Managing Potential Redundancy - An overview for employers
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Overview for Employers – Managing Potential Redundancy
Managing Potential Redundancy
An overview for employers
May 2014
The Sector Employment Assistance Scheme (SEAS) is a service provided by Jobs Australia, funded by the
Department of Family and Community Services, and supported by industry and sector partners.Overview for Employers – Managing Potential Redundancy
Introduction
A range of factors will influence the approach an employer should take when managing significant
change, and in particular when there is the potential for jobs to become redundant.
Industrial Requirements of the relevant award or enterprise agreement
Minimum
o Consultation
Standards
o Explore redeployment options
o Notice and severance pay
Unfair dismissal and general protection provisions of the Fair Work Act.
Equal opportunity and anti-discrimination laws
Occupational health and safety laws
Contractual obligations to employees
Organisational policies and procedures
Organisational Fair treatment of employees
Values
Acting consistently with, and not undermining commitment to, the values
of the organisation
Responsible and accountable management of the organisation
Strategic Processes intended to maximise the likelihood of making the right
Management organisational decisions, including open communication and consultation
Opportunities to go beyond minimum requirements
o Preferential employment opportunity provisions of funding for
transition under the GSHS reforms
o The award and the National Employment Standards (NES) only set
minimum standards. The responsible use of resources to provide
more generous benefits for employees where this is desirable for
fairness and to minimise hardship is encouraged
Financial imperatives
Fostering employee commitment and motivation
Retention of key skills and knowledge
Maintaining and improving quality of service delivery
Potential Outcomes of Loss of Funding
Where an employee’s position will no longer exist due to loss of funding, termination of
employment may be an outcome, but it is by no means the only possible outcome. Alternatives may
include:
Redeployment within the organisation
o Either with similar conditions, or,
The Sector Employment Assistance Scheme (SEAS) is a service provided by Jobs Australia, funded by the
Department of Family and Community Services, and supported by industry and sector partners.Overview for Employers – Managing Potential Redundancy
o By agreement, redeployment to a very different role, possibly including reduced
hours
Facilitating transfer of employment to another provider who has secured new funding
Redeployment to another role on a temporary basis, retaining entitlements to redundancy
payments if there is no ongoing work available at the end of the temporary redeployment.
Access to retraining.
The consultative process is integral to identifying and implementing alternatives to retrenchment.
In the end, if retrenchment is the only option then at least a well managed, and clearly fair, process
will have helped all concerned to cope with the stress of the situation.
Checklist – Expectations of tribunals for a fair process
So what are the features of a good redundancy process?
Some clues can be found by looking at how industrial tribunals deal with disputes about redundancy.
The general principles for getting a redundancy process right were summarised in a decision of the
Industrial Relations Commission of NSW1. This decision drew on a range of earlier precedents in
both federal and state jurisdictions and is still relevant under the Fair Work Act. The principles also
provide a good practical guide for maximising the chances of a good outcome in management terms
for the organisation.
It was noted that both employers and employees have obligations – as listed in the following
checklist. These obligations are explored in more detail in the subsequent sections of this Guide.
Key points for Employers contemplating redundancy:
1. Give reasonable written notice to employees and/or their unions, including the details of
changes and the possibility of redundancy.
2. Consult with employees and/or their unions on the impact of the proposed changes.
3. Explore genuine alternative options for redundancy, such as redeployment or relocation. It is
important to consider all options for suitable alternative employment, and to be able to
defend any decision not to offer other employment. Ensure such options are fairly offered to
the affected employees.
4. Provide reasonable standards of redundancy benefits.
5. Provide appropriate ancillary services, such as time off to seek alternative work, retraining
opportunities, outplacement services or financial planning.
6. Ensure employees nominated for redundancy are fairly selected on an objective and unbiased
basis.
Employees also have reciprocal obligations, including:
1. Being willing to participate in the consultation process.
1
(Neal v Shaw McDonald Pty Ltd and another [2003] NSWIRComm 298, Sams DP, 22/09/2003)
The Sector Employment Assistance Scheme (SEAS) is a service provided by Jobs Australia, funded by the
Department of Family and Community Services, and supported by industry and sector partners.Overview for Employers – Managing Potential Redundancy
2. Participating in exploring alternatives to redundancy.
3. Not being unreasonable about accepting retraining, alternative employment, redeployment or
relocation.
Consultation
In addition to the requirements contained in awards and collective agreements that employers
consult with employees, it is still an important principle of fairness that as soon as an “in principle”
decision has been made to restructure, the employer should consult with its employees and, in some
cases, any unions to which they belong.
In the lead up to the transition to GHSH, before the tender outcomes are known, organisations who
tendered for funding do not know whether they are going to be growing or shrinking.
Even when the outcome is not yet known, it is still important to communicate with your employees.
Confirm what the organisation tendered for
Explain what is currently known about timelines
Confirm the plan for consultation once the outcome is known
Provide information about resources and supports, such as existing EAP and resources
available through SEAS.
The award refers to an obligation to consult
“Where an employer has made a definite decision to introduce major changes ……. that are likely to
have significant effects on employees, the employer must notify the employees who may be affected
by the proposed changes and their representatives”.
It is important to understand that this does not mean waiting until final decisions have been made
about the exact outcome. It is a requirement to consult as early as is practicable, once a decision
has been made that there will be major change. And, of course, in an open and transparent
organisation it is good management practice to communicate and consult about the likelihood of
change.
In particular, consultation should occur before identifying which employees are redundant.
