Spotlight on best practice redundancies

by Stephanie Zillman17 Apr 2013

According to new statistics from March of this year, 13% of Australian employers are planning to decrease their level of hiring during the second quarter of 2013.

The Manpower Employment Outlook Survey (MEOS) data coincides with broader economic and political trends which can be seen in the rate of unemployment rising to 5.6% while the number of both full-time and part-time jobs in the economy fell by over 36,000 – according to the Australian Bureau of Statistics (ABS).

With the number of redundancies increasing across the country and across industries, notably with the 500 job losses at Holden last this week, Right Management’s managing director Bridget Beattie told HC that communication remains the key during times of restructure. The response is certainly not limited to HR, and Beattie commented that the organisation’s response needs to be a unified among all of the business leaders and the communication needs to be very proactive. “Honesty is central with as many Q&A type sessions as possible, and just keeping the conversation going in terms of what the vision of the organisation is, what the strategy is, and what their future is within that. Because that’s the key thing employees want to know. ‘Where do I fit in’ ‘Do I still have a job?’ ‘Are there any more cuts planned?’ – those are the sorts of questions that need to be answered,” Beattie said.

Redundancies can have a significant impact on companies’ productivity levels and reputation, and there are major risks to the business if these conditions and events are managed poorly. Pattie Walsh of employment law firm DLA Piper said the best way to avoid legal hot water in times of redundancy, is by focusing on 3 key strands of the equation:

  1. Fair reason: Ensure you have a genuine situation of redundancy, and it’s not tainted by other considerations, ie. getting a poor performer out by the back door, or it’s not based on discriminatory thinking. A genuine, objective basis and reason needs to drive the decision.
  2. Due process: Make sure you go through the necessary hoops, not just legal hoops, but on the people-management side the PR element must be carefully managed.
  3. Payout: Ensure correct notice payments, redundancy payments, and any contractual commitments are fulfilled.

Walsh emphasised that the communication to those left at the end of a restructure needs to be managed as closely as the legal risks. “I think there’s so much at stake in terms of how you motivate the people left behind after a restructuring and how they feel about the way you’ve handled the restructure, and your internal and external communications around the message of what you’re doing are so important – if you haven’t got that right, it’s a bit like trying to put the toothpaste back in the tube,” Walsh said.


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