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Dismissal on the grounds of redundancy is permitted as a fair dismissal. However, that is only where a valid redundancy situation exists and fair procedures have been followed.
In a recent case, the Workplace Relations Commission (WRC) accepted that the pandemic may have had an adverse impact on the business of a ventilation company (Company) giving rise to a genuine redundancy situation but that it does not provide an exemption for fair procedures.
The Company in this case argued that the Complainant was selected for redundancy on the basis of 'Last in First Out' (LIFO) and by applying a selection matrix. However, this was disputed by the Complainant who alleged that he was not the most recently recruited employee and that he was not previously provided with details of the selection criteria. The WRC agreed with the Complainant and concluded that the selection matrix was contrived for the purposes of the hearing. The Company was ordered to pay €10,000 compensation to the Complainant for failing to follow a fair selection process before terminating his employment. This was the maximum amount that the WRC could have awarded in this case as the Complainant had mitigated his losses.
In its decision, the WRC reminded employers that the core principles of employment laws and fair procedures continue to apply during the pandemic. A copy of the decision can be seen here.
How to Conduct a Fair Selection Process
A selection process may not necessarily arise in all individual or small group situations, but where it does arise, an employer must be able to justify why an employee was selected for redundancy.
The selection criteria is particularly relevant where there are a number of similar employees who can perform the same role and an employer has to select a number of employees for redundancy from amongst this number.
The selection criteria applied must be based on objective grounds and applied in a fair manner.
It should also be consistent with an employee's contract of employment and the previous manner in which redundancies had been dealt with by the organisation unless there are special reasons to justify deviating from the standard practice.
Best practice is to allow an employee to comment on proposed selection criteria in advance before it is applied.
In our experience, some of the more common selection criteria are as follows:
- One rather traditional selection basis is LIFO, which is based solely on the length of service with the organisation. Historically, it was a common basis for selection particularly where there are a large number of similar employees performing the same duties. More recently, selection criteria have often been more detailed but LIFO is still a legitimate basis in the right situation.
- Another common selection process is an interview or skills matrix process on a points based system. Employers might consider an employee's contribution to the business, their importance in the business, adaptability, qualifications, relationships with key clients and other similar criteria. The employee with the lowest score would then be in scope for redundancy. Some criteria may be difficult to objectively score so employers should avoid excessively subjective criteria.
Employers should avoid criteria that use attendance records as this could indirectly discriminate against an employee with caring responsibilities, for example, or on disability grounds e.g. if they were on sick leave. We would also advise against using disciplinary records as an employee could argue that that is a double penalty - they have already been disciplined but now they are being disciplined again. Performance appraisals could also be challenged if the appraisal process was not objective.
Discriminatory grounds, either directly or indirectly, should obviously also be avoided. This includes grounds related to age, disability, civil status, family status, gender, sexual orientation, religion/belief, race or membership of the Traveller community.