Is now the right time to let staff go? Brett Pomroy, Australian Lawyer specialising in Industrial and Employee Relations addresses this in our recent Webinar.
Is now the right time to let staff go?
The answer is, it comes down to a case by case scenario.
On Monday 30 March 2020 the Australian Government made it clear they want to keep people employed, business open and ticking along.
However, based on the impact to a company and current cash flow, keeping people employed may not be an option. If viability is in question, companies will need to stand down workers. Alternatively, if their workers are in positions or performing tasks that are no longer needed today and into the future, this is when employers may choose to go down the redundancy path.
First, in standing down workers and accessing standing down provisions there is strictness in what’s required before an employer can stand down its employees. Brett urged employers to get advice as there may be other options such as leave with or without pay that may be offered. Employers need to be aware that the normal rules do apply even in today’s circumstances. For example, a position that was made redundant cannot come back into an organisation for at least six months or it would or could be deemed as a “sham redundancy”.
However, now more than ever, is the time when employers should address whether they need to restructure and perform selective redundancies.
Realign, straighten, get business in order.
What are some of the implications in letting staff go?
Brett mentioned that all employers need to get specific advice about their situation and how to proceed. Knee jerk reactions may come back to bite.
Employees if they believe they have been dismissed unfairly (known as “sham redundancy) may lodge a claim, be it:
- Unfair dismissal
- Discrimination – examples could be parents with children under school age, individuals over 55 years of age, or individuals with a protected attribute
- General Protection – Here if an employee made a complaint prior to being let go. .. employer took action, alleged that it was due to that complaint. Can turn into huge legal argument. Normal one = workers compensation. Communication consultation, thinks in writing, file notes, policy, following process, following policy. Nothing beats defending a work cover claim in a reasonable manner.
If the claim is honoured, employers could be asked to reinstate the worker or could be asked to award damages of up to 26 weeks’ pay.
Getting the Process Right
Brett reinforced the largest most common mistake employers make is that, in some way they do not follow the process.
There are key processes an employer should follow to make a valid case for redundancy.
First, the organisation should address the structure that is needed both today, in the short term and the future. If employers believe they will bring staff back, Brett mentioned it’s best to stand down versus retrench workers.
If the structure of the organisation sees positions (note it being positions not people) as no longer required, this will instigate the redundancy actions.
The organisation will then determine the individuals that are affected.
A key stage is consultation.
If an employer’s hands are tied (for example the business is closing) the individual would be consulted to inform them that their position has been made redundant.
If however, the business is still operating, an employer must consult with the employee and look to see if there is the opportunity for redeployment. An employer would benefit from asking the employee if they can see any other areas that they could be redeployed to so it is a consultative process.
Redundancy is not purely used in crisis situations, many employers will use this when they are transforming, streamlining or merging divisions/operations.
If there is no opportunity to redeploy an individual the redundancy provision comes into play.
The redundancy provisions allow for organisations to make a position redundant and affected person receives redundancy provisions.
Depending on the instrument, be it Agreement, Award or Fair Work Act an employer would check their governing instrument and ensure employees are paid according to what that instrument says.
The Fair work Act is the governing legislation. Out of that come the instruments be they the Modern Awards (not everyone on) or an organisation may have an Enterprise Agreements – where the Award is safety net (minimum requirements) that has further clauses and requirements based on that enterprise.
Letting Staff Go
- Casual Worker – can finish immediately. Engaged on a period to period time. Come into work, at time finish work, they are no longer engaged.
- Fixed Term employee – employed from one date to another date. As long as employee (not contractor) this employee will accrue entitlements. Could fall into redundancy, depending on time, award and details under NES (National Employment Standards)
- Permanent Workers – Goes on a yearly basis, each year the employee work would equate to how many weeks payment that employee is entitled to receive as a redundancy payment.
Brett reinforced that specific advice, from situation to situation, is what is called for.
Where to from here?
For a private consultation, please contact Harvest HR & People solutions via email firstname.lastname@example.org or call 1300 363 128
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Further reading Webinar Part 1, by Brett Pomroy – “Standing down Workers”
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This is general summary only and in no way considered legal advice. For advice specific to your circumstances, please arrange a private consultation.