Termination of employees for business reasons, such as poor economic conditions. Redundancies can be forced or voluntary – in the case of voluntary redundancies there are usually incentives offered to outgoing employees, such as extended garden leave or more valuable severance packages. Voluntary redundancies are designed to prevent the employer having to choose who to terminate.
Redundancies can be controversial, particularly if businesses must select who is to be made redundant. A commonly-used technique is Last In, First Out (LIFO), whereby the employees who have joined most recently are considered first for redundancy. This in itself is controversial; critics say it disadvantages young workers who will inevitably have less-established careers.
Redundancies are typically preceded by consultations, which are collaborative efforts between employers, employees and other stakeholders into ways the business can save the role from redundancy through new opportunities or restructuring. Employers may legally be required to consult for a certain period of time although this often depends on how many employees are at risk of redundancy.
When multiple people are at risk of redundancy, the correct term is collective redundancy.
Common euphemisms for redundancy include ‘downsizing,’ ‘delayering,’ ‘excess reduction,’ and ‘strategic restructuring.’