Redundancy: Getting it Right

Of the 29 Employment Relations Authority determinations on redundancy personal grievances so far in 2022, this is the only one where the employer won the case. The vast majority failed because the employer did not follow the correct process.

Covid 19 lockdowns led to a number of organisations having to make redundancies. Welding Technology Ltd (WTL) was such a company. During the Level 4 lockdown in March, 2020 they had to close their business with the exception of supporting essential services.

Their employee, Mr Aitken, was paid the government wage subsidy during lockdown (which he had agreed to) and was not required to work. He returned to work on 17 April and the company began consultation over a possible restructuring. The consultation resulted in Mr Aitken’s termination due to redundancy on 12 June. He worked in sales.

Mr Aitken claimed the redundancy was predetermined, a sham and failed to account for all the work he did in his role.

The leading case for redundancy is Grace Team Accounting v Brake, where the Court of Appeal stated: “If an employer can show the redundancy is genuine and that the notice and consultation requirements of s.4 of the Act have been duly complied with, that could be expected to go a long way towards satisfying the s.103A test.” The test being the justification test.

The Authority was satisfied the decision to restructure WTL’s sales operations was based on a decision to move sales operations away from in person sales to an on-line business model. This was a business structure that had evolved for WTL over time and was expanded and developed during the Lockdown closure.

WTL formulated a proposal based on this and then consulted over the proposal. This is what informed the decision to restructure and the decision to terminate Mr Aitken’s employment for redundancy. The Authority determined the basis for the redundancy was genuine.

Once establishing the genuineness of the redundancy the Authority then considered the process that was followed and whether it was a fair one.

The Employment Court in Stormont v Peddle Thorp Aitken Limited, Judge Inglis summarised the consultation requirements as follows: “The key requirements in relation to consultation can be summarised as follows. Consultation involves the statement of a proposal not yet finally decided on, listening to what others have to say, considering their responses, and then deciding what will be done. Consultation must be a reality, not a charade. Employees must know what is proposed before they can be expected to give their view on it. This requires the provision of sufficiently precise information, in a timely manner. The employer, while quite entitled to have a working plan already in mind, must have an open mind and be ready to change and even start anew.”

The Authority determined the employer met each of these obligations plus the requirement to consult on and consider alternatives to redundancy once it was decided the position held by Mr Aitken was to be disestablished. A written proposal was provided to Mr Aitken, he was given the opportunity to provide feedback which he did, and there was no evidence of pre-determination. As such the Authority concluded there was no personal grievance.

The required process to reach a justified redundancy termination has been clearly established in the Courts and Authority, and it is critical employers follow it. If you are considering redundancies please get in touch so we can help ensure you meet these essential requirements.