Reducing redundancy in the workplace is a difficult decision to make as a business owner. It can have a frustrating and sometimes devastating impact on employees. Although it might be a necessary move for the health or evolution of a business organization, it is difficult from an individual perspective.
In this article, we will discuss what redundancy in the workplace is and what it isn’t. We’ll see how redundancy works, and what making a job redundant entails from an employer’s perspective.
What is Redundancy in the Workplace?
Redundancy is when a business must let go of an employee for reasons other than their job performance.
This can occur for a variety of reasons. If an employer makes a role redundant, it means that job is no longer necessary to help the business operate.
Why Does Redundancy in the Workplace Occur?
The idea of redundant work is a controversial topic. Some feel restructuring an organization should aim to include all of its current employees, rather than eliminate existing positions.
Despite this, it happens. The cause of redundancy in the workplace can include a variety of situations.
Sometimes, a business outgrows the need for certain job titles. An example of this would be if the work an employee was doing was no longer necessary. This could be due to introduction of new operational processes or technology, such as software or an automated phone system.
Loss of Funds
If the funding for a project falls through or runs out, and employees hired for the project no longer have work, this makes their positions redundant. Keeping the team members assigned to the project when there is no project can end up costing businesses money.
Relocation or Termination of Business Operations
Where and how a business operates can also impact employee redundancy.
If an employer decides to move their business to a new office, city or state, doing so may cause redundancy. This could be because there aren’t enough funds for employee relocation packages. It could also be because the company is moving to a new location to downsize.
A business that ceases operations will also lead to workplace redundancy. If there is no business, the existing positions are no longer required.
The economy can also play a significant role in workplace redundancy. For example, imagine a business is trying to operate during a recession. They may find it necessary to eliminate certain positions to keep the business afloat.
Who is Selected for Redundancy?
The individuals who are considered at risk of redundancy are also known as the redundancy pool. This group of employees can include those working on a specific project, people with certain job titles or departments, or even the entire business’ workforce. Businesses or employers select the people they will make redundant from this pool specifically.
An employer will need to consider several selection criteria for making a role or employee redundant. Such criteria may include:
- Disciplinary record
- Relevant skills or job experience
- Job qualifications
- How long they have worked with the company compared to others in the pool
- Attendance record
These are used as a guide to help employers fairly and objectively grade an employee in the redundancy pool. Many employers choose to use a third-party consultant to help grade the employees based on the above criteria.
Those in a redundancy pool cannot be discriminated against for reasons due to race, gender, disability, maternity leave, age, sexual orientation, whistleblowing or religious beliefs.
Overall, an employer must have a valid reason for making an employee redundant and be able to prove that.
Valid and Invalid Reasons for Redundancy
It may be helpful to understand what are both legitimate and illegitimate reasons for redundancy in the workplace. There have been cases where an employer claimed that they were making a role redundant, only to reveal later that they were trying to remove a single person from the company.
Examples of valid redundancy reasons include the elimination of a job title or company restructuring, a business merger or the closing of the business — anywhere there is a surplus of employees, not enough money or not enough work.
Invalid reasons for redundancy typically have to do with the individual and their relationship with the employer or their work performance.
For example, say a flower shop employee does not get along with their manager, but shows up for their shifts on time and displays a positive attitude and strong work ethic. One day, after a disagreement with their manager, they are told their job has been made redundant. Several weeks later, the employee sees a job opening online for their previous role.
If the flower shop employee’s position had really been made redundant, they would not be putting out an advertisement to hire someone new to replace them. In this instance, the flower shop manager felt it was easier to claim the role was redundant, rather than firing the employee due to a lack of a good working relationship.
Another invalid reason for claiming redundancy is if an employee has a poor performance or attendance record. That person can be fired for these reasons, but they cannot be made redundant.
Can a Redundancy Be Appealed?
Employees who have been made redundant can appeal against the decision if they feel the process was unfair. Ultimately, the employer decides whether to accept the appeal request.
If an appeal is accepted before the employee leaves employment, an employer can offer them their original contract and position. If they have already been terminated, the employer can offer them their old position and reimburse them for the time they were unemployed.
How is Redundancy Different from Layoff or Downsizing?
There are several differences between redundancy and other common business terms like “layoff” or “downsizing.”
A company that permanently reduces the number of its employees due to a merger, loss of revenue or economic stress can be said to be downsizing. It is also possible that a company downsizes if they are trying to make their business operations more efficient.
Just like redundancy, layoffs that occur do not have anything to do with the individual employee’s workplace performance. Rather, a layoff typically signifies a temporary loss of work due to many of the same reasons that occur when a business downsizes.
Being laid off can also indicate a permanent loss of work due to a recession, technological advances that automate or replace a worker’s role, or perhaps, a reduction in overall production.
Lasting Effects of Workplace Redundancy
Both employers and the employees who found their roles redundant can experience lasting effects on personal wellbeing and productivity.
For the individual, it can be a shock to be classified as redundant. Initial feelings of embarrassment, shame and anxiety about their future are common. However, although being made redundant can be stressful, it is important to remember that it does not have anything to do with the individual’s work ethic or performance.
Many people who have been made redundant use this time to reevaluate their life and career goals, and to take the opportunity to explore new paths.
Organizations that make workers redundant are not exempt from experiencing negative side effects. The employees who remain after a reduction in staff experience a lack of trust in their employer. This leads to a lack of productivity, decreased engagement in workplace activities and a decrease in overall efficiency.
Businesses that work hard to handle the redundancy process with transparency, fairness and increased support for remaining employees, may avoid or reduce the potency of these effects.
The subject of workplace redundancy can be a tricky one to navigate. It is a controversial topic that has lasting effects on both a business and the employees who were made redundant.
As an employer, it is necessary to handle the redundancy process as equitably and honestly as possible. The decision to make certain roles redundant should always be taken seriously.