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Redundancy / Restructuring
Employers are occasionally faced with the prospect of down-sizing or restructuring to make their businesses more efficient, or moving to a different location. The result usually means redundancies. Conducting a redundancy or restructuring exercise is seldom straightforward, particularly when there are large numbers involved and so full consultation with all affected employees is essential.
There are three alternative components to redundancy:
- Closure of Business.
- Closure of Workplace (eg: relocation).
- Reduced requirement for employees to do work of a particular kind.
Accordingly, it is not necessary for there to be a downturn in the business for a redundancy situation to exist. The business could be doing well but simply need fewer people to carry out certain types of work requiring certain skills, for example, where someone’s role can be replaced by a new computer system. Similarly, a restructuring of the business might result in redundancies where one or more positions can be absorbed by other employees, even though some new positions are being created.
The employer must consult fully with all affected employees before making a final decision to dismiss for redundancy. This means discussing the proposed selection process and exploring ways of avoiding or minimising redundancies, such as through redeployment. In the case of a business closure there may be less to consult over than in a down-sizing situation because everybody will be effected in the same way. On the other hand, when there is a need to down-size the employer must first choose his “pool” from which he is going to make his selection for redundancy, then select on the basis of fair and objective criteria. Unfair dismissal claims usually arise when there has either been an unfair selection or lack of proper consultation.
When 20 or more people at an establishment are to be made redundant then employers must consult through representatives of the employees eg: a Union or other recognised representative body or representatives elected by the employees themselves. With these numbers there is a strict statutory regime that must be complied with.
Some employers may try to use redundancy as an excuse to dismiss someone who for example, is not performing satisfactorily or is unpopular. This is a short sighted approach because the redundancy dismissal is effectively a sham which can be exposed in a Tribunal.
It is recommended that employers take advice in good time before embarking on any redundancy exercise to ensure they avoid the many pitfalls involved.
Head of Employment & Intellectual Property