Closing the redundancy loophole: Exploring developments in redundancy case law to determine whether the right balance has been struck between protecting employees while allowing employers to manage their business

Abstract

In a redundancy situation the employees affected have ‘done no wrong’. It is simply that, in the circumstances, their jobs have disappeared. The option of a personal grievance provides some protection for employees whose employers might seek to create a false redundancy situation and terminate their employment for other reasons. The analysis in a personal grievance is two-fold: whether the redundancy itself is genuine and justifiable (substantive justification) and whether it was implemented in a fair and reasonable manner (procedural fairness). The focus of this research was to determine whether, in deciding redundancy cases, the Employment Relations Authority and the Employment Court have become too focused on the employer’s compliance with process requirements when implementing a redundancy and were not properly taking into account the genuineness of the reason for the decision. Section 103A(5) of the Employment Relations Act 2000 (ERA), enacted in 2011, ought to have excluded ‘minor’ procedural defects when deciding whether a redundancy is justifiable. Overall, this research found that the procedural issues identified in redundancy cases appropriately impacted on the decisions around the fairness and reasonableness of the employer’s actions and decisions. However, it became apparent that awards of remedies granted for an unjustified redundancy are very inconsistent, particularly where the issue identified is solely procedural in nature. In those cases, perplexing inconsistencies were identified. In particular, approaches differ greatly when it comes to awarding lost wages for a redundancy case. In some instances, awards were made of 2-3 weeks to cover the likely period of further employment if a proper consultation process had occurred. In others, particularly where redeployment was not properly examined, three months lost wages was common (or longer). There were also vast differences in the compensation awarded to redundant employees, despite there being little evident reason for those distinctions. The question of what remedies might be awarded in a redundancy case involving process flaws is very uncertain.