The Importance of Applying Fair Procedures in All Redundancy Situations

The Workplace Relations Commission (WRC) recently made an award of €120,000, being one year’s salary. This was despite the fact that it found that the complainant’s job was genuinely redundant and that any appeal against the decision to make the role redundant was likely to be unsuccessful. In making the award, the WRC found that the employee’s termination was unfair partly due to the disrespectful manner in which the employee was terminated. In doing so, the employer had departed from “the standard of reasonableness that a reasonable employer would have shown” to an employee in similar circumstances.

Background

The complainant was employed as an account manager with 15 years’ experience on the Dublin-based sales team of Econocom. Due to a fall in profits which made the business unsustainable, the company made the decision to close the entire sales operation in Dublin. The WRC decision serves as a strong reminder to employers that redundancies are a type of dismissal and that there is a requirement to comply with the Unfair Dismissals Acts.

The complainant was informed that his job was being made redundant over Microsoft Teams. He was unaware of the purpose of the meeting and was not afforded the right to be accompanied or represented at the meeting. The complainant sought an enhanced redundancy package of 4 weeks’ pay per year of service. This was rejected and his employment terminated on 31 July 2020. He received a statutory redundancy payment, plus outstanding holiday pay and certain commission payments.

It was the company’s position that a shortened consultation process was sufficient due to the fact that the Dublin sales operation was closing and that discussions with the complainant regarding alternatives to redundancy would have been futile as there were none.

No application of a fair procedure

The adjudication officer was satisfied that a genuine redundancy existed but that under the Unfair Dismissals legislation, employers need to apply fair procedures and the WRC still needed to consider the conduct of the employer. The WRC was of the view that Econocom had not discharged that conduct requirement as they had failed to apply fair procedures. The complainant was provided with (1) no notice of the meeting; (2) no representation; (3) no right to respond; and (4) no right to appeal.

In addition to not following a fair procedure, Econocom failed to consider any alternatives to redundancy. The WRC noted that no credible explanation was given for the decision of Econocom not to engage with the employee to identify a suitable alternative role, or to extend his notice period so that he could find another job. The WRC also suggested that the company ought to have dismissed the employee on mutually agreed terms.

Impact of the decision

The decision of the Adjudicator in this instance was far reaching. For example, there is no right at law to facilitate representation for an employee at a meeting to communicate a decision to make a role redundant. Neither is there any obligation on an employer to extend an employee’s notice period or, subject to some exceptions, make an ex-gratia payment. The Adjudicator’s comments and approach however helpfully restate and underline the requirement for employers to follow a fair process even in circumstances where a redundancy situation clearly exists.

Conclusion

The key takeaway for employers is that even in a genuine redundancy situation, there is a need to apply fair procures and engage meaningfully with affected employees in order to successfully defend an unfair dismissal claim in the WRC.

For expert guidance on navigating similar issues for your organisation, please contact a member of our Employment & Benefits team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.