Redundancy can be defined as a situation where an employee loses their job because their position is no longer needed or required by the employer. As in all employment matters, the employer must act in good faith and follow a fair process during the redundancy process before making any decisions.
The process of redundancy can be an emotional time and cause uncertainty for many employees. This is one reason why the redundancy option, from an employer’s perspective, should be a last option and there is a legal obligation to consider redeployment before terminating employment for redundancy.
To start the redundancy process, the following steps must be followed:
- Employers are to document their proposal for change in writing. This document needs to clearly explain the proposed changes to the business, the reason for the proposed changes, an outline of how the employer will be making their decision, and timeframes for the employer’s decision making process.
- The employer then gives this written proposal to all employees in a similar category of employment for consultation. During the consultation process, an employer should offer employees the opportunity to meet with the employer to discuss the proposal further and to provide their feedback in person and in writing.
- The employer then gathers the feedback and considers all responses received.
- After considering all feedback, the employer will need to make a decision on the new structure of the business. This should be given to all employees in writing followed by a meeting with the employees. The employer is required to advise all employees of their decision. At this point, the employer needs to consider whether there are any suitable redeployment opportunities available. If there are no suitable redeployment opportunities, the employer would give the employees notice, in accordance with their Individual Employment Agreement (“IEA”), that his/her position is no longer required. If there is no IEA in place, a reasonable notice period must be given. This can be decided based on the employee’s length of service, the reason for the redundancy, the industry norms and/or the pay cycle. The employer will have to choose whether to pay the employee for their notice period or have the employee work out their notice period. If an employee resigns during this notice period, the employer is not required to pay for the balance of the notice period owing.
- The employer will then make the changes to the business and support the employees being made redundant throughout these changes. Support can include (but is not limited to) counselling sessions, career advice, interview training, curriculum vitae support etc. As the redundancy process can be a very stressful time for employees, it is extremely important to make sure that all employees are receiving the support they require.
Regarding final payments to employees that have been made redundant; this pay must include any unused annual leave and wages, along with any other entitlements up to the end of the notice period.
As the redundancy process is strict and must be followed accordingly, it is strongly recommended to involve human resource expertise if available and/or a lawyer, to provide guidance in drafting necessary documents and on how to conduct required meetings.
For more information, please contact a member of our employment team.
Disclaimer: The content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.