WRC Finds Genuine Redundancy but Unfair Dismissal Due to Flawed Process
A recent WRC decision highlights the importance of following a fair and transparent process when selecting an employee for redundancy, even where there is a genuine business need for redundancies.
The Workplace Relations Commission has found that an employee was unfairly dismissed after accepting that a genuine redundancy situation existed within the employer’s business. The WRC found that the employer had failed to properly consult with the employee, explain the selection criteria or provide a meaningful opportunity to consider alternatives before making the role redundant.
The case concerned an Education Sales Representative who had worked for the employer for more than ten years before his employment was terminated by reason of redundancy.
Background to the case
The employee had worked for the company since March 2014 as an Education Sales Representative, covering the North West region.
The employer had experienced financial difficulties and undertook a review of its Sales Team with a view to reducing costs and restructuring the way its sales territories were managed.
As part of the restructuring, the employer decided to make two Sales Representative roles redundant. The employee's role was one of those selected.
The employer explained that its decision was based on a number of factors, including the geographical coverage of territories, student numbers, travel requirements and the impact that reducing sales representation would have on the business.
The employer maintained that the redundancy was genuine and that the employee's role was no longer required in its existing form.
The employee argued that he had been personally selected for redundancy and that the redundancy process was used as a means of terminating his employment.
The redundancy process
The employee was invited to a meeting which was due to take place on 25 June 2024. However, he was unwell with COVID and was unable to attend.
The following day, the employee received confirmation that his employment was being terminated by reason of redundancy, with his employment due to end six weeks later.
The employee argued that he had not been placed on notice that his role was at risk of redundancy and had not been given an opportunity to discuss the proposed redundancy, challenge the selection criteria or put forward alternatives.
The employer subsequently provided an appeal process, which was conducted by an independent consultant.
However, the WRC noted that the redundancy payment was issued to the employee before the outcome of the appeal had been communicated to him.
WRC decision
The WRC accepted that there was a genuine redundancy situation within the business.
The Adjudication Officer accepted the employer's evidence regarding its financial difficulties and the need to restructure the Sales Team. The WRC found the employer's evidence and supporting documentation regarding the financial position of the business to be compelling.
However, the WRC went on to consider whether the employee had been fairly selected for redundancy and whether the employer had acted reasonably in the circumstances.
The WRC noted that the employer had identified objective criteria for determining which Sales Representative roles should be removed. However, the employee had not been informed of those criteria or given an opportunity to make submissions regarding his selection.
The WRC found that the employee:
- Had not been notified that his role was at risk of redundancy
- Had not been given advance notice of the selection criteria
- Had not been given an opportunity to engage in consultation regarding the proposed redundancy
- Had not been given an opportunity to suggest alternatives to redundancy
- Had not initially been informed of a right of appeal
The WRC also considered that the employer could have postponed the meeting until the employee had recovered from his illness rather than proceeding directly to terminate his employment.
While an appeal was ultimately provided, the WRC found that the process did not adequately address the earlier procedural shortcomings. The fact that the redundancy payment was made before the appeal outcome was issued was also considered significant.
The WRC concluded that there was a genuine redundancy situation, but that the employer did not engage in a fair and transparent process in selecting the employee for redundancy.
The complaint of unfair dismissal was therefore upheld.
€60,000 compensation awarded
The WRC awarded the employee €60,000 in compensation.
In determining the appropriate level of compensation, the WRC considered the employee's financial losses, including the difference between his previous salary and his new salary, the loss of pension and commission benefits and the loss of use of a company car.
The WRC also took account of the impact of the dismissal within what it described as a niche sector and rural community, as well as the employee's efforts to secure alternative employment.
The employee's separate complaints under the Redundancy Payments Act and Payment of Wages Act were not upheld.
What does this mean for employers?
This decision is a useful reminder that having a genuine business reason for redundancy does not, by itself, make a dismissal fair.
Employers should ensure that the process used to select an employee for redundancy is fair, transparent and properly documented.
Where redundancies are being considered, employers should:
- Clearly identify the business rationale for the proposed redundancies
- Identify the roles or employees potentially at risk and establish appropriate selection criteria
- Communicate the risk of redundancy to affected employees
- Provide employees with an opportunity to understand and respond to the proposed selection
- Properly consider any alternatives to redundancy or possible redeployment
- Allow sufficient time for meaningful consultation
- Give employees an opportunity to raise concerns or make alternative suggestions
- Provide a clear and meaningful right of appeal
- Keep a detailed record of the redundancy process and the reasons for decisions made
It is also important that employers do not treat consultation as a formality once a decision has effectively been made.
Key takeaway for employers
This case demonstrates that a genuine redundancy and a fair redundancy process are two separate considerations.
An employer may have a legitimate business reason for reducing headcount, but it must still be able to demonstrate that the employee was selected fairly and that the redundancy process was handled properly.
Taking the time to follow a structured consultation process, clearly explain the reasons for the proposed redundancy, consider alternatives and provide a meaningful opportunity to appeal can help reduce the risk of an unfair dismissal claim.
If your business is considering redundancies or you need advice on managing a redundancy process, please don't hesitate to contact MSS The HR People at info@mssthehrpeople.ie or call +353 (0)1 887 0690.
