Principles and Practice of Redundancy


An average person on the street would have likely had an experience of redundancy, either directly or indirectly. A sibling who works in a multinational company suddenly stopped going to work because his services were no longer required. The continuous development of technological solutions for works that were hitherto done by employees, harsh economic conditions and acquisition by another organisation are all responsible for the growing rate of redundancy of employees in Nigeria.

Redundancy meaning

When called upon to decide a dispute between an employer and employee, the Court of Appeal resolved the question “what is redundancy?” by defining it as, “an involuntary and permanent loss of employment caused by an excess of manpower. It therefore arises where the termination of employment is or is part of a reduction in the workforce. It is therefore a mode of removing an employee from service wherein his post is declared redundant by his employer. It is a unique procedure whereby an employee is quietly and lawfully relieved of his post.” See Gerawa Oil Mills Ltd v. Babur (2018) LPELR-44720(CA).

Section 20(3) of the Labour Act also defines the concept as “an involuntary and permanent loss of employment caused by an excess of manpower.” This implies that redundancy is usually not a result of the actions or inactions of an employee, it is a tool for an organisation to cut cost.

Types of Redundancy

An organization that wants to reduce it workforce could either adopt voluntary or compulsory redundancy.

When a company gives workers the option to voluntarily quit their jobs, usually in exchange for a severance package or improved redundancy benefits, this is referred to as voluntary redundancy. This choice is usually placed on the table when an organization is downsizing or reorganizing and does not want to adopt coercive tactics. One of the major challenges of voluntary redundancy is that the company is at risk of losing its bright talents, who might decide to leave in exchange for a high compensation package.

However, compulsory redundancy occurs when the company forces employees to leave its workforce. In this situation, individuals are not given the option of choosing whether to leave or not, rather they are chosen by the organization based on certain conditions. It is usually adopted when there is a real need to downsize the workforce owing to economic factors, technical advancements, or organizational reorganization. In this situation, employees have little or no choice but to leave, as such they do not enjoy the level of bargaining power enjoyed under voluntary redundancy.

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Legal provisions on redundancy in Nigeria

Due to the sensitive nature of redundancy, there are laid down procedures that must be followed by an employer. These have been listed in Section 20(1) of the Labour Act as follows:

1. The employer shall inform the trade union or workers’ representative concerned of the reasons for and the extent of the anticipated redundancy.

2. The principle of “last in, first out” shall be adopted in the discharge of the category of workers affected, subject to all factors of relative merit, including skill, ability and reliability; and

3. The employer shall use his best endeavours to negotiate redundancy payments to any discharged workers who are not protected by regulations made under subsection (2) of this section.

Where there is no trade union in an organisation, which is the case in most MSMEs (Micro, Small and Medium Enterprises), the employer will be under an obligation to ensure that the binding contract of employment between it and the employee is duly followed.

The Last in First out (LIFO) approach which is one of the criteria for selecting the pool of employees that would be placed on the redundancy list is to the effect that consideration should be given to employees’ length of service in the organisation. It provides that employees who joined the organisation last should be the first to be shown the gate where the need for redundancy arises.

Despite the above provision, the law recognised the need to create exceptional circumstances that an employer should also put into consideration which are factors that shows an employee has competitive advantage over others. These are categorised under the umbrella of factors of relative merit which includes skill, ability, and reliability. The overall goal of these criteria is to ensure that employees are not selected based on favoritism or discrimination.  Some of the criteria that wouldn’t justify the selection of an employee for redundancy include age, gender, religion, race/tribe, or any form of disability which has not affected the discharge of duties. However, whether employers really comply with these criteria is a matter for deliberation.

One of the necessary procedures to be followed in a redundancy process is the payment of redundancy allowance and other benefits an employee is entitled to. Although the Act provides in Section 20(2) that “the Minister may make regulations providing, generally or in particular cases, for the compulsory payment of redundancy allowances on the termination of a worker’s employment because of his redundancy.” However, the Minister is yet to make any regulation on this provision.

An employee would ordinarily be entitled to the following benefits if his employment is terminated on the basis of redundancy, the redundancy allowance, accrued bonuses and other entitlements, and personal expenses the employee might have used in the discharge of his official duties etc.

Difference between redundancy and dismissal of an employee

There is understandably a thin demarcation between redundancy and dismissal of an employee, because in both cases, the employment is permanently terminated. However, in redundancy the employment is terminated because there is no work to do any more, while in dismissal, the employment is terminated unilaterally by the employer for reasons other than unavailability of work. It could be the employee’s misconduct or several other factors.

In a nutshell, redundancy is when the job disappears while dismissal is when the employee is discharged from the job. In the former, the role no longer exists, while in the latter, the role still exists and would have to be filled by another individual.

How to avoid being redundant as an employee

The rapid technological advancement going on across the world has made it obvious that certain jobs will no longer exist in the future and even if they do, they will no longer be relevant or in high demand. The sad news therefore is that redundancy will not end anytime soon. Lest you get to the office and you are told that your services are no longer needed, these are some of the things you can do:

1. Create quality network within your organisation and other organisations in the same industry.

2. Develop yourself to be abreast of technological developments in your field.

3. Learn how to operate and maintain the technology that is disrupting your role.

4. Be proficient in your field such that the organisation will find you valuable enough to keep when discharging others.

5. If your current role has died a natural death, it is time to upskill to a new role


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