Avoid an unfair dismissal claim by getting the redundancy process right

Moira Grassick

September 14 2021

A redundancy situation, or losing an employee in the broader sense, is generally something employers try to avoid. But that doesn’t mean these situations don’t happen.

In some instances, redundancy can be mishandled or rushed through. This may be because of an employer’s urgent need to make cutbacks. Or for the want of getting a disruptive employee out of the business.

When the dust settles, a review of the redundancy process undertaken could show up flaws. And, if the dismissed employee feels that the process didn’t follow proper procedures, you could have an unfair dismissal claim on your hands.

What constitutes an unfair dismissal?

Under the Unfair Dismissals Acts 1977-2015, a dismissal is considered unfair if an employee is dismissed for:

  • Membership or proposed membership of a trade union or engaging in trade union activities.
  • Religious or political opinions.
  • Involvement in legal proceedings against you.
  • Race, colour, sexual orientation, age, or membership of the Traveller community.
  • Pregnancy, giving birth, breastfeeding, or any matters connected with pregnancy or birth.
  • Availing of rights under legislation to maternity leave, adoptive leave, paternity leave, carer’s leave, parental leave, or force majeure leave.
  • Unfair selection for redundancy.
  • Making a protected disclosure under the Protected Disclosures Act 2014.

The need for a genuine redundancy situation

For any employee to be made redundant, a genuine redundancy situation must exist. Evidence of this situation must be established before beginning a redundancy process.

Redundancies are often a factor of:

  • Business closure.
  • Financial difficulties.
  • Technical advances e.g., new technologies.
  • Demand for the employer’s goods or services decreases causing a shortage of work.

Once a genuine redundancy situation has been established, you must ensure that:

  • The employee had the benefit of fair procedures before dismissal.
  • The selection process was fair.

Unfair dismissal claims tend to arise from employees who question these procedural steps.

So, to prove a genuine redundancy situation exists, you’ll need supporting evidence to back up your argument. You’ll also need to ensure your redundancy process follows fair procedures before making an employee redundant.

This underlines the benefit of having a reliable redundancy procedure in place. Your policy should outline the notification, consultation, and selection process that any final redundancy decisions will be based on.

Guide: Redundancy selection criteria

What is a fair selection process?

Fair selection with regard to redundancy involves a situation where several employees work the same or similar jobs. Fair selection is necessary to maintain transparency and fairness.

You should ensure that the selection for redundancy is:

  • Not due to one of the automatic unfair reasons for dismissal
  • Not in contravention of an agreed selection process or past custom and practice in respect of selection.

If you have no procedure in place, the general rules of fairness and reasonability apply. If no redundancy policy or custom and practice exists in respect of selection, you should seek to agree the selection method, and any associated criteria, before commencing the redundancy consultation process. By securing agreement to the selection method, you reduce the chances of undertaking an unfair redundancy selection process.

An example of a selection method is ‘last in first out’ (LIFO) or a skills selection matrix. The best method to choose will depend on the needs of your business and the role being made redundant.

What does a fair redundancy process consist of?

A redundancy process that satisfies the “reasonableness” test set out in Unfair Dismissal legislation requires that you go through a redundancy consultation process.

This involves conducting a number of consultation meetings with the affected employees that look to ensure they:

  • Understand the rationale behind the potential redundancy situation.
  • Agree to the method for selection.
  • Have an opportunity to explore alternatives to redundancy.

To ensure a fair redundancy process, employees should also be given the option to have representation at these meetings.

Only after these meetings should you confirm to the employee that they’re being made redundant. Confirm this by way of a termination letter outlining their entitlements.

Looking for redundancy advice?

Knowing how to correctly conduct a redundancy procedure can save your business from an unfair dismissal claim.

So, for further advice on how to carry out a redundancy, speak to one of our HR experts today on 0818 923 923.

Suggested Resources