Redundancy

What is redundancy?

Redundancy happens when an employee's job is no longer needed by their employer. This usually occurs as a result of business changes, the introduction of new technology, or tough economic times. It's important to understand that redundancy is about the job role itself, not the person's work performance or behaviour.

Why do companies make roles redundant?

There may be several reasons why certain positions are made redundant by an organisation.

Business changes:

Companies may choose to reorganise their structure, combining departments, shutting down certain areas, or moving operations to different locations. When this happens, some jobs may no longer be necessary.

New technology:

When a new technology is introduced, for instance, automation or artificial intelligence, some manual tasks become unnecessary. This can make certain job roles obsolete.

Financial pressure:

During economic downturns or when specific industries struggle, companies often need to cut costs. Reducing staff numbers is one way to lower expenses.

Mergers and takeovers:

When two companies join together, they often have duplicate roles, especially in administration and support functions. The combined company doesn't require two people doing the same job.

Business closure:

In the worst-case scenario, a business may shut down completely, making all employees redundant.

How should HR handle redundancy?

HR teams must handle redundancy both fairly and legally. Here are the key areas they need to focus on:

Following the law:

HR must strictly follow employment laws about notice periods, consultation requirements, and severance payments. These laws vary between different countries and regions, so HR needs to know the specific rules that apply.

Fair selection:

When choosing which employees to make redundant, companies must use clear, objective criteria. These standards should be fair, non-discriminatory, and applied consistently to everyone.

Proper consultation:

Companies usually must discuss redundancy plans with affected employees or their union representatives. This gives everyone a chance to talk openly, explore other options, and address concerns.

Supporting employees:

Good companies help redundant employees find new jobs. This might include career advice, help with writing resumes, job search assistance, or retraining opportunities. This support shows the company cares about its people, even in difficult situations.

Looking after remaining staff:

HR must also consider the employees who keep their jobs. Clear, honest communication throughout the process helps maintain morale and reduces worry among the remaining workforce.

How is redundancy different from being fired?

Both redundancy and dismissal result in an employee leaving the company, but the reasons are completely different.

Dismissal:

Dismissal usually happens because of an employee's actions or performance. This includes misconduct, poor work performance, or breaking company rules.

Redundancy:

Redundancy is a business decision based on the company's needs. It has nothing to do with how well the employee has been doing their job or their behaviour at work.

Understanding this difference is essential for HR professionals to manage these situations correctly and stay within the law.