Redundancies can occur when an employer reduces the number of its employees due to closure of the business or workplace, or diminished requirements of the business for employees to do work of a particular kind. A redundancy situation can arise due to any of the following:
- economic pressures making closure or reducing staff necessary;
- a change in products or services provided;
- an internal reorganisation to increase efficiency;
- technology causing a change to job functions; or
- relocation of business;
The law does not interfere with an employer's freedom to make such business decisions and will not look behind the facts to see how the redundancy situation arose.
Redundancy is a potentially fair reason for dismissal provided an employer has acted fairly overall. A dismissal for redundancy may be unfair if:
- redundancy is not the real reason for the dismissal;
- employees are not warned and consulted with about a proposed redundancy;
- an unfair basis to select for redundancy is adopted; or
- suitable alternative employment is not considered.
Employees who are dismissed for redundancy may be entitled to a redundancy payment, either under the statutory scheme or under a more favourable contractual scheme.
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