Everywhere you look at the moment there is doom and gloom and there are some organisations doing it really tough – hoping that the market will pick up but, if it doesn’t, what can you do? Some organisations may need to consider redundancies for the greater good of the business; so can you make roles redundant to reduce your overall cost base? The answer is yes, but here are ten things you need to know:
- Under the changes to the Fair Work Act, all permanent and part time and, possibly, some casual employees are entitled to a retrenchment pay out
- The length of service is calculated only from 1st January 2010, regardless of how many years service the employee may have
- There is a formal process that all businesses need to follow to ensure procedural fairness. This includes a consultation period where both parties need to attempt to find alternative employment within the company (redeployment) or associated companies for the impacted individual
- Where possible, but not a legal requirement, offer additional support such as an Employee Assistance Program or Outplacement
- Check your Modern Award to confirm whether you have any additional requirements around advising your Union
- Communicate well, both with the individual and the organisation, as redundancies do unsettle teams. Also the organisation may have an obligation to advise the employees as soon as is practical after a decision has been made
- The process of identifying the employees impacted needs to be carefully assessed, managed and documented
- You cannot rehire into a redundant role for a period of 12 months
- Redundancy is not a replacement for active management of poor performing employees, which is a cheaper option (and not, necessarily, hugely time consuming if done well)
- Invest back into the remaining team to reassure them about the future, ensuring that you do not lose any additional employees through resignations. Ensure that the work that now needs to be completed elsewhere in the business is reassigned and factored into position descriptions
Redundancies are not only tough on the individual but on everyone. They are a tool at your disposal if you need it, but use it correctly.
When business starts to pick up, think about changing your team mix, enabling you to flex resources using a combination of permanent, part-time, virtual and casuals. The businesses that do this effectively are successful as they can buffer the market troughs.
Natasha Hawker owns Employee Matters Pty Ltd; an HR Consultancy that assists small to medium businesses with their HR functions to make them more efficient and profitable. Their offering includes HR Management, Recruitment, Training, Coaching, and Exit Management. – find them at www.employeematters.com.au