Taking care of business
Redundancy processes are open to significant attack and need to be handled logically, objectively and with precision. Una Clifford totes that barge
As the economic environment continues to ebb and flow, redundancies are common practice.
This manner of reducing the workforce is sometimes utilised to recharge or restructure a bigger organisation or, often, simply as a reaction to stay in business.
As lawyers, we should ensure that we’re always one step ahead for clients in advising them on the most robust and litigation-free process when considering making an employee redundant.
Likewise, in our advice to plaintiff clients, we need to administer a level of focused critique on a process for potential flaws or ‘sham’ redundancies.
Redundancies mean that people lose jobs and hence – whether singular or in small numbers – can be difficult, emotional and litigious.
Working man
The pitfalls that can emerge from flawed redundancy processes can result in significant awards being made to the claimant at the Workplace Relations Commission (WRC).
Advice to employers should include ensuring the business rationale is logical, capable of being evidenced, and objective. If selection criteria are to be used, they must be tailored for the role and be mindful of any areas that could give rise to claims of discrimination or less favourable treatment.
A consultation process that is robust, transparent, and considers all alternatives prior to a redundancy decision being made is essential.
Finally, if the employee is eligible for statutory redundancy pay, then it should be calculated correctly and paid promptly.
An ex gratia amount that can be paid in a tax-efficient manner and includes a waiver of claims could improve what can be a difficult process and ensure that the termination of the employment relationship concludes without reprisal.
If the legal advisor is advising the employee to challenge a redundancy that he believes to be a sham, we need to tackle process, consultation, alternatives, and selection, ensuring that each step has been carefully considered by the employer.
A background discussion might show us that the client was a poor performer who was potentially ‘moved on’ with a redundancy. Alternatively, an employee might have become too expensive over the years, and an employer foolishly decided that a ‘redundancy’ would be effected as a method of reducing costs.
Sixteen tons
The 2024 annual report of the WRC outlined that there were 7,316 individual complainants to the WRC, some submitting multiple areas of complaint. Approximately 2,285 of those complaints related to unfair dismissal, and 716 specifically to redundancy.
However, as many of us who are in the WRC regularly observe, it is likely that a redundancy process was perhaps also attempted or addressed within those dismissal cases.
With the increasing assistance of AI-related tools to guide on particular areas of law, it is likely that the volume of applications to quasi-judicial fora, such as the WRC, will increase. Therefore, an attempted or completed redundancy process needs to be watertight.
The WRC is focused on adequate and fair processes being afforded to employees in every aspect of the employment relationship. Redundancy-related dismissals are a focus of scrutiny by the WRC to ensure they are fair, legitimate, and that procedural fairness has been applied.
Often, however, employers get to the point where they want an immediate solution to remove a poorly performing or belligerent employee, and they indicate to them that their ‘job is gone’.
They do not attempt a selection process, consult, or make any attempt to find an alternative role for the employee. They simply conclude the employment relationship for reason of redundancy. The employee takes advice and immediately submits an unfair-dismissal complaint.
At the point where counsel are briefed and ready to defend the position for the employer, the horse has now most certainly bolted, and they have to contend with a process that was flawed or 'sham', and a very weakened defence.
The burden of proof is on the employer to demonstrate that the redundancy was fair, and counsel will be contending with some thorny issues if the process was not robust. Counsel for the plaintiff whose job is ‘just gone’ in that case will have a ‘slam-dunk’ win at the WRC, securing a large settlement for their client.
Career opportunities
In advising clients, some critical areas of consideration when advising either an employer or an employee looking to challenge a redundancy are, first:
- How will an employer defend that a redundancy situation arose?
- What arguments can be put forward that it was ‘business-focused’ and not personal or performance-related?
- Why did the employer not consider a voluntary-redundancy process? Why was the only employee selected the longest serving?
The legal criteria for a redundancy to arise are outlined in section 7(2) of the Redundancy Payments Acts 1967-2014 (as amended by section 4 of the Redundancy Payments Act 1971) and provide that a person who is dismissed shall be deemed to have been dismissed by reason of redundancy if the dismissal results, wholly or mainly, from one of the following:
- The employer is ceasing or intends ceasing carrying on the business, the purposes of which the employee was employed by him or her, or the employer intends ceasing carrying on the business in the place where the employee was so employed,
- The fact that the requirements of that business for employees to carry out work of a particular kind in the place where he was so employed have ceased or diminished, or are expected to do so,
- The fact that the employer intends carrying on the business with fewer or no employees,
- The fact that the employer has decided that the work for which the employee had been employed should be done in a different manner, for which the employee is not sufficiently qualified or trained, or
- The fact that the employer has decided that the work for which the employee had been employed should henceforward be done by a person who is capable of doing other work, for which the employee is not sufficiently qualified or trained.
