Can You Re-Employ Someone Made Redundant?

employee signing employment contract

by Moira Grassick, COO at Peninsula Ireland

Redundancy is one of the most technical areas of employment law. The many rules and procedures can be overwhelming for business owners.

A question our advice team often deals with involves re-employing a worker your business had previously let go.

Here are 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 an employer re-employing somebody who has been made redundant pursuant to a legally compliant redundancy process.

Provided a genuine redundancy situation existed when the employee was let go, there should be no issues with re-employing them at a later date.

It may be that you had to reduce your headcount because your business was struggling, but you’ve now managed to re-build your position in the market.

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 law

The Unfair Dismissals Act 1977 considers all dismissals to be unfair unless there are substantial grounds justifying them.

Redundancy is one such justifiable ground, but there must be:

  • A genuine redundancy situation.
  • Fair selection of employees based on objective criteria.
  • Proper consultation.

Where an employee has been dismissed by reason of redundancy, they may seek to challenge the redundancy if they think any of the above conditions haven’t been met.

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.

When an employer wishes 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 extremely important that you have evidence demonstrating that there was a genuine redundancy situation when the initial redundancy was made.

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 remained employed in similar roles without receiving the same pay rise or improved benefits.

Continuous service considerations

Another area to consider when re-hiring an employee who was previously made redundant is continuity of service. A break in employment of between 6-12 months is generally accepted as sufficient to amount to a break in continuous service. However, anything 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 3.5 weeks later the employee was re-employed on a series of fixed-term contracts. His employment ended in April 2004.

The EAT 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 has accepted redundancy together with a redundancy payment should not also enjoy employment rights that are based on the length of their continuous service.

The fairest way to deal with this issue if it arises may be to ask the re-hired employee to return their redundancy payment if they wish to reinstate their continuous service.

About the author

Moira Grassick is an experienced director with a demonstrated history of working in various services industry including financial and legal services. Skilled in HR Consulting, HR Policies, Organizational Design and Development, Management, and Performance Management. Commercially focused with the ability to grow and develop new business. Moira currently holds a BA in HRM, Certified Mediator and diploma in Employment Law.