Once the outcome is finalised, employers are obliged to formally consult around minimising any
adverse effects or employees. This includes providing written information about the situation and
the proposed course of action.
Consultation does not mean that agreement has to be reached.
But consultation does mean that there is a genuine opportunity for the affected employees to
influence the final decision.
The Sector Employment Assistance Scheme (SEAS) is a service provided by Jobs Australia, funded by the
Department of Family and Community Services, and supported by industry and sector partners.Overview for Employers – Managing Potential Redundancy
As the employer, if a suggestion from employees does not make operational sense, there is no
obligation to adopt it.
But on the other hand, it makes little sense to reject sensible suggestions. Often, it will be useful to
agree to a modification of the original proposal, provided the main organisational objectives are still
met. A negotiated modification to the original plan may be a good way of protecting morale and
commitment among remaining employees – and might even be an improvement on the original
plan.
The consultation should include: discussion regarding alternatives which may lessen the number (or
impact) of terminations; and, giving employees time to deal with the emotional, family and domestic
stresses of a potential termination. It is important that such consultation is backed up with written
materials such as fact sheets, letters, meeting minutes or any other documentation that can be
relied on should there be a dispute. Consultation should also include absent employees who may be
on WorkCover, maternity leave or any other kind of leave.
In particular, the employer should:
1: Prepare written advice to all affected employees outlining why there needs to
be change, and the nature and purpose of the proposed restructure. This
should be followed by face-to-face meetings;
2: Clearly explain how the proposed restructure would affect positions in the
organisation and the employees;
3: Explain how it proposes to select employees for new or restructured positions
and therefore those employees whose employment may be terminated if no
alternatives arise;
4: Prepare a timetable for each stage of the restructure;
5: Ensure that employees are given the opportunity to comment on the
restructure and suggest any alternatives, which may avert or mitigate its
adverse effects; and,
6: Appoint a liaison person to deal with any enquires or comments from
employees.
Employees should not be selected or given notice of the termination of their employment until the
above steps have been implemented.
Summary of entitlements to Notice and Severance
For Specialised Homelessness Services in NSW, the relevant award is the Social, Community, Home
Care and Disability Services Industry Award 2010.
This award refers to the National Employment Standards (NES) for the relevant notice period for
termination of employment.
Severance pay is subject to the provisions of clauses 12.5 and 12.6 which have the practical effect of
preserving the severance pay entitlements of the Social and Community Services Employees (SACS)
NSW award until 31 December 2014.
The Sector Employment Assistance Scheme (SEAS) is a service provided by Jobs Australia, funded by the
Department of Family and Community Services, and supported by industry and sector partners.Overview for Employers – Managing Potential Redundancy
These are minimum, “safety net” entitlements. Employers always have the option of providing more
generous benefits than an award or the NES.
In the transition to GHSH, organisations with surplus funds are able to use that to assist exiting
employees and this may include the provision of more generous severance.
This may be of particular relevance for small employers with less than 15 employees.
The award does not oblige severance pay to be paid by small employers. However,
If there is a capacity to provide some level of severance pay it is reasonable to do so in the
interest of fair and ethical treatment of employees, and in the interest of sending positive
signals to all stakeholders about the organisation’s commitment to its employees.
Employers are able to use surplus funds for this purpose.
This approach is also consistent with the general obligation on an employer to minimise the
adverse effects of redundancy.
Small employers are encouraged to consider this option where they have capacity. The NES
standard of severance pay might be used as a guide to a reasonable level of payment.
During the formal notice period, employees are entitled to up to one day per week for job searching.
Finally, where more than 15 jobs are being lost, there is an obligation to notify Centrelink.
Notice periods (provided by the National Employment Standards)
Employee’s period of continuous service with Period
the Employer
Not more than 1 year 1 week
More than 1 year but not more than 3 years 2 weeks
More than 3 years but not more than 5 years 3 weeks
More than 5 years 4 weeks
Over 45 years of age and at least 2 years Add 1 extra week to the relevant notice period
continuous service above
The Sector Employment Assistance Scheme (SEAS) is a service provided by Jobs Australia, funded by the
Department of Family and Community Services, and supported by industry and sector partners.Overview for Employers – Managing Potential Redundancy
Severance Pay – Employee under 45 years of age (based on the preserved SACS NSW provisions)
Period of continuous service Severance pay
Less than 1 year Nil
1 year and less than 2 years 4 weeks’ pay
2 years and less than 3 years 7 weeks’ pay
3 years and less than 4 years 10 weeks’ pay
4 years and less than 5 years 12 weeks’ pay
5 years and less than 6 years 14 weeks’ pay
6 years and over 16 weeks’ pay
Severance Pay – Employee 45 years or over (based on the preserved SACS NSW provisions)
Period of continuous service Severance pay
Less than 1 year Nil
1 year and less than 2 years 5 weeks’ pay
2 years and less than 3 years 8.75 weeks’ pay
3 years and less than 4 years 12.5 weeks’ pay
4 years and less than 5 years 15 weeks’ pay
5 years and less than 6 years 17.5 weeks’ pay
6 years and over 20 weeks’ pay
This publication is prepared exclusively for the general information of specialist homelessness services in NSW
as part of the Sector Employment Assistance Scheme. While it directs attention to, and comments upon,
aspects of industrial relations and employment law, it is not intended to provide legal advice in this area.
Information is current at the date of publication.
Further advice should be sought prior to acting upon information conveyed in this publication.
The Sector Employment Assistance Scheme (SEAS) is a service provided by Jobs Australia, funded by the
Department of Family and Community Services, and supported by industry and sector partners.You can also read