If a complaint is heard in the WRC, employers should be asked to introduce minutes of meetings to evidence, indicating that the business had to make adjustments because they had too many people and there were high-cost pressures.
Board minutes or minutes of management meetings that don’t personalise the matter and instead reference ‘role reduction’ as opposed to individual people should be brought into evidence.
Job absorption, where an employer decides that the job done by two people could be done by one person, is a valid rationale but, again, should be evidenced as part of a structured management decision around costs and roles, and not individual people.
Ol’ man river
Secondly, where an employer then had a number of people doing the same job and he/she needed to reduce the headcount, what process was used to select employees for redundancy?
Where an employer uses selection criteria, he/she needs to ensure that they are ‘hard’. Examples include identifying the technical skills needed to perform in the role and evaluating those currently doing the job, from 1-5.
Selection criteria must be devised that are tailored specifically for the role and must stand up to objective scrutiny. Using soft criteria, such as ‘impact on team dynamics’, will be difficult for an employer to defend.
Awarding scores for length of service is always good to demonstrate that it was a factor in selection. If an interview process is to be implemented where those doing the same job ‘compete’ for the job, the same rationale applies.
The employer must ensure his scoring matrix at interview is balanced, fair, and will stand up to scrutiny if he has to defend it in an unfair dismissals claim. An interview panel should have panel members with sufficient experience and skills to objectively assess those competing, and should be gender-balanced, if possible.
Detailed consultations with plaintiff employees will tease out the veracity of the selection criteria and/or the interviewing process, and enable the legal practitioner to mount a challenge if any cracks emerge.
Fair play
Thirdly, what defence can be put forward to alternatives being explored?
Did the employer consider moving the affected employee to another area of his business? Was consideration given to a temporary lay-off period or a reduced-hours contract as an alternative to making him/her redundant? Why wasn’t the alternative proposed by the employee considered? Can the employer provide evidence that it was thoroughly considered, and the reasons it wasn’t viewed as an acceptable proposal?
Fourthly, what process of consultation was conducted with the employee?
The employer should be able to defend the process robustly. He should demonstrate that notes were taken and shared with the employee, such that he/she could evaluate what was discussed and respond accordingly at a consultation meeting.
The employee should be afforded the presence of a support colleague or trade-union official at what will be a stressful meeting.
Confirmation of the process and the various stages and timeframes should be shared in advance with the employee and, ideally, he/she should be pointed to an employee assistance programme (if one is there) to provide external counselling support if needed.
If an employee discloses that he was ‘rushed out the door’, the process again is open to challenge for procedural flaw.
Workin’ for MCA
It is evident that simply deciding to remove an employee without due process or consideration could be a costly matter for any employer.
The seminal case of St Leger v Frontline Distributors Ltd (1995 6 ELR) confirmed that the two main characteristics needed for a valid redundancy situation to exist are ‘impersonality’ and ‘change’.
A decision to make a role redundant is not about a person – only about a role; and, secondly, the redundancy is arising due to some sort of change that is occurring, whether it be in how work is completed, automation, structural change, role elimination, or a merging of roles.
Legal advisors to plaintiff employees should also scrutinise any possible avenues for discrimination.
Why was it only a woman who was selected for redundancy, or a person who was older than most of the rest of the workforce? If a man and woman were competing for one role, why did either get the job? Was the interviewing panel biased?
Last year, in Mark Langham v JMK Group (ADJ-00047192), the WRC awarded €125,000 to the complainant after finding he was unfairly dismissed under the ‘cloak’ of redundancy.
Although the employer had engaged in a consultation process, he wasn’t able to justify the alleged ‘cost-saving’ rationale for the redundancy, couldn’t provide any substantive evidence that the cost-saving measure was required, and the adjudicator highlighted the absence of any minutes from a senior-management meeting at which the decision to make the role redundant was made.
In closing remarks, the adjudicator commented that he found the redundancy was used as a ‘cloak’ to dismiss the plaintiff.
Salt of the earth
The burden of proof is on the employer to show that the dismissal resulted wholly or mainly from the redundancy of the employee.
Under the acts, the WRC can have regard to the reasonableness, or otherwise, of the conduct of the employer in relation to the dismissal. Even if there is a genuine redundancy situation, there is an onus on the employer to show that the selection of the individual was reasonable, and the selection process was fair and transparent.
It is evident that a redundancy process is open to significant attack and needs to be handled logically, objectively, and with precision – this article only serves to highlight some of the relevant areas.
At such an emotional time, often with employment relationships that have been sustained over decades, employers and employees alike are emotional and nervous, and the planned process can easily falter.
We need to be ready to mount the challenge for either side.
Una Clifford is a barrister specialising in employment and equality law and is a committee member of the Employment Bar Association.