HR Glossary

Redundancy

What is redundancy?

Redundancy occurs when an employee's role is no longer needed. It is not related to employee performance but rather stems from business changes, financial constraints, or technological advancements. In many countries, redundancy is legally regulated to ensure fairness and support for affected employees.

What are the common reasons for redundancy?

Redundancy can happen for various reasons, including:

1. Business closure or downsizing: 

   Companies may shut down entirely or scale back operations due to financial losses or strategic shifts.

2. Technological advancements: 

   Automation and AI can replace certain job functions, rendering some roles obsolete.

3. Restructuring the organization:

   Mergers and acquisitions may lead to workforce changes to drive growth, improve efficiency, and expand market reach.

4. Outsourcing: 

   Businesses may delegate certain functions to third-party providers, resulting in job cuts.

5. Relocation: 

   A company may move its operations to a different location, and not all employees may be able to transfer.

6. Economic downturns: 

   During recessions, companies often cut jobs to manage costs.

7. Changes in market demand: 

   If a product or service becomes less popular, companies may reduce staff in affected departments.

What criteria are used to decide which roles are redundant?

Employers must use fair and objective criteria when selecting employees for redundancy. Common selection methods include:

• Last in, first out (LIFO): Employees with the shortest tenure are the first to be let go.
• Skills and qualifications: Employees whose skills are no longer needed may be selected for redundancy.
• Performance and productivity: Employers may assess work quality, attendance, and efficiency.
• Disciplinary record: Employees with prior misconduct may be at a higher risk of redundancy.
• Voluntary redundancy: Some companies allow employees to opt for voluntary redundancy.

What are the types of redundancy?

Redundancy can be classified as:

1. Compulsory redundancy: 

   Employees are selected for redundancy based on business needs, typically through a formal selection process.

2. Voluntary redundancy: 

   Employees are given the option to leave in exchange for a redundancy package. This helps companies avoid forced layoffs and legal complications.

What are some ways to reduce redundancies?

Organizations can take proactive measures to minimize redundancies:

• Reskilling and upskilling: 

  Training employees in new skills to help them transition into different roles.

• Flexible working arrangements: 

  Offer part-time roles, job sharing, or reduced hours to retain employees.

• Temporary pay cuts or unpaid leave: 

  Instead of layoffs, consider reducing salaries or offering unpaid leave.

• Redeployment: 

  Reassign employees to other departments within the company.

• Business diversification: 

  Expand into new markets or services to create new job opportunities.

• Consultation with employees: 

  Engage staff in decision-making and seek alternative cost-cutting solutions.

Should you tell an interviewer that you were made redundant?

Yes, but how you frame it matters. Redundancy is not a sign of poor performance, so be honest yet positive:

• Be concise: 

  Clearly state that your role was made redundant due to company restructuring, downsizing, or economic conditions.

• Stay positive: 

  Emphasize your achievements in the role and how the experience has contributed to your professional growth.

• Show adaptability: 

  Highlight how you’ve upskilled, taken on freelance work, or pursued additional training since redundancy.

By framing redundancy in a positive light, you demonstrate resilience and a proactive mindset, which can impress potential employers.