When is Redundancy NOT a Fair Dismissal?

The ongoing COVID-19 pandemic has had a devastating impact on employment in some sectors of the Irish economy. This has, once again, increased the level of focus on the circumstances in which a redundancy will be lawful. The recent decision of the Labour Court in Dublin Tech Summit F5 Digital Media Communications Limited v Lundy (Determination No. UDD2019, 1 February 2021) is of interest in that regard even if the dismissal in question took place before the pandemic hit Ireland.

The Complainant in the case was a Marketing and Communications Manager. She commenced employment in March 2017. Her employment was terminated by reason of redundancy in September 2019 after the company decided to reduce staff numbers in order to tackle costs.


The Managing Director met with two members of staff (including the Complainant) and discussed their skills and abilities before choosing which one to retain and which one to dismiss by reason of redundancy.


Interestingly, the Court noted that both parties accepted that the Complainant's role was made redundant at the relevant time. One might think that agreement on that point could have decided the matter as the Unfair Dismissals Act 1977 (as amended), under which the case was heard, clearly provides that:


"the dismissal of an employee shall be deemed, for the purposes of this Act, not to be an unfair dismissal, if it results wholly or mainly from ... the redundancy of the employee".


In this case, however, the dismissal was found to be unfair by both the WRC and the Labour Court. How did that happen? Essentially, the Court concluded that an employer is required to follow a procedure that is essentially fair and transparent even in a redundancy situation. It noted that:


"The Respondent has accepted that neither employee whose employment was in jeopardy as a potential consequence of a process to assess the comparative skills of both was aware of that fact. In the view of the Court, this absence of knowledge on the part of the Claimant deprived her of an opportunity to properly address the matters under consideration in the selection process and deprived her of the opportunity to make proposals as regards her future role in the company or to otherwise make a coherent case for her retention in employment.


In those circumstances the Court concludes that the procedures adopted by the Respondent to identify as between two employees which employee should be dismissed were so lacking in transparency and fairness as to mean that the Court cannot accept that the dismissal of the Claimant arose through ‘the redundancy of the employee’."


The Court went on to hold that the dismissal was unfair on that basis. It did, however, reduce the compensation awarded to the employee from €16,000 (as awarded by the WRC) to €7,750 in light of her having found alternative employment in July 2020.


The Court's decision is not necessarily surprising in light of the increasing level of significance that it has attributed to procedures in redundancy cases over the last decade or more. However, it is worth noting that in this case both parties seem to have accepted that there was a real redundancy. Some employers might be surprised that the Court found in favour of the employee, given that the legislation clearly states that a dismissal is not to be deemed unfair if it arises wholly or mainly from redundancy.


Ultimately, employers should note that the requirement to follow fair procedures, long applicable in cases involving dismissal for misconduct or poor performance, appears to have leaked into the sphere of redundancy over the last decade or more and morphed into a slightly different form. Care should be taken and advice should be obtained before leaping headlong into a process that could result in litigation.


For advice and assistance in relation to redundancies, please contact our Employment Law team.