Clint Indrele 0:16
Ladies and gentlemen, good morning once again for On Demand HR’s HR Fridays. My name is Clint Indrele, Managing Director of On Demand HR every Friday at 1130. We cover a specific workplace relation topic of interest, and something that we’ve typically spoken about with clients or we’re hearing with various different people in the business world. Please let us know any future topics that are of interest to you by leaving some comments in the comment box. And feel free to ask any questions throughout today’s session. Today’s session, we are going to cover a redundancy. So we’re going to cover redundancy process, we’re going to cover payments, potential risks, and obligations. So certainly with job keeper, job keeper 1.0, coming to an end, we anticipate there’s probably going to be some redundancies coming up in the business world in the near future, probably another round, certainly towards December, January, and probably another round. Or maybe even the most significant round towards the end of March when job keeper should effectively come to an end.

Clint Indrele 1:23
So yeah, obviously our HR Friday session every week, we’re trying to provide advice to clients and just the general public which is based on reality, and not, you know, unnecessary scare tactics that are out there being peddled by other organizations trying to provide just advice, which is reality. And based on a real understanding of risk On Demand HR, we’ve represented clients in the Fair Work Commission on a regular basis as a paid agent. We’ve also dealt with various other matters in other employment tribunals. So let’s get into it. For those who are interested in more information about us www.ondemandhr.com.au.

Clint Indrele 2:02
So today’s presentation is about redundancies. So essentially, I’d like to just start with the redundancy pay scale that is outlined in the NES. So basically, section 119 of the Fair Work Act outlines redundancy entitlements as follows. As you can see, it’s a scale that’s based on continuous service with the employer. And the scale goes up and up and up and up and up until it hits nine years, but less than 10, where it hits 16 weeks and then goes down to 12 weeks after 10 years. That is not a misprint, that is basically how the scale has been structured. Because in basically all states at 10 years, you would receive long service leave entitlements, and hence why it has been adjusted. accordingly.

Clint Indrele 2:49
It’s important to understand in a redundancy, there are two obligations one is to well actually number of obligations. But in terms of payments, there’s two obligations. There’s the redundancy pay component, which is essentially as outlined in that top table. And then there is the notice component, which is outlined in the bottom table. Now notice obviously maybe worked or it can be paid in lieu, whereas redundancy pay must obviously be paid redundancy, the redundancy pay period can’t be worked, it can only be paid. So there are two key things in terms of the entitlements.

Clint Indrele 3:22
Getting on to a little bit about the the next part, which is how do we conduct a redundancy process and for those who are thinking about undertaking a redundancy in the coming weeks or the coming months, please do not reflect on movies carried out or movies of George Clooney, you know, going in and carrying out you know, 50 redundancies at once or Donald Trump on the apprentice. Please think about what is a proper process that I’m required to undertake under the Fair Work Act. And we hear many of these war stories about – I’ve heard of redundancy processes, we just walk people into one room, tell them they’re made redundant and then out they go, I can tell you that particular approach is fraught with danger. And it’s actually pretty scary how commonly still clients and people in the business world think that having one meeting and conducting a redundancy is simply okay. So we’re here to break that myth today. And I want to talk to you a little bit more about what the expectations are on the redundancy process itself.

Clint Indrele 4:22
Okay. So, very importantly, under Section 389 of the Fair Work Act, the there is an obligation to consult prior to carrying out a redundancy. Now consultation does not mean telling someone what is about to happen. Consultation means giving the employee a meaningful opportunity to influence a decision before it is made. Okay? And this is why we advocate the process which is shown in the flowchart here on your screen.

Clint Indrele 4:50
So what we always advocate in a redundancy process is that you first have an initial consultation meeting so that you have a you’ve advised the employee that you’ve made a definite decision to restructure the organization or the position and basically, that your position will be affected. Okay. It outlines the business case for the restructure and any alternative jobs that you have identified. Okay. So that is very important to understand.

