim if they feel that they were unfairly made redundant or consider that a genuine redundancy situation did not exist.

Under the Unfair Dismissals legislation, selection for redundancy based on certain specific grounds is considered unfair. These include redundancy as the result of an employee’s trade union activity, pregnancy or religious or political opinions. The Employment Equality legislation also prohibits selection for redundancy that is based on any of the following nine grounds: gender, civil status, family status, age, disability, religious belief, race, sexual orientation or membership of the Traveller community.

It is important to point out that the burden of proof in a claim for unfair dismissal is on the employer. While an organisation may believe they are justified in making an employee redundant, they risk leaving themselves open to claims if they don’t follow correct policies and procedures set out in the Redundancy Payments Acts 1967 – 2014. 

Other legislation that needs to be considered when dealing with redundancies and dismissals includes the Unfair Dismissals Acts 1977 – 2011, Minimum Notice and Terms of Employment Acts 1973 – 2005 and the Employment Equality Acts 1998 – 2012.

Redundancy arising from lay off

People often use the term ‘lay off’ to refer to redundancies. However, lay off in this context is not the same as a redundancy. Lay off and short time are temporary situations where an employer is no longer able to retain the employee in their normal capacity. This option has been used extensively in businesses that have been badly impacted by the current crisis.

Employee’s right to be made redundant suspended

Pre-Covid, an employee could request to be made redundant after a period of four consecutive weeks (or a broken period of six weeks) on lay off or short time under the Redundancy Payments Act 1967. The employer then has 7 days to provide counter notice and where the employer cannot guarantee that they can provide 13 weeks unbroken employment within four weeks of the employee’s notice, the employer must pay redundancy to the employee provided they qualify for a statutory redundancy payment.

However, if an employee has been put on lay off due to Covid-19, they cannot claim redundancy as this right has been suspended again until 30th September 2021 as part of emergency legislation introduced in March 2020.

Risks associated with redundancy

Previous experience shows that the Workplace Relations Commission will find in favour of the complaint due to bad processes and procedures carried out by the Organisation. Critical to any planned redundancy is the fact that fair procedures must apply and an employer must be able to demonstrate all considerations:

  • A genuine redundancy situation exists
  • Fair selection procedures are employed
  • Legislative requirements are met in terms of procedures and compliance.

If any of the above is not in line with fair procedures or natural justice then an employee can see redress under the Unfair Dismissals Acts, the Redundancy Payment Acts, the Protection of Employment Acts or the Employment Equality Acts if the dismissal was on any of the nine grounds previously mentioned, which may result in financial liability or other redress on the employer.

Some redundancies will be inevitable in the aftermath of Covid-19 and if an employer does not careful take the above considerations into account, they risk getting it wrong, which can prove costly. Therefore, we always advise early and proper planning.

Adare Human Resource Management is a team of expert-led Employment Law, Industrial Relations and best practice Human Resource Management consultants. For more information go to or contact one of the team at (01) 561 3594.