Getting it right when redundancy is unavoidable

Wednesday November 4, 2020

2020 is a year that will go down in history. The pandemic has impacted the Australian economy, and despite the continuation of a revised JobKeeper payment, many businesses may seriously need to consider reducing staff numbers.

Redundancies can carry significant risk for a business if not done correctly. In May 2020, the Fair Work Commission revealed unfair dismissal claims have increased by 70%. Clearly, many employees are pushing back, having lost their job as a result of the COVID-19 pandemic.

Making a lawful redundancy

To mitigate risk when making redundancies, you need to do it right. Here are 4 things to note:

  1. Make sure you understand the definition of a genuine redundancy

The Fair Work Commission states that a genuine redundancy occurs when a job no longer needs to be done by anyone because of changes to how the business operates or when the business becomes insolvent or goes bankrupt.

  1. The process usually requires consultation

Confirm whether the relevant Awards, Enterprise Agreements or other registered agreements require employee consultation as part of the redundancy process. Even if they don’t, following a consultative approach is considered best practice for successfully handling redundancies while minimising risk.

During consultation, you must:

  • Advise the relevant employees if their roles may be impacted
  • Provide them with information about the changes
  • Discuss the steps taken to avoid or minimise the impact of the changes and
  • Consider employees’ ideas and suggestions about the changes[1]
  1. Be aware of notice periods and redundancy payout requirements

The Fair Work Act specifies that employees are entitled to a redundancy payout of up to 16 weeks, depending on their length of service and the size of your business.

  1. Be aware of general protections and acts of discrimination

If the redundancy seems unlawful, unfair, discriminatory or harsh, an employee can bring a claim against the business.

The mental health implications

Terminating someone’s employment can take a mental and emotional toll both on the person making the termination and the employee who is being made redundant.

The manager or business owner who must notify employees of their termination (and those employees who aren’t made redundant) could potentially suffer increased anxiety, guilt and sadness, which can negatively impact their productivity.

At the same time, it’s important to support those team members who are being made redundant. For some people, the changes may be difficult to accept, especially when the economy is struggling and new work is hard to come by.

With the right guidance and support, an employee may be able to see the situation as an opportunity to make some positive changes. But it’s a delicate topic to discuss.

With the downturn in the economy, redundancies may be unavoidable and motivational stories can help inspire people to greatness. Many great people who have lost their jobs have gone on to do amazing things. For example, Steve Jobs was reinstated at Apple years after being dismissed to help revolutionise the brand.

Asking for support

If redundancies are on the table for your business and you’d like guidance, get in touch. Our HR professionals can help you develop a redundancy process that is fair, legal and supportive of all your affected employees.

[1] https://www.fairwork.gov.au/ending-employment/redundancy

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