Redundancy
A redundancy happens when-
an employer ends an employee’s employment because:
aa position filled by an employee is no longer needed, or
athe employer has made a genuine decision for commercial reasons to
discontinue employment.
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An employer must have a genuine work-related reason for a
redundancy.
These include:
=cutting staff numbers to increase business efficiency
=restructuring business operations, including a change in the
organisation’s roles or location
closure of the business
=outsourcing, and
=sale of the employer’s business.
Employees in restructuring situations are entitled to certain
protections. “Restructuring situations” are situations where an
employee’s work will be taken over by a different employer.
For most employees and their employers, employment agreements must
contain a provision that describes what steps the employer will
take to protect employees in restructuring situations.
OAn employer must have a genuine work-related reason for a
redundancy. You cannot make an employee’s position redundant for
reasons relating to the employee personally (such as the employee’s
performance).
It is important to check the employee’s employment agreement and
any relevant organisational policies before pursuing a course which
may result in a redundancy.
Process
Employers and employees
must act in good faith throughout the process.
If you are thinking of making staff redundant, you must consult
with the employees concerned and their union, if they are covered
by a collective agreement.
You must give the employee(s) relevant information (for example,
about the problems you perceive and your goals) so they can make a
meaningful contribution, and the opportunity to comment on that
information before the final decision on the redundancy proposal is
made.
If the employment agreement contains a process to be followed in
redundancy situations, then you must follow this process.
You must follow a fair process. This could include:
giving appropriate notice about any redundancy proposal
being open minded to alternatives to redundancy, such as
redeployment, and
offering counselling and career advice services.
A guide on the actions an employer would generally be expected to
take in a redundancy situation can be found in the labour
Department's An Employer’s
Guide to Employment Relationships.
Notice
When a decision to proceed
with a redundancy is made, notice will need to be given to the
employee. The required period of notice should be in the employment
agreement.
Employees can work out the required notice period, or you can pay
them for the notice period.
Compensation
Generally, there is
no right to redundancy compensation unless employers and employees
and/or their union have agreed to it. This can be done before or
after an actual redundancy is planned. It is also up to the parties
to decide what any redundancy compensation should be.
However, in some restructuring situations, employees (who do
certain catering, cleaning, caretaking, laundry and orderly work)
can ask the Employment Relations Authority to decide what
redundancy entitlements they should receive (see the restructuring
fact sheet for further information).
Payment for annual holidays
An employee’s annual leave entitlement should be included in their
final pay.
Challenging redundancy
It is
important to act in good faith and follow a fair process when you
are considering a redundancy. You cannot use redundancy as a way of
dismissing someone for reasons relating to the employee personally
(such as the employee's performance).
Employees can raise a personal grievance if they believe their
employer has acted unjustifiably. If the grievance is not resolved
by the parties themselves or by mediation the Employment Relations
Authority or the Employment Court will look at each case
individually.
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