Making a position redundant in your business

Contents

• Business restructuring process must precede redundancy
• Restructuring process
• Positive side effects of managing a restructure and redundancy process correctly are as follows:

When can you recruit after making someone redundant? When you make a position redundant in your business, it is the job that is disestablished – not the employee.

The affected employee only has to leave the business if there is no other suitable job for him or her at that time.

Employers are required to offer upcoming suitable positions to the person affected by the position’s disestablishment for six months following disestablishment.

 This being the case, the short answer is that if a position is disestablished, you cannot hire a new employee into it – simply because it no longer exists.

Business restructuring process must precede redundancy

When can you recruit after making someone redundant? The process prior to disestablishing a position in your business is also critical to transparency and risk reduction – given how frequently employees losing their jobs due to their position being disestablished (or made redundant) challenge the decision with a grievance.

The risk of grievance is reduced significantly if the employer follows the correct restructuring process leading up to any positions being established or disestablished. The process can also get messy if any performance management of the employee has taken place leading up to this process. This can be challenged as a sham redundancy- buts that’s another blog topic!

A restructure process must be based on the needs of the business and be managed in accordance to the business plan. Restructuring is conducted when a business moves to a growth or scaling up phase as much as it is when a business needs to scale down. 

Restructuring process

When can you recruit after making someone redundant? After the business planning and structure revisions are considered at management level – based on business requirements, the initial stage of restructuring is one of consultation and soliciting feedback from the employees. Anyone potentially impacted by a change in the structure must be consulted – and there is a strict sequence of events to be followed to ensure this process is compliant. We are not listing that information here, simply because compliance requirements can change from time to time.

Employees should be invited to have a support person attend meetings with them (but are not required to do so) – meaning that enough time to allow people to contact their support person and enough time to consider the situation to hand must be allowed for in the process – but not so much time that they begin to become anxious. A couple of days are generally enough.

Most employers getting into difficulty with grievances have skipped this step and presumed that they have the right to make changes that impact on employees without a consultation process.

Following consultation, the employer is required to take time to consider feedback before moving forward.

In the case of a team where all employees have the same position and one or more positions are to be disestablished, in the absence of a company policy stating the redundancy structure when restructuring occurs (which we recommend for all businesses), each team member must be individually met with an interviewed for the remaining positions.

In this instance, a selection process is required. That process must also be transparent and laid out at the initial consultation so that everyone knows what to expect.

Following your reconsideration, another meeting must be held.

Positive side effects of managing a restructure and redundancy process correctly are as follows:

Firstly, you have taken time to consider the restructure from a business point of view and you have a business based reason for the moves at play. This ensures no personality or performance related issues are able to be connected to your decisions.

Secondly, because the team has been informed from the outset, had the opportunity to input and to consider what the business needs, they will adjust much more easily to losing a job or a teammate.

Employers acting in good faith putting business needs at the fore will generally manage this process without it feeling personal for the employees, which means less risk and less grief due to a team member’s job and thus a team member being removed.

If you feel you need assistance or guidance with this process, our team of HR experts are here to help or to manage the process for you. Often that is easier for all concerned. Please contact if you feel that this would be helpful for you.

When can you recruit after making someone redundant

The difference between redundancy & restructuring

Contents

• All considerations in regards to restructures – and potential resulting redundancies must be fully transparent.

With so much pressure on employers in 2020 due to COVID-19 – the introduction of work from home, social distancing and hygiene practices to prevent a second wave during Level 3 Alert, some employers will also need to consider restructuring and potentially disestablishing some positions to navigate their business forward.

Firstly, it is important to note that employers are obliged to act in good faith and in the interests of employees as well as in the interests of their business at all times.

All considerations in regards to restructures – and potential resulting redundancies must be fully transparent.

Employers have the right to act in accordance with the requirements of their business, but a process must be followed in the area of altering the structure – whether it be for business growth or reduction.

Restructures are commonly assessed due to a change of market and trading environment, an acquisition or a change in direction in business strategy.

Firstly, by way of definition, redundancy (otherwise termed as role disestablishment) is the outcome of a restructuring process, and would usually be considered the last resort in terms of the employee or employees concerned.

Role disestablishment does not always mean the termination of an employee’s contract – very commonly where a role is disestablished, the employee is moved into another broader (or more specialised) role.

