Treasury Secretary Steven Kennedy said the end of JobKeeper would result in thousands of job losses – but what happens when you need to let some team members go as a way to reduce your overheads.
Can you just say “I’m sorry there is no role for you anymore” Well, it depends, but the answer is not really as this is likely to trigger a redundancy or even unfair dismissal. For blog purpose, we will look at the redundancy.
But what is redundancy?
Redundancy is when an employer reduces their workforce because a job or jobs are no longer needed.
Common reasons for redundancy
There are lots of reasons why you might be made redundant, and they usually aren’t a reflection on your ability to do the job…
- New technology has made your job unnecessary.
- The job you were hired to do no longer exists.
- Your employer needs to cut costs by reducing staff numbers.
- The business is closing down or moving.
- The business has been bought by another company.
When an employee’s job is made redundant their employer has to give them redundancy pay, also known as severance pay.
Redundancy pay doesn’t need to be paid in some circumstances.
- employees whose period of continuous service with the employer is less than 12 months.
- employees employed for:
- a stated period of time
- an identified task or project
- a particular season
- employees terminated because of serious misconduct.
- casual employees
- trainees engaged only for the length of the training agreement.
- employees terminated because of ordinary and customary turnover of labour.
For small Business owners you may find some relief that a small business is one that employs fewer than 15 employees. Some small businesses don’t have to pay redundancy pay when making an employee redundant.
But you have to do it the right way and it needs to be a genuine redundancy.
A genuine redundancy is when:
- the person’s job doesn’t need to be done by anyone.
- the employer followed any consultation requirements in the award, enterprise agreement or other registered agreement.
It won’t be a genuine redundancy if.
- still needs the employee’s job to be done by someone.
- could have reasonably, in the circumstances, given the employee another job within the employer’s business (or associated entity)
- has not followed consultation requirements as provided by the relevant Modern Award or enterprise or other registered agreement (if applicable)
Let’s focus on the consultation
You are generally required to consult with the employee before ending their employment. This means that you must notify the employees of the proposed change to their employment, invite them to a meeting to further discuss the matter and take any suggestions the employee might offer to keep their job into consideration before making a final decision.
As part of the consultation process you must offer the employee any vacant job within the business or an associated entity that the employee can reasonably do.
You should also consider jobs that pay less or that are not as senior, as the employee may want to take them for a number of reasons.
If you are a manager or owner, it is highly encouraged that you arm yourself with the knowledge and get to need to know about the procedures of disciplinaries and the associated risks along the way. Since 2012 we have been creating, writing and updating our support manuals which are now available to you.
Our manual – Effective and risk free disciplinaries, A guide for Manager and Business owners – consists of all this information you need. Managing employees can be complex, but a claim-free and happy workplace with motivated, loyal, and productive employees, is possible through a few simple steps and a fair and transparent process, free from discrimination, or harsh, unjust or unfair treatment.
This disciplinary manual will guide you through the disciplinary process step by step and provide you with the templates, tips and advice. However, it is not a replacement for expert advice.
Use this manual to help you understand.
- what makes a dismissal unlawful;
- when and how you can lawfully dismiss and employee;
- how your policies and procedures can help you to manage dismissal in your workplace;
- the alternatives to dismissal; and
- your notice and termination pay requirements.