Redundancy: Counting the Cost

Author:Ms Aoife Bradley
Profession:LK Shields
 
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In two recent cases, the Employment Appeals Tribunal has handed down substantial awards - €127,350 and €87,000. The tribunal is penalising employers who fail to adhere to 'fair procedures', even when there is a genuine redundancy situation. Aoife Bradley reports. In recent times redundancies have been an unavoidable reality for many companies. However, now more than ever, tribunals and courts are scrutinising the actions of employers who claim that the dismissal of an employee was due to redundancy and the issue has become one of the most problematic and significant in employment law.

In the two cases in question, Mackey v Resource Support Services Limited (UD56/2009) and Fennell v Resource Facilities Support Limited (UD57/2009), both claimants held managerial roles - regional manager and area manager respectively - and they were made redundant as part of their employer's restructuring. The tribunal held that while both were genuine redundancies, the employer did not adopt fair procedures in effecting the redundancies.

In particular, the tribunal was critical of the fact that the employer:

Failed to consult or engage with the claimants before announcing the decision to restructure, Failed to properly consult with the claimants on the procedures that it adopted, Did not afford the claimants a reasonable opportunity to consider these procedures, and Did not inform the claimants of their right to appeal the decision. Redundancy: What the Law Says.

If an employee is dismissed as a result of redundancy, the dismissal will not be unfair if the employer can establish that:

A genuine redundancy situation exists, There was fair selection of the employees for redundancy, and The employer's conduct is fair and reasonable. If the employer does not observe one or more of these conditions, there is a strong likelihood that the redundancy will be successfully challenged. Most challenges are brought before the tribunal under the Unfair Dismissals Acts, 1977-2007. The tribunal can direct re-engagement, reinstatement or compensation of up to two years' remuneration.

Recent decisions by the tribunal also indicate that in the current economic climate, where it is more difficult for employees to secure work elsewhere, an employer is expected to go to greater lengths than ever before to satisfy the tribunal that its conduct was reasonable. Many unfair dismissal cases are lost because the employer cannot establish that it adopted a fair...

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