Clint Indrele 5:23
What we then also issue at during or at the end of the initial consultation meeting is what we call an initial consultation letter. So, first of all confirms the nature of the restructure that is proposed to occur. And it confirms whether there are any alternative jobs. And it also outlines the business reasons that you’ve just referred to in the initial consultation meeting. Now, the important thing about the initial consultation letter is this also meets one of the other obligations that’s outlined in the Modern Award in pretty much all of the modern awards, and that is to provide information to employees, if you’re not providing an initial consultation letter, and you’re just going ahead to a termination meeting down the track Well, what information have you actually provided to the employee prior to the redundancy? and there’s an argument that you haven’t provided any, if you don’t provide at the very least an initial consultation letter, sometimes you might have multiple meetings, or there might be multiple pieces of information provided. But in this situation, at the very least, an initial consultation letter is absolutely, vitally important.

Clint Indrele 6:26
We then observe a consultation period. So I like to typically recommend the client at least observed seven days, sometimes longer, depending upon the circumstances. And what you’re doing in this seven days is you are considering what alternatives may exist, you are discussing with the employee any feedback that they may have about the proposal, and looking at theoptions. Now, even if there are no options, even if this is, you know, clear cut, and there are no options to be considered, it is still important to observe the consultation period to at least create the facade if you like that, you know, there is some sort of thinking about options, even if there are no options because the Modern Award, and 389 of the Act requires that consultation.

Clint Indrele 7:14
The other thing we like to offer during the consultation period, or, or first after the initial consultation meeting is potentially access to employee assistance program services and On Demand HR, we’ve got a relationship with people since by Altius, to offer those services to our clients, and each should they require them on an ad hoc basis.

Clint Indrele 7:36
So then what we do is we go to the second and fourth annual final meeting and I say, second end or final meeting, because there could be more than one meeting, there could be potentially two, three or four meetings once all the options are discussed. And depending upon how the process is structured. So if there are no alternative positions that are offered in the initial consultation meeting, chances are it’ll be a second and probably final meeting, if there was alternative jobs offered, well, there might be a second meeting to consider whether or not the employee has applied for any of those roles, and whether or not they’re suitable for any of those roles. And then a third meeting to make the final decision.

Clint Indrele 8:13
It’s important to understand if we’re offering an alternative job, it doesn’t need to be a job that’s on the same or similar pay, it can be a lower paid job, it can be a lower employment status, it could be you know casual role or a part time role instead of a full time role. And all of these things are important in mitigating risk, if you have proposed an alternative position, and the employee is rejected it and therefore taken the redundancy, there’s certainly a lesser likelihood that they would have a valid claim in the Fair Work Commission for unfair dismissal.

Clint Indrele 8:44
Now, for those business clients that are just sort of listening to this going, what do you mean unfair dismissal? I just pay my redundancy, entitlements. And surely that’s the end of it? Well, no, we need to remember that redundancy processes are dismissal processes. So again, not meeting your obligations for consultation, not meeting your requirements under Section 387 of the Fair Work Act might put you in a position where a claim could be made against you.

Clint Indrele 9:09
So very importantly, at the second and final meeting, you would be either confirming that no alternatives have been identified. In the case where there’s no alternative jobs, or if the person has not applied for any alternative jobs. You could also just say, Well, you know, we’ve you’ve considered the alternative jobs, obviously, you’ve not opted to apply, and therefore we’re now confirming the redundancy.

Clint Indrele 9:30
We then following the second and final meeting provide a second and/or final letter. And I like to say following the final meeting, because I still want to create the impression that at the second meeting, the employee has the ability to still influence the decision. So having that letter follow the second meeting is probably slightly better than issuing the letter at the second meeting. So the first meeting doesn’t matter so much because you’re just outlining the proposal for the restructure but the second meeting the letter should follow the meeting. Not be on not be at the meeting where possible.

