Whilst Ireland is currently at low unemployment levels the impact of the cost-of-living crisis, external market forces and global geopolitics has meant that Organisations in many sectors are seeking to reduce headcount. With any redundancy process the application of proper procedures, best practices, transparency, and compliance is essential so Organisations can avoid complaints, financial redress and reputational damage.
Key considerations when reducing headcount
Where a reduction in headcount is necessary, it is important that impacted Organisations ensure they are applying a procedurally correct and legally compliant approach to mitigate the potential financial complications that come with these processes. One of the main issues is ensuring it is done in a fair and objective manner and ensuring a consultative procedure is put in place for Employees whose roles are at risk of being made redundant.
Financial impact of getting it wrong
If an Employer does not follow the correct procedure, they leave themselves open to serious financial implications. Where 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.
Selecting roles for redundancy
To fairly select an Employee’s role for redundancy, an Employer must first establish which positions are to become redundant. Having established that certain positions are no longer required, Employees in that position 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. If a particular redundancy process has been previously used by the Organisation, there must have a justification for departing from the procedure that was applied previously.
In selecting a particular Employee for redundancy, an Employer must apply selection criteria that are reasonable and are 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.
Unfair Dismissals legislation
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.
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.
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. It is important to note that the burden of proof in a claim for unfair dismissal is on the Employer.
Conclusion
The current economic impact on Organisations may lead to some difficult resourcing decisions being made. Paramount to any at-risk and redundancy process is the application of proper procedures, best practices, transparency, and compliance. Where all these are present Organisations can mitigate the risks that inevitably flow from such a process while avoiding complaints, financial redress and reputational damage.