Redundancy is one of the most technical areas of employment law, with many rules and procedures that can, at times, be overwhelming.
Today, let’s address one of the questions our advice team gets most frequently: what happens when you’ve let someone go, and then you want to re-employ them?
Below, we discuss some issues to consider if you find yourself in this position.
Zero restrictions on re-employing a staff member you previously made redundant
Firstly, there are no restrictions on re-employing somebody who's been made redundant – in accordance with a legally compliant redundancy process.
There should be no issues with re-employing your former employee, provided a genuine redundancy situation existed when they were let go. For example, you may have had to reduce your headcount because your business was struggling, but since then, you’ve managed to re-build your position in the market.
Here, rather than hiring and training new employees, you may consider re-hiring the people who already have the skills required and know your business. In these circumstances, it’s accepted that there may well be valid grounds for an employer to re-hire an employee they previously made redundant.
Ensure your redundancy complies with unfair dismissals legislation
Remember, as per the Unfair Dismissals Act 1977, all dismissals are presumed to be unfair – unless there are substantial grounds justifying them.
Redundancy is one such justifiable ground. For it to be considered as such, though, there must be:
- A genuine redundancy situation.
- Fair selection of employees based on objective criteria.
- Proper consultation.
When an employee has been dismissed by reason of redundancy, if they think any of the above conditions haven’t been met, they may seek to challenge the redundancy.
One thing to be cautious about? Re-hiring somebody you recently made redundant could raise questions regarding the validity of their initial redundancy and whether there was in fact a genuine redundancy situation.
If you want to re-engage an employee who was made redundant, there’s a higher risk that the employee could mount a legal challenge questioning the validity of being made redundant in the first place.
So, if you’re re-employing someone to fill a position that was made redundant, it’s crucial that you have evidence showing that there was a genuine redundancy situation when the initial redundancy took place.
Re-employ on similar terms and conditions of employment
It’s also important to re-hire the employee on similar terms and conditions of employment.
Re-hiring somebody on a much lower salary or less generous benefits package might be seen as a way of resetting staff loyalty bonuses or similar schemes.
On the other hand, a significant increase could be seen as unfair by any staff who stayed employed in similar roles, but without receiving the same pay rise or improved benefits.
Continuous service considerations
When re-hiring an employee that you previously made redundant, you should also consider continuity of service. A break in employment between 6-12 months is generally seen as enough to constitute a break in continuous service.
However, a break that's less than 6 months will be deemed continuous service, and the re-hired employee will reacquire any rights based on continuous length of employment.
Caselaw involving continuous service
In Kenny -v- Tegral Building Products Limited, the employee commenced his apprenticeship in 2000 and was made redundant upon completing it in 2003. He was issued his P45, but three and a half weeks later, he was re-employed on a series of fixed-term contracts. His employment ended in April 2004.
The Employment Appeals Tribunal held that “the continuous service of an employee in his employment shall not be broken by the dismissal of the employee by his employer followed by the immediate re-employment of the employee.”
Should the rehired employee return their redundancy payment?
It could be argued that an employee who accepted redundancy and a redundancy payment shouldn't also enjoy employment rights that are based on the length of their continuous service.
If it arises, the fairest way to deal with this issue could be to ask the re-hired employee to return their redundancy payment if they wish to reinstate their continuous service.
Dealing with a redundancy-related HR issue?
Redundancy and continuous service queries are difficult employment law challenges for business owners to handle.
If you have a query on your redundancy obligations, why not speak to one of our HR advisors?
You can call us any time day or night on 1800 719 216.
