Making your Redundancies Legal


In a recent Australian Industry Group briefing Nicola Street, Senior Workplace Relations Advisor and Solicitor, reported a surge in employment termination claims that are clearly linked to bungled redundancy practices by employers. 

There is no doubt the business landscape has changed. Current business objectives are very different from this time last year and we need to reassess our efforts moving forward.

For many organisations, lowering salary costs are high on the agenda. With a little creative thinking, there are numerous ways to achieve this. Considerations should include:  

  • Reducing your salary overheads by up to 20% by offering employees move to a four day week or reduce your salary overheads by up to 10% by offering employees a day off per month.
  • Offering your employees ‘leave days'. Five to ten unpaid leave days between now and Christmas can directly reduce your salary expenditure while giving employees opportunities to enjoy a balanced lifestyle.
  • Engaging contractors and temporary employees. Utilise the services of an on-hired services provider. Often by having contract or temporary staff, you can still maintain the resources needed to run productively without the risks associated with engaging permanent staff.
  • Implementing business close-downs or partial close-downs and place employees on periods of annual leave.
  • Offering training leave or short term sabbatical. Personal circumstances of some employees may mean they would relish the opportunity for temporary timeout of the workplace.
  • For those employees currently on leave, consider an extension. The employees you have on leave understand the current market conditions and while there might not be enough work to sustain returning to the workforce right now.
  • Reduction in remuneration (for an agreed amount of time).
  • Salary freeze.
  • Reassessing bonus schemes, incentive payments etc.

When considering changes in any employment conditions it is critical to give due consideration to existing employment contracts and company policies and potential detrimental outcomes and it is imperative an HR/IR specialist is involved. 

Businesses cannot make unilateral changes in a person's position or employment conditions without their consent. So if you do not have the knowledge internally, seek external expert advice.

If redundancies are necessary there are some critical steps you need to undertake.

  • Using carefully considered advise; make a plan with clear objectives and long term, sustainable workforce solutions.
  • Redundancies must be role specific - not person specific.  
  • Timeliness - a long, drawn out process may be the cause dissatisfaction and resentment in the workplace; too short may impact due process.
  • Preparation is paramount. Make sure all managers understand the key messages and timeframes and are able to communicate them effectively.
  • Communicate. Rumours and stories will circulate when the majority of your workforce is left in the dark. Be open, honest and authentic in your communication with employees.
  • Make it legal by knowing what industrial instruments you need to adhere to and ensure you cover all entitlements. There are minimum conditions of notice and severance pay. Minimise your risk to unfair and unlawful claims by paying accordingly.
  • Notify relevant authorities. If you are making more than 15 people redundant you need to notify Centrelink.
  • Documentation - there are minimum notification advice that all employees should receive.
  • Consider marketplace impacts to avoid damaging your brand. Use key staff advice and media releases as appropriate.
  • Prepare the message - to those departing, those remaining and your customers!
  • Train your Managers - these skills have not been needed recently and many managers will not have experienced redundancies. Make sure your managers are trained in these difficult situations and specifically managing teams through change.
  • Refocus efforts. Business goals have radically changed in the last 6 months. Revised KPI's, goal setting and targets should all be realigned to meet expectations.
  • Employee Engagement - it is important to put practices in place to keep productivity high with your remaining workforce. 
  • Be consistent, transparent and objective!

Above all seek expert advice and minimise any negative impacts on you, your business, your employees and your customers. 

With the new Fair Work Act coming into effect as of 1 July 2009, there are broader employment laws covering redundancies and redeployment.

To discuss these outcomes in more detail or to have a tailored approach specifically aligned to your business objectives, call in expert advice. As an employment services specialist we can assist your business and your bottom line with your workforce solutions.

For further information on this or any other issue please don't hesitate to contact us - your employment services specialists.

We can help you with notification letters and templates, separation certificates and certificates of service.

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