Over the last few weeks, the technology sector has had a steady stream of redundancy announcements, both in Ireland and across the globe. As any successful business knows, keeping control of costs is essential, particularly during challenging times. In general, the costs associated with employing staff are the biggest overheads of many companies, and despite the business’s best efforts, there may be times when it is necessary to restructure teams and/or reduce costs for the overall success of the business.
A potential redundancy situation might arise where you decide to restructure the way in which things are done within your business. For example, where labour-saving technology has made a job obsolete, or you may find that you can no longer retain the same headcount where significant cost savings are needed following a serious decline in the revenues or profitability of your business.
In such circumstances, it is essential that you follow a robust process and comply with all aspects of local employment laws. The Company should develop and document a clear business rationale for any restructure.
This may include:
o Review of Company/Product Performance
o Current and future challenges within your sector
o Strategic options & related risks
o Financial review & analysis
o Change in the skills & capability needs
The definition of what constitutes a redundancy is quite extensive. Redundancies must reflect a change in business. Examples include business restructuring, change of job requirements, a reduction in overall number of employees required or a change in the way work is done and business closures to name a few.
To run a robust and safe redundancy process, there has to be a genuine redundancy situation which means that there has to be some form of objective change necessitating the redundancy of one or more roles. An employer will be expected to demonstrate that something fundamental has changed which requires the redundancy of a role or roles. It is important to note that roles are made redundant, not people.
It is important to note that additional obligations are imposed by law where multiple employees are let go in workplaces above a certain size. In these circumstances, collective redundancy legislation may apply. This imposes additional obligations on an employer, including a mandatory 30-day consultation period and the Minister for Enterprise, Trade and Employment must be notified.
Employers should always check if they come within the thresholds for each redundancy situation.
• An employer must engage in some form of consultation with employees in advance of implementing redundancies and must always follow fair procedures. Employers have an obligation to consult with and provide information to the affected employees and it is important for this to be followed before any redundancies are made. The initial meeting should inform the employees that the decision has been made to implement redundancies (or make the employee’s position redundant) and outline why this decision was taken. Affected employees must be informed of the consequences of this decision, i.e., that their role is now at risk of redundancy.
• Employees must be informed that the employer is entering into a period of consultation, but no decision will be made until the consultation period has expired. Employees should be informed that the purpose of the consultation period is to deal with any questions which the employees may have and to explore any suitable alternative roles which may be available and whether the employee has any suggested alternatives to redundancies.
• Following this initial meeting employers should meet with their employees on a one-to-one basis to discuss their positions. If there are no suitable alternatives to redundancy or the employee chooses not to accept an offer made, the employee should be informed of the fact that they are redundant and the terms of their redundancy package. Employers should write to all employees following the final meeting confirming the position in writing. It is important that employees are not informed that their role has become redundant until the consultation process has concluded.
• This allows for an opportunity to try to avoid redundancies. It is possible, for example, that employees could make proposals to their employer for example, a reduction in salary across the board, that might negate the need for redundancies.
• It is important to note is that an employer is not obliged to accept the employees‘ proposals. But a prudent employer will at least consider them and document this. They will also allow the affected employees sufficient time to make representations and likewise will spend sufficient time considering them if they are submitted.
An employer who adheres to these basic principles should not go far wrong when engaging in a redundancy process.
The redundancy process is often complicated at the best of times. To ensure adherence to the law, employers should always seek advice when considering possible redundancies. At Voltedge, we can help you navigate these challenging situations, ensure you follow the correct process to comply with the law and also to support you in handling it with empathy and sensitivity.
Liz O’Donovan, Voltedge Management Senior HR Business Consultant