Alexa Mihailoff

With the down turn in our local economy, many businesses are faced with the harsh reality of restructuring and downsizing their staff just to stay afloat.  Redundancy has now become a bit of a buzz word that can leave a black mark for employers and employees alike.   

Gone are the days where you can run your business as you see fit.  The restructuring and redundancy process is a highly sensitive, and therefore highly risky, area of Employment Law. 

Employers must take a cautious approach and follow the correct procedure in implementing a redundancy.    Whilst it is impossible to guarantee that a Personal Grievance (“PG”) for unjustified dismissal will not be brought against you, following a fair and transparent procedure (and getting legal advice and guidance as early as possible in this process) should serve to mitigate that risk. 

There are two elements to a redundancy: 

  • Justification – the reasons for the redundancy and whether it is ‘genuine’; and
  • Procedure – the consultation process used to determine whether a redundancy is necessary and if so, who will be made redundant. 

Recent case law has put more emphasis on the above factors.  Employers must:

-          Provide all relevant information to employees facing redundancy;

-          Ensure that any decision to make an employee redundant is backed up by genuine business reasons (and is supported by fact);

-          Give employees the opportunity to provide feed back on any part of the process which may impact upon them. 

-          Provide employees with any selection criterion that are being used to determine who is made redundant,. 

The Employment Relations Authority and the Court are no longer afraid to undertake extensive investigation as to the genuineness of a redundancy, which can result in a hefty award to pay.  Even with genuine reasons for being made redundant, aggrieved employees or their representatives will hunt for the t’s that aren’t crossed and i’s that aren’t dotted, which exposes employers to a PG claim.  

It is crucial that employers explore their options and get their ducks in a row before simply determining that a restructure or redundancy process is required.   If heading down this path seems like the only viable option, then you need to do it right. 

In order to minimise risk and avoid any unwanted penalties and further costs to your business you must consult with an Employment Lawyer before you start the process.  

Alexa Mihailoff is our resident Employment Law expert and can assist employers and employees alike though the restructure and redundancy process. Contact Lexi for further information or advice.