What is redundancy

Updated: Feb 21

Redundancy involves terminating employment as they are no longer needed by the organization usually due to cost-cutting activities due to an economic recession or introduction of new technology making a business capital-intensive (factor substitution).


They can be either voluntary or compulsory (involuntary) depending on the amount of workforce the firm needs to reduce. If the amount is large, the firm will adopt a compulsory approach. Redundancy are not considered as dismissals, as such redundant employees are given monetary compensation according to their past contribution to the firm.


Dismissals is a penalty from disciplinary issues the employee has, that resulted to employment termination. The disciplinary issues may involve;


  1. Gross misconduct by the employee

  2. Incompetence

  3. Illegal or law-breaking activities

These employees must undergo a disciplinary procedure or process before a dismissal can happen.


RELATED CONCEPT


  1. Dismissals


PAST YEAR QUESTIONS


  1. What is meant by ‘redundancy’? (2 marks) Feb/Mar 2019/12 & Oct/Nov 2019/11

  2. Identify two situations in which downsizing the workforce might be necessary. (2 marks) May/June 2018/11

  3. Do you think a firm should select all the workers for the new jobs from those about to be made redundant? Justify your answer (6 marks) Oct/Nov 2019/11

  4. Identify two reasons why a business might downsize its workforce. (2 marks) May/June 2020/12