What is redundancy in the workplace?

In the workplace, redundancy refers to when employers have to let go of one or more employees due to circumstances unrelated to job performance or behavior, often as a result of organizational changes. 

Here are some examples of situations where employers may have to let employees go due to redundancy:

• Economic recession: If external factors like an economic recession start to affect your business, you might have to let employees go in order to control costs and manage financial challenges.
• Termination of business: Redundancy can occur if you decide to close your business because you want to try another venture, retire or move on to a new job.
• Termination of job title: If your business no longer needs a particular job title, this could lead to redundancy. For example, if your company moves to an electronic phone system, the employee’s job as a Receptionist may no longer be needed as the position is redundant.
• Limited funding: If your business has limited or no funding for a project, this might be a cause for redundancy. Reducing costs may require eliminating roles that are no longer needed due to financial constraints. Keeping employees when there’s no work for them could cause a loss in profits.
• Relocation of business: If you decide to move your business to a new location or another region, state or even country, some roles may be made redundant as a result of the move, and your company may also need to downsize in order to establish its new location.
• Restructuring: A business may need to undergo restructuring to improve efficiency or adapt to market changes. 
• New technology: The adoption of new technology, such as AI, can also make certain roles redundant, as some employee’s roles or positions may no longer be required.

What is the difference between redundancy, layoffs and downsizing?

Before you evaluate redundancy within your workplace, it can be useful to understand how redundancy differs from layoffs and downsizing. 

Here’s how you can distinguish between these terms:

The difference between redundancy and layoffs

Layoffs typically occur when an employer can no longer provide work for their employees. These can either be permanent or temporary depending on the state of the company. 

Redundancies can also occur as a result of a lack of work available for an employee, as well as situational factors such as business termination or relocation. A redundant employee is someone whose role is eliminated due to business needs, not because of personal performance.

Layoffs and redundancy are both types of dismissals, but redundancy is typically termination based on business needs, such as organizational restructuring or economic downturns, rather than employee conduct or performance. In contrast, layoffs may sometimes be temporary or due to other operational reasons.

The difference between redundancy and downsizing

Downsizing is when a company reduces its size. This could be because they’re preparing for a merger or because they’re trying to balance their finances in response to an economic downturn. In this way, downsizing is similar to redundancy, but with downsizing, sometimes employers offer employees the option to transfer to another company location.

Some organizations may also offer voluntary redundancy as part of their downsizing strategy, allowing employees to choose to leave with compensation. Larger organizations often have structured processes for managing downsizing and redundancy to ensure fairness and support for affected employees.

How to evaluate potentially redundant roles

Evaluating redundant roles within your company may help you preserve your company’s finances, and effective redundancy management is essential for ensuring a fair and compliant process. Careful planning and consultation with employees and managers can help minimize risk and support fair decision-making during the evaluation process.

Consider the following steps to help guide you through the process:

1. Identify essential roles within your company

Determine which roles in your organization are considered essential. This could include roles for company officials and department heads or managers because they help oversee your company’s operations. 

When identifying essential roles, ensure unconscious bias does not affect your decision. For example, affinity bias might encourage someone to prefer employees who have a similar background and education, and deem others without this background or skillset as less essential. Consider treating all workers equally during the decision-making process by monitoring for signs of unconscious bias.

2. Review key personnel and their ability to take on additional roles

Consider each essential employee and their role within your company. They might be able to take on other responsibilities if they have transferable skills, such as financial acumen.

For instance, if the head of the accounting department has a background in financial planning and is also a Certified Public Accountant (CPA), they could take on more responsibility if you have to let go of one or more accountants.

3. Consider which roles or departments present limited benefits

When reviewing your organizational structure, evaluate which roles may present the least potential benefit to your company going forward to help you determine which roles are redundant. Look for a sudden decrease in a role’s workload, or whether certain skills are still required after an acquisition or a merger.

For example, a business that is not effectively reaching their target audience with their sales team may downsize in order to better streamline their approach. Instead of making sales associates redundant, they might retrain a portion of staff in more useful roles such as customer data analysis or customer relationship management. That way, they can discover more efficient ways of connecting with customers, while also retaining and retraining staff.

4. Identify potential areas that those employees could move to within the company

If your purpose for finding redundancies is to improve productivity rather than prevent a loss in profit, you could create new positions or move employees to other roles to better benefit your company. For example, if you have multiple Marketing Specialists but still want to keep them in your company, you could offer them positions in Communications Specialist, Marketing Manager or Market Research Analyst roles.

Best practices for handling redundancy

Here are some tips to consider when handling redundancy within your workplace. Please note that we are not your recruiting or legal advisor.

• Consult with other company officials.
• Hold a townhall meeting to address the situation.
• Meet with each redundancy candidate individually.
• Provide proper notice to all impacted employees when necessary, specifying the notice period and ensuring all notice periods required by law are met.
• Deliver redundancy notifications in writing to ensure clarity and professionalism.
• Offer outplacement services and support to employees, such as access to job search resources and government support programs.
• Provide practical advice to employees on next steps, including job searching and interview preparation.
• Involve human resources (HR) in the redundancy process to ensure compliance, fair treatment and effective communication.
• Companies should communicate transparently and support employees throughout the redundancy process.
• Avoid making productivity assessments for anyone on medical leave.