Redundancy

What is redundancy?

Redundancy is the termination of an employee’s contract for reasons that stem from the employer, not the employee’s performance or conduct. It occurs when a business reduces or eliminates roles, most often for reasons such as:

• Reorganization (operational model changes, department mergers): for example, combining the marketing and communications teams so two overlapping management positions are no longer needed.
• Implementation of automation or new technologies: for example, automating invoice processing reduces the need for certain finance roles.
• Closing a project, business line, or location: for example, discontinuing an unprofitable product makes the related sales and support positions unnecessary.
• Sustained decline in demand or need for work: for example, a manufacturer experiences a long-term decline in orders for a specific component due to changes in the automotive market and reduces staff in the affected production unit.
• Transition to outsourcing: for example, shifting IT support to an external provider eliminates in-house helpdesk positions.

📌 Note: Redundancy is not the same as reducing working hours. Redundancy ends the employment relationship entirely, while reducing hours changes the terms of employment but keeps the employee on staff.

How does redundancy differ from layoff or employee suspension?

Redundancy is a permanent separation for organizational reasons. In many regions, redundancy is synonymous with a layoff for business reasons. However, in some English-speaking countries, a layoff can also mean a temporary furlough during a downturn or production halt, whereas in many markets a layoff always refers to a permanent termination.

A suspension means the employee remains on the payroll but is temporarily removed from their duties – for instance, during an investigation into alleged misconduct or a conflict of interest. The purpose is not to eliminate the job but to pause the employee’s work until a decision is made. Some jurisdictions do not provide a general legal framework for suspensions except in specific professions (e.g., teachers, civil servants, or law enforcement).

How does redundancy differ from job elimination?

Job elimination (or position elimination) is an organizational change that doesn’t always lead to separation. An employee whose role is eliminated may be offered redeployment to another position or retraining for a different role. Only when these options are not possible does job elimination result in redundancy.

Can you declare redundancy and then hire a new employee?

Employers may adjust their workforce and create new positions. After a redundancy, a company can hire again – even for a similar role – but should proceed cautiously and have a sound business justification.

If the redundancy was based on genuine business needs and the new recruitment reflects changed circumstances (e.g., winning a major client), this is generally acceptable. Problems arise when a new role is effectively identical to one that was just eliminated: a former employee could claim the redundancy was not genuine. Even if procedures were followed, such actions risk legal disputes or reputational damage.

How does the redundancy process work step by step?

Processes vary by country and internal policies, but HR teams generally follow these stages:

Step 1: Strategic analysis and identifying the need for redundancy

The board or senior management defines the business objectives that require adjustments to the workforce. HR, working closely with managers, reviews workforce data, labor costs, financial forecasts, and operational risks. At this stage, alternatives to redundancy – such as redeployment, retraining, or process reorganization – are considered.

Step 2: Developing a plan and formal basis for the decision

HR prepares the documentation supporting the decision: selection criteria, an action timeline, employee communications, and settlement procedures. In jurisdictions where additional steps are required, the company consults employee representatives or unions and notifies the appropriate labor authorities.

Step 3: Transparent communication and individual meetings

News of the redundancy is first shared with management and key decision-makers before being communicated to teams. Individual meetings with affected employees include delivering termination notices, explaining rights and benefits (notice periods, severance pay, accrued compensation, retraining opportunities), and answering questions.

Step 4: Execution and organizational stabilization

The employer finalizes all payments, updates HR systems and personnel records, and monitors the morale of the remaining teams – providing support and clear information about the company’s future. Many mature organizations also analyze the business and workforce impact of the redundancy afterward to refine future processes and assess whether the intended objectives were met.

How long does the redundancy process take?

The length of a redundancy process depends on the size of the organization, local labor regulations, the number of employees affected, and the complexity of the restructuring.

• In smaller companies with only a few redundancies, the formalities can often be completed within the notice period – typically two weeks to three months, depending on local law and the employee’s length of service.
• In larger organizations or in jurisdictions with extensive worker protection procedures, the entire process can take six to twelve months, especially when consultations with employee representatives or labor unions are required.

What rights and benefits does an employee have during redundancy?

The specific rights employees have during redundancy depend on the country’s labor laws, but several principles are common across most legal systems and HR practices:

Notice period

In most countries, employers are required to provide an appropriate notice period or pay in lieu of notice. The length of notice typically depends on the employee’s tenure or the terms of their contract.

Severance pay

Many countries mandate financial severance, especially when redundancy occurs for reasons outside the employee’s control. Severance amounts are often linked to length of service, employee age, or terms negotiated in collective agreements.

Payment for unused benefits

Employees are usually entitled to compensation for unused vacation time or other benefits accrued under company policy or law.

Right to appeal or compensation

In many jurisdictions, employees may challenge the validity of a redundancy before a labor court or similar body. They may seek compensation or reinstatement if the redundancy is deemed unfair.

Rehire priority

Some legal systems stipulate that if a company recreates an eliminated role within a specified time frame, the former employee has priority in applying for or reclaiming the position.

Employer support

While not always legally required, it is good practice for companies to offer outplacement services, career counseling, or skills training to help employees transition to new opportunities. Increasingly, organizations also provide short-term benefits or access to mental health support to help mitigate the impact of job loss.

Ethics

Regardless of jurisdiction, redundancies should be handled transparently and documented thoroughly – with clear reasoning, respect for employee dignity, and compliance with their rights.

How does an HR platform support the redundancy process?

Redundancy requires careful planning, strict adherence to procedures, and an empathetic approach to employees. An HR platform such as PeopleForce can:

Summary

Redundancy is one of the most challenging aspects of human resources management. While sometimes necessary for business reasons, it always demands thoughtful consideration, thorough preparation, and transparency. The way it is handled shapes the company’s reputation, organizational culture, and future recruiting opportunities.

Handled ethically, a redundancy can turn departing employees into brand ambassadors. At the same time, it strengthens trust among those who remain, making it easier to rebuild the team and maintain organizational stability.