A redundancy should never be a quick decision; you need to start preparing weeks, if not months in advance to do it right and provide the support your redundant employees will need for a smooth transition.
To help you prepare, follow this 7-step guide to planning redundancy and be sure to seek the appropriate professional advice throughout the process.
1. Assess your reasons for redundancy
What are the motivating reasons (economic, structural, technological, etc.) that are making a restructure necessary? Are you able to redeploy, retrain or relocate staff to keep them within your business? Do you have data and evidence to support that you are offering a genuine redundancy?
According to the Fair Work website, 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
A dismissal is not a genuine redundancy if the employer:
- Still needs the employee’s job to be done by someone (e.g. hires someone else to do the job)
- Has not followed relevant requirements to consult with the employees about the redundancy under an award or registered agreement or
- In the circumstances, could have reasonably given the employee another job within the employer’s business or an associated entity.
2. Determine if you offer voluntary or involuntary redundancy
Does your organisation have the scope for voluntary redundancy ahead of involuntary redundancy? Voluntary redundancy occurs when an employee volunteers or agrees to be made redundant. Voluntary redundancy can often save the trauma and disruption of involuntary redundancy and the reputational risks that arise during these discussions. It’s important to note, though, that a voluntary redundancy is not a way to avoid payments and entitlements.
Suppose you do decide to offer voluntary redundancy. In that case, this needs to be planned carefully, or else you can risk losing your best talent who, knowing they will be able to find another job quickly, opt to take the financial incentive to move. With this in mind, you may wish to be selective with this option – but beware of anti-discrimination legislation. We always recommend involving an employment lawyer at this stage to ensure you and your business are protected.
3. Identify entitlements
The next step is to identify what entitlement employees have to redundancy pay under the applicable award, enterprise agreement and legislation to ensure you comply. In some cases, some employees are not entitled to redundancy pay; you can find out more about this here. To work out how much your employee is entitled to, you can go to the Fair Work Notice and Redundancy Calculator.
4. Check the minimum notice period
As you are checking entitlements, check the applicable award, contract, agreement and legislation for the minimum notice periods and any mandated consultation to ensure you comply. It is important to be thorough here, noting that you may face defending an unfair dismissal allegation if you fail to provide your employee/s with the required notice period and consultation before reaching an agreement.
5. Develop your redundancy timeline
Now that you are informed, you can establish your redundancy timeline. Include the notification, consultation, communication (with the redundant employees, wider organisation and key stakeholders) and exit dates.
Your timeline should also document any necessary training for the manager or leader responsible for communicating the change and conducting the redundancy conversation. Preparation is essential to handle redundancy and restructure well.
6. Organise your outplacement provider
Once you have finalised your timeline, book in your outplacement provider. You will want an outplacement provider that provides a wide range of programs to suit your redundant employees’ different needs and career motivations. When you book them in, organise them to be onsite for the separation conversation so redundant employees can speak to them immediately after you have delivered the news.
7. Determine what support you will provide for the remaining employees
One of the most neglected areas in redundancy planning is looking at what support you will provide remaining employees – the survivor group. Change is disruptive, and the uncertainty and mistrust that a restructure can bring can significantly impact productivity, performance, job satisfaction, retention and loyalty in your team.
How will you ensure your team is equipped to get back to business as usual as quickly as possible? What added training do they need to help your organisation run effectively and efficiently, particularly with fewer resources available to support? What ongoing communication and assurances will they need going forward to make them feel safe, secure and motivated?
Need help planning redundancies in your organisation?
With more than 7,600 people successfully transitioned into new roles, at Turning Point Partners, we help you part on better terms with your staff by providing onsite support and tailored outplacement programs to transition your people into the next stage their careers more easily. Call us today on 1300 27 83 45.
For more tips on managing change, download the complimentary TPP HR Manager’s Toolkit.