The single most important consideration is whether or not the role is required in the immediate and foreseeable future for the business.

To begin the process of business restructure, the business plan must first be put in place and all resources – inclusive of workforce, taken into consideration.

Where workforce is concerned, the skill matrix identifying gaps and overlaps is a key element. While a downsized structure due to pressure on profitability and business viability is in question, succession planning must also be considered and the business plan needs to examine areas of potential growth and increased margin.

In this regard, your overall restructuring strategy may well require the introduction of new or higher skills in some areas – or specific requirements for experience and expertise may be sought out for business plan progression into new avenues.
A restructure does not necessarily mean a chopping of employee numbers (although this is commonly the outcome). Every aspect of business must be carefully considered.

Where role disestablishment is the only option – and no new role can be established for the employee in the role, redundancy due to role disestablishment takes place.

Careful communication with the employee concerned is required. Redundancy is very stressful for employees and it’s important that it is not a surprise – and equally important that all avenues for retaining or repositioning this employee are evaluated.

Employees faced with disestablishment must be paid all owing holiday pay in their final pay cycle, they must be allowed time to attend interviews if they wish to and they may also be offered outplacement support – which involves assisting them with CV optimisation, prepares them for successful interviewing and ensures they are feeling as optimistic and positive as is reasonably possible under the circumstances.

If employers are feeling unsure about the correct process to follow – ensuring compliance and risk minimisation during this process, professional HR support is recommended.

For full and detailed guidance, please contact us and one of our consultants will be happy to assist you, or you may wish to consider purchasing our Restructure & Redundancy Toolkit from this website.

Restructures Involving Restructures and Redundancy

Contents

• The Employment Court now places focus on employer decision making process
• Restructures and redundancy is becoming more complex

In relation to restructures involving redundancy, there has been a long-held perception that as employers are entitled to manage and organise their businesses and to determine which positions will be selected for redundancy.

It has been generally accepted that as long as there are genuine employer reasons, and redundancy has been implemented in a procedurally fair manner (involving consultation with the employee), the Employment Courts will not interfere with management’s commercial decisions to restructure and make redundancies as they see fit, even if those decisions are poor ones.

This is no longer the case!

The Employment Court now places focus on employer decision making process

Recent decisions in the Employment Court make it clear that rather than the Court being chiefly focused on the consultation process, they are now also placing greater scrutiny on the justification for the employer’s commercial decision to restructure and whether it made a decision to terminate the employment relationship on substantively justified grounds.

Redundancy can be challenged by an employee through the personal grievance process outlined in the Employment Relations Act 2000, as can any other type of employee dismissal.

This process requires an employer to justify the redundancy, and that the manner in which it was executed was considered to be fair and reasonable in the eyes of the court.

Using redundancy to mask any other reason for terminating an employee’s employment (e.g. poor performance, personality based reasons or any other non financial reason) will not be tolerated by the Courts.

A personal grievance means a claim that an employee has against the employee’s employer or former employer that he or she was:

• Unjustifiably dismissed; or
• Disadvantaged by some unjustifiable action.

If an employee is terminated for redundancy reasons and is found to have been unjustifiably dismissed for want of substantive justification, the remedies available to the employee include reinstatement to the former position or a position no less advantageous to the employee, reimbursement of a sum equal to the whole or any part of wages lost by the employee as a result of the grievance, and payment of compensation to the employee for either humiliation, loss of dignity and injury to the feelings of the employee, and/or compensation for loss of any benefit which the employee might reasonably have been expected to obtain if the grievance had not arisen.

Even if an employee is reinstated, an award for lost wages may be ordered for the period between the dismissal and reinstatement, and an award for compensation for hurt feelings may be made.

Restructures and redundancy is becoming more complex

Recent employment cases signal that restructures and redundancy is becoming more complex and remains an important topic in employment.

There are many reasons when embarking on any process that may result in an employee or employees being made redundant, whether it is an internal restructure or a sale of a portion of a business, it is more important than ever for employers to seek professional advice and guidance early.

Undertaking this process with an experienced HR professional is a huge advantage and relief for an employer, and CHQ can assist by setting out all the factors that should be taken into consideration, mapping out a process and assisting you with the implementation of these.

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.