What employers should learn from the Dick Smith collapse

by Victoria Bruce02 Mar 2016
The collapse of retail giant Dick Smith should serve as a timely reminder for employers to review their redundancy obligations, says employment lawyer Andrew Jewell.
Businesses to be aware that there is a hefty obligation to provide redundancy payments when faced with laying off company employees, says Jewell, Principal lawyer at McDonald Murholme.
Dick Smith’s approach to managing its 2,500 staff redundancies after being forced into receivership could set an example to other employers, he says.
“From the outside it would appear that Dick Smith is following best practice, that is, to operate a transparent and lawful process which concludes with severance payments,” Jewell says.
“Obviously without any redeployment opportunities, the main concern is that Dick Smith adequately consults all staff members,” he says.
Ensuring open and ongoing communication with employees about their job security and futures when faced with the tough realities of business closure is an essential part of best-practice HR when managing staff redundancies, Jewell says.
“The degree of consolation is not a "black and white" matter, however the employer should err on the side of more consultation,” Jewell told HC Online.
“While consultation is a legal obligation it also can alleviate concerns of employees and prevent disputes,” he says.
Employers may be at risk of unfair dismissal claims which can result in damages over and above any redundancy payment if they fail to follow correct process when making staff redundant.
Jewells says the Dick Smith case is a prime example that business failure is a hard fact of life.
“Employers can take the Dick Smith example as confirmation that not all businesses succeed,” Jewell says.
“Businesses should make plans for tough economic times and be aware that there is a large obligation in the form of redundancy entitlements that occurs at the cessation of a business.”
Jewell says when faced with making mass workplace redundancies, some important consideration for human resources employees include:
- What are the consultation obligations?
- Are there any redeployment opportunities?
- What the company's obligations in regards to severance payment - is there a policy, enterprise agreement or award that applies?
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