Recently, Catie had the privilege of being invited to appear on an episode of Small Business Matters with The Better Business for Good (BB4G) TV. Co-founder Brenda Thomson and Catie discuss the IF, WHEN and HOW of effectively managing redundancies, in particular:

– Why would you consider redundancy?

– Can you make any role redundant?

– What are the legal implications?

– Do you have to follow a process?

– What are the alternatives to redundancy?

Catch up on Catie’s episode now on the Better Business for Good Company website. Click the link below to watch the full episode.

https://bit.ly/3oFiKWJ

If you are needing guidance on how to effectively manage redundancies, get in touch with me today.

Businesses are always having to adapt to changes from the economic and social environment, technological advancements and their customer’s needs. Many of these changes can be planned for and implemented when the business is ready. The pandemic changed a lot of these plans and some businesses were forced to pivot their operations and priorities or even temporarily close, no more so then in the building industry.

Significant events like COVID-19, have impacts on employee roles, responsibilities and conditions, however, at the same time, it hasn’t changed employer obligations no matter the severity of business issues.

In a recent case, a client in the building industry had an employee file an unfair dismissal claim citing constructive dismissal and redundancy. Due to the complexity of the dispute and changes to the business as a result of COVID-19 at that point in time, Catie Paterson HR Business Consulting was brought in to manage the unfair dismissal case to help the employer and employee resolve the dispute that was both fair and reasonable for both parties.

The lead up to the dispute

The employer owns and operates two business entities in the building industry. Before taking twelve months maternity leave the employee was engaged in a role, working three days per week and no weekends. When the employee was due to return to work from maternity leave, COVID-19 restrictions meant some of the builder’s operations were closed. There was a decline in sales which resulted in the employee not being able to return to their previous role.

The employer offered the employee an alternate role in their other ‘business entity’ for a period of four to six months until sales increased. The role offered was similar in status and the pay remained that same as the previous role with the other business entity. The hours of work would this time include working one weekend day.

The employee did not agree that the alternate role was of similar status and requested a further six-month extension of maternity leave in order to return to the original role. The employer did not agree to the maternity leave extension but agreed to the employee working three days per week and no weekends. The employee did not accept this and resigned from her role and filed an unfair dismissal citing constructive dismissal and redundancy.

The approach to the Unfair Dismissal Conciliation

According to Fair Work, a constructive dismissal is a forced resignation, meaning an employee has no real choice but to resign. A genuine redundancy is when an “employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise.”

Catie Paterson HR Business Consulting approached the dispute by first reviewing and understanding the facts of the case by utilising prior knowledge and experience from other similar disputes, to determine if it was constructive dismissal and a genuine redundancy. With this concise process of review and consultation, Catie Paterson HR Business Consulting were able to gather the necessary documentation to justify the decisions that were made and that procedures were followed in compliance with Fair Work. This meant the client was well prepared for the unfair dismissal conciliation with the Fair Work Commission (FWC) and an agreed settlement could be reached, avoiding a full FWC hearing or conference.

The Result

During the conciliation it was found the situation was not constructive dismissal as the employee resigned on their own accord as a result of not wanting to accept/work in the alternate role offered with the other business entity. It was deemed that the employer did offer flexibility with changing the roster to working three days per week and no weekends.  Also, the original role was not made redundant as the employer required someone in the role for the future and within six months.

The importance of Human Resources (HR) policies, procedures and documentation

FWC conciliations and hearings can be very stressful for all parties involved and can be a very long, drawn out process if procedures, documentation and consultation requirements are not followed or complied with. As this case demonstrates it’s important to have workplace policies and procedures in place to help manage legal risk, provide that support framework for when decisions need to be made and required documentation.

It also shows how the complexity of the pandemic can affect a business and their employee’s roles, responsibilities and conditions but employer obligations still remain the same as before the pandemic.

Businesses going through significant changes should seek guidance from a Human Resources Consultant on any decisions that need to be made around their workforce to hopefully avoid FWC conciliations and hearings.

Here’s why a small business had to pay a redundancy based on full time hours and not part time hours which resulted in a difference of tens of thousands of dollars.

The impacts of the pandemic can be felt across many industries far and wide. One of the biggest industries that has really been hit hard is the events industry. Due to heavy Government restrictions of gatherings, all events where no longer able to go ahead which forced many small event businesses to temporary close or completely close with no longer being able to sustain the extended restrictions of Melbourne’s lockdown.

A small event-based business, who had been decimated by the pandemic and no longer in operation had to make redundancies. As a result of one employee not having an Employment Agreement and the process not being followed the business had to pay a redundancy based on full time hours and not part time hours which resulted in a significant difference of more than tens of thousands of dollars for the pay-out.

The lesson for other businesses is to make sure all your employees have written documentation, that it’s up to date with their current position and employment and signed by the employee.

Background

The employee was originally employed by the event-based business on a full-time basis and also received a significant salary increase over the past twelve months. During this time, the employee went on maternity leave and returned on a part-time basis.

Throughout their employment there was no signed Employment Agreement in place for either their full time or part time employment and no regular hours were discussed and confirmed in writing. The only form of documentation was a letter provided to the employee regarding their increase in salary.

With the unfortunate closure of the business, the business had to make redundancies which the relevant consultation requirements set out by the Fair Work Ombudsman were also not followed correctly.

The result

As there was no signed Employment Agreement in place, the administrative processes not correctly followed internally and the relevant consultation requirements set out by the Fair Work Ombudsman not followed, the business were required to pay the employee’s redundancy based on full time hours and not part time hours. This resulted in a significant pay-out to the employee at a substantial difference of more than tens of thousands of dollars.

Tips to prevent this happening to your business

  • No matter how big or small the business, it’s critical to have a good and solid administrative procedure that makes sure Employment Agreements are followed up on and signed. A signed Employment Agreement needs to be in place regardless of your relationship or if they are a ‘nice person.’
  • Any updates to the Employment Agreement should be made in writing and confirmed by employee by counter-signing the Employee Agreement.
  • The signed Employee Agreement must also be for your employee’s current employment and position.
  • It’s important to follow the Fair Work Ombudsman employment processes, procedures, policies and the law.
  • Seek professional advice if you are unsure about the redundancy process or need help to set up administrative processes and procedures for managing Employee Agreements.

 

These minor administrative tasks of signed Employment Agreements can seem insignificant and can be put to the side and sometimes forgotten about. As this case shows not following up and updating Employment Agreements when current employment and positions have changed can have significant consequences down the track. This case also emphasised the importance of understanding your obligations to consult with your employees when there have been substantial business changes.