Clint Indrele 10:01
So, the second the second letter would confirm employment has been terminated by redundancy. By way of redundancy, it would outline any payments and timeframes. And the other thing again, we like to offer is outplacement services. So we find that employers that offer outplacement services have less of a risk of unfair dismissal claims. And outplacement services refers to giving the employee the opportunity to have a professional look at their resume, help them with job seeking techniques, get them positive about changing the future. And we find that giving the employee the opportunity to do that. And to get them positive and thinking more about the future. Leaves them more inclined to not focus on the past and not focused on negatives that have just occurred in respect to the employment that’s just come to an end.

Clint Indrele 10:45
So there’s your minimum redundancy process. Again, for more complex redundancy processes, you are looking at probably more meetings and potentially more consultation then what I’ve outlined that this is certainly a framework from which you can work with.

Clint Indrele 10:59
Just my final slide on this for today’s HR Fridays is around other considerations and entitlements. So in a situation where you’ve got, let’s say 10 truck drivers, but you only want to keep seven of them. And you want to make three redundant, what you need to consider is selection criteria. So how am I choosing the three people that are going to be selected for redundancy? And do I set some sort of criteria and score those people against that criteria. Now, whilst that might sound silly, and whilst you know who the weakest people are, and so on, it’s very important to make sure that if the matter does go to the commission, that your criteria is objective. So that you can actually show that I didn’t choose this person for discriminatory grounds, because they were old because they were young, because they were, you know, female, male whatever it may be. So a selection criteria certainly helps in showing that you have been objective.

Clint Indrele 11:50
With long service leave entitlements, that’s another consideration. In New South Wales, for example, if you terminate someone for redundancy, and they have had more than five years service, there will be an entitlement to pro rata long service leave. So that needs to be considered. Obviously, in each redundancy situation, is there any entitlement to pro rata long service leave? and how much that is. The standards do vary from state to state on that particular subject.

Clint Indrele 12:15
The other thing that we also like clients to consider is a deed of release. So in situations where they’re being offered more, then the situation where you know, the more than the obligations under the Fair Work Act, then you might consider well, should we make that conditional upon a deed of release being signed by the employee to release the employer from any further claims. So that is certainly a good strategy as well. In the event, you are paying more than what the minimum scale in the act refers to.

Clint Indrele 12:46
The alternative jobs. We covered that in the previous slides. But again, very important that you consider can I offer any alternative jobs to the employee, even if those jobs are less senior, less pay less status, again, great mitigating strategy.

Clint Indrele 13:02
Unfair dismissal risk, remember redundancies aredismissal processes. Very important to remember that so any any perceived unfairness about a redundancy process could result in an unfair dismissal. And very important to offer a support person, particularly at the second meeting, where the final decision is made. Again, that goes to general due process considerations under Section 387 of the Fair Work Act, and so on and so forth.

Clint Indrele 13:28
So that’s, that’s a quick wrap today on redundancies for our HR Fridays, and look really interested to have any comments or questions about this subject. If you’ve got any comments or questions, feel free to shoot them up in the next minute, or alternatively, On Demand HR can get back to you about any inquiries you might have on this particular subject.

Clint Indrele 13:49
I’d also like to say that look, in these particular times, there is certainly an increased risk of claims. We’re seeing employees, you know, clutching on to their employment for dear life. Obviously, the the job market isn’t that boyant at the moment and people are scared about the alternatives. There’s not a whole bunch of great alternative employment out there. At the moment, depending upon which industry you’re in. Of course, there is some industries that are really really strong and are still very, very competitive. There are some industries, however, that are very, very weak at the present time and they’re being heavily subsidized by by job keeper related situations. So once again, from Clint Indrele here, Managing Director of On Demand HR hope you’ve enjoyed HR Fridays, once again, let us know your thoughts and comments, feel free to visit our website, www.ondemandhr.com.au and have a wonderful weekend.