Employee redundancy arises after the employer carries out an organisational change that results in a specific employee becoming unnecessary. Similar to the termination grounds based on employer dissolution and/or employer relocation, redundancy is a manifestation of a structural change made by the employer. The decision is issued directly by the employer or its authorised body. An employee may be lawfully declared redundant only if all the following statutory conditions are met:
The employer has issued a decision on an organisational change;
As a result of this change, the employee has become redundant;
There is a causal link between the organisational change and the employee’s redundancy.
All three of the above-listed elements must be fulfilled for the termination to be valid. This termination ground depends on the operational needs of the employer. It enables the employer to adjust both the number of employees and the qualification structure of the workforce according to its needs. All defined conditions must be met simultaneously, and the employer must be able to prove them; otherwise, the dismissal is invalid.
Organisational Change as a Ground for Termination
For redundancy purposes, an organisational change is understood as a situation in which the employer could still assign work to the employee, but doing so no longer makes economic sense. This includes, for example, technical or organisational adjustments leading to a reduction in the number of employees or even the introduction of shorter working hours.
It is not necessary for the employer to actually reduce the total number of employees. A redundancy dismissal may occur even while the company is increasing its workforce, because the purpose of this termination ground is not only to regulate the number of employees, but also their qualification structure.
If the organisational change affects multiple employees, the selection of which employee becomes redundant is made solely by the employer. The selection criteria, however, must not be discriminatory.
How the Organisational Change Must Be Implemented
Although a decision on organisational changes does not require written form, the employer must make the decision before giving notice of termination. The employer must also inform the employee of the decision. The organisational change must take effect before the employment relationship ends. The employment relationship does not end at the moment the employee receives the notice — it ends only after the notice period expires.
This means the employer may give notice while the organisational change takes effect during the notice period. For assessing redundancy, the decisive moment is the effective date of the organisational change. If the organisational change were to take effect after the end of the notice period, the termination would be invalid.
Redundant Employee
An employer considers an employee redundant if the work the employee performs is no longer needed. The needlessness of the employee’s work follows from the organisational changes adopted. For example, if the employer decides to reduce the number of employees, the work of a particular employee may no longer be required. It is irrelevant whether the employer could continue employing the worker or assign them different duties.
An employee may also be deemed redundant if a portion of their job description or one of several tasks is eliminated. Such an employee is no longer fully occupied with work duties. The employer is not required to offer the employee different work or a shorter working time.
The employer decides exclusively who is redundant. In its decision, the employer may define the group of redundant employees according to its discretion, most commonly according to the type of work performed.
When an Employee Is Not Redundant
The employer must assess redundancy carefully and consider all circumstances of the case. The substantive nature of the job duties is essential. For example, if the employer merges certain positions or departments but the employee’s job duties remain unchanged, the employer may not proceed with a redundancy dismissal.
An employee working shorter hours under the contract is not redundant just because the employer wishes the work to be performed full-time. Nor is an employee redundant simply because the employer considers them less qualified than a newly hired worker.
Causal Link Between the Organisational Change and Redundancy
The employer proves the causal link if the employee’s work becomes unnecessary as a direct result of the organisational changes adopted. The employee’s redundancy must arise directly from the employer’s measures. The employer’s conduct must always be assessed in context. For example, if the employer artificially increases the number of workers only to dismiss some as redundant shortly afterward, this may be seen as an artificial manoeuvre aimed at removing an unwanted employee. The employer also cannot rely on redundancy if it hires a new employee for the same position after the dismissed employee leaves.
Redundancy based on organisational change is assessed by the employer. If the employer decides to issue a redundancy dismissal, it must explain why the employee was deemed redundant. The employer must prove the causal connection between the organisational change and the employee’s redundancy.
Know Your Employee Rights
Termination due to redundancy is probably the most common type of employee dismissal. It is frequently misused by employers, which is why it is important to assess whether the dismissal is lawful.
Have you received a redundancy notice and need advice? Contact us — we are here to help.
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