Whilst Ireland is currently at low unemployment levels the impact of the cost-of-living crisis and geopolitical impact on the market has meant that Organisations in many sectors are seeking to reduce headcount. Many Employers are in the position of having to examine budgetary constraints and financial implications on their Organisation. Where this happens and a reduction in headcount is necessary it is of paramount importance that impacted Organisations ensure they are applying a procedurally correct approach and remaining fully compliant in order to mitigate the potential financial complications that come with these processes.
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 making sure a consultative procedure is put in place with Employees whose roles 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 role for being at risk of redundancy, having first demonstrated that a genuine redundancy situation exists due to the organisational case for change.
Selecting roles for redundancy
To fairly select a role for being at risk of redundancy, an Employer must first establish which positions may become redundant. Having established that certain positions may no longer be required, Employees in those positions must be considered against the criteria for selection.
When setting out the criteria for selection, Employers should consider precedence – has the Organisation made redundancies in past and, if so, what selection methods were used. The two main methods of selection used are ‘last in first out’ or ‘matrix selection criteria’ that can be based on qualifications, skills, experience, or a combination of all three. If a redundancy process has been previously used by the Organisation and it wants to use a different procedure, then it must have a specific reason justifying a departure from the procedure that applied previously.
Employers need to be careful and transparent when dealing with a redundancy process. While a potential redundancy situation may exist, an Employee can have grounds for complaint if the manner of the selection for redundancy was unfair.
In selecting a particular role for redundancy, an Employer must apply selection criteria that are reasonable and applied in a fair manner. An Employee is entitled to bring a claim for unfair dismissal if they consider that they were unfairly selected for redundancy 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 implementing redundancies, 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.
Risks associated with redundancy
Critical to any planned redundancy is the fact that fair procedures must apply, and an Employer must be able to demonstrate all considerations. Implicit in any potential redundancy are the justifications that a genuine redundancy situation exists, fair selection procedures are employed, and legislative requirements are met in terms of procedures and compliance. Thorough and meaningful engagement in consultation with the impacted Employees is paramount to a procedurally correct process and ensuring all considerations and alternatives are examined prior to any decision being made.
If any of the above is not in line with fair procedures or natural justice then an Employee can seek 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.
Conclusion
Paramount to any at risk and redundancy process is the application of proper procedures, best practice, transparency, and compliance. Where all these are present Organisations can mitigate the risks that inevitably flow from such a process whilst also managing the interests of the business. If your Organisation is experiencing any employee relations or employment law challenges, contact Adare Human Resource Management for details of compliance support under our Partnership Programme.
If your Organisation needs advice, support, or guidance in relation to compliance requirements or any HR issues, please check out our website https://www.shannonchamber.ie/services/shannon-chamber-hr/ or contact Adare Human Resource Management call (01) 561 3594 or email info@adarehrm.ie
