Retrenchment & Redundancy: A Step-by-Step Checklist for Australian Employers

Retrenchment or redundancy, while sometimes a necessary business decision, can be a challenging process for both employers and employees. Here at Recruitment Central, we’ve seen firsthand the impact of poorly managed redundancies. It’s not just about complying with legal requirements; it’s about supporting your people through a difficult transition.

That’s why we’ve put together this step-by-step checklist to guide you through the key steps to manage retrenchment or redundancy responsibly and within Australian regulations.

Understanding the Difference

Before we begin let’s clarify:

• Retrenchment: Broadly refers to laying off employees due to financial constraints or business restructuring.
• Redundancy: A specific type of retrenchment where a particular job is no longer needed due to operational changes or changes in the business needs.

Both situations require careful planning and adherence to legal and workplace obligations.

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Step-by-Step Checklist

1. Assess the Necessity:

• Genuine redundancy: Can others absorb the work, or is the role truly obsolete due to technological advancements, financial reasons, or restructuring? It’s important to determine the details.
• Explore alternatives: Consider redeployment, retraining, or reduced hours or days before making a final decision.

2. Management of the process:

• Fair and non-discriminatory: Base your selection of who may be made redundant or retrenched on objective factors like skills, experience, and performance. Avoid bias based decisions around age, gender, or other protected attributes.?

3. Consultation:

• Legal obligations: Consult with employees and unions as required by awards, agreements, and legislation. Consult early and be transparent.
• Open communication: Explain the reasons behind the redundancy and discuss any redeployment options, including outplacement services to assist.

4. Notification:

• Written notice: Inform affected employees in writing, clearly stating the reasons for redundancy and their final date of employment.
• Notice period: Comply with legal notice requirements outlined in awards, agreements, or contracts. The more notice the better for most.

5. Entitlements:

• Redundancy pay: Calculate entitlements based on length of service and applicable awards or agreements. If you can afford it, be generous.
• Tax implications: Consult with a financial advisor or accountant to understand all the components of severance payments and terminations.

6. Additional Considerations:

• Large-scale redundancies: Notify Services Australia (Centrelink) if retrenching 15 or more employees.
• Support services: Provide information to retrenched employees about available support services like the Early Access initiative under Workforce Australia, Fair Entitlements Guarantee (FEG), and the JobSwitch tool.

As your trusted recruitment partner, we can assist with:

• Outplacement services: Guiding, counselling and assisting with resumes and interview preparation including helping retrenched employees to find new roles.
• Talent acquisition: Filling any vacant positions that arise after restructuring and managing the process.
• HR consulting: Advice on best practices for workforce adjustments and compliance.

By considering these aspects and offering support, you can navigate the retrenchment process ethically and legally and sympathetically, while minimising the impact on your employees and your business.

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Need Further Assistance?

If you have questions or need expert guidance on retrenchment or redundancy, our team at Recruitment Central is here to help.?

References:

Redundancy. Fair Work Ombudsman. https://www.fairwork.gov.au/ending-employment/redundancy

Retrenchment done right. Department of Employment and Workplace Relations. https://whatsnext.dewr.gov.au/help-employers/retrenchment-done-right

Support for retrenched workers. Department of Employment and Workplace Relations. https://whatsnext.dewr.gov.au/where-do-i-stand/support-retrenched-workers

Message from the CEO

As the market continues to shift, many employers face the challenging task of navigating redundancy and retrenchment. With uncertainties around interest rates and cost of living pressures, we’ve noticed that while more candidates are available, many are choosing to stay in their current roles.?

Current sentiment has led to a wave of retrenchments across various companies, but we anticipate that the situation will stabilise in the coming months. Managing these sensitivities and situations which impact people’s lives is difficult on both employers and employees, even employees still working with you need to be considered. Our advice is to make sure the process of payment and calculation is done by the book according to Fair Work and then add a layer of care to the process by offering outplacement services and follow-up resources.??

At our recruitment agency, we are well equipped to assist you with these aspects.??

Thank you for your continued trust and partnership. Together, we can navigate these challenging times and emerge stronger. If you need any assistance, please do not hesitate to reach out.

Till next month, take care.

Regards

Sandra?