5 Things to Consider when Making Redundancies

Retrenching staff is a tough decision for a business and an even tougher role for a manager to undertake. Be mindful how you will personally react to the situation including sleepless nights and anxiety. Be prepared, it will ultimately assist you breaking the difficult news.

The top 5 considerations when dealing with employee terminations and redundancies:

1. Adopt a redundancy policy

Consider adopting a formal redundancy policy. This is not a legal requirement but will ensure that employees are aware of the procedures which will be followed if a redundancy situation arises.

When compiling and agreeing on the procedure, if possible, involve employees, trade union officials or other employee representatives. Ensure the policy and procedures comply with employment legislation.

2. Establish a business case

Make sure that you have a clear business case for reducing your headcount. A job becomes redundant when an employer no longer desires to have it performed by anyone, remember it is the job that is redundant not the person.

Always treat people equally regardless of sex, pregnancy or maternity leave, marital status, sexual orientation, age, race, religion or belief, disability, or trade union membership. A dismissal will be automatically unfair if you discriminate in your selection criteria or victimize someone for asserting their statutory rights.

Remember, redundancies do not just happen in periods of economic down turn; it is common for a new business leader or senior staff to join an organsiation and reorganise.

3. Communication of the redundancies.

It is important to communicate the situation to the entire company through meetings and / or email. Be mindful of the message you are sending to your employees. The message must be transparent, clear and concise versus wordy and indirect. Use carefully selected terminology; restructuring or rebuilding are better choice of words downsizing or cost cutting.

There should be no reference made to employee performance rather clear emotion free messages need to be provided to the business and for each individual employee receiving a redundancy.

4. Notice Period & Severance Pay

The notice period and severance pay needs to be decided upon and publicized to the company. The notice period should be carefully thought through; although it may seem necessary for the retrenched employees to leave on they day they are informed of their redundancy, a hand over may be required to ensure workflow continues and clients and productivity are not affected.

However, if you extend the notice period beyond a few weeks, it may be detrimental to all as the redundant employee could feel dejected and behave in a negative way.

Again, although not a legal requirement, outplacement services and counseling services can be made available, there are numerous organsiations which specialize in this exact experience, furthermore getting outside expertise can assist with employee morale.

5. Legal or Professional Advice

If you have any questions, are in doubt or are unsure what to do, consider taking legal advice. Legal advice will minimize the chance of litigation by an employee and ensures all bases are covered.

For more information on redundancies or for assistance in determining your own organisational needs contact;

• Your relevant employer body
• Australian Human Resource Institute on 03 9918 9200
• The Workplace Authority on 1300 363 264

For any legal enquiries relating to HR, employment relations, or industrial relations, Sparke Helmore Lawyers has one of the largest team of experts in Australia. Contact a team member in your state on 1800 63 85 63.