McDonald Murholme Principal lawyer Andrew Jewell discusses the importance for employers to know their legal obligations when it comes to a redundancy.
See below article for further details
The surprisingly better way to handle redundancies in the workplace – INTHEBLACK
In an age of endless restructuring and instant communication, employers are learning the advantages of a more transparent approach to redundancies.
Digital disruption is accelerating the need to not only add new roles to organisations, but also remove established roles. Many employees can now expect to be told at least once in their career that their position is no longer needed.
This is removing some of the personal stigma of redundancy, but it is not taking away the pain of losing a position and an income.
Organisations, meanwhile, risk creating enormous ill will and harm to their business if they don’t handle the process properly. British bank Barclays discovered this in January when it axed 100 staff in its Singapore office.
The news had leaked earlier in the month, but when Barclays announced the redundancies just before the Chinese New Year holiday, shocked staff went public with complaints about unfair treatment and lack of outplacement support.
Where the damage happens
Such public outcries are increasingly common these days. Angry workers can lash out on social media, and news media then amplify this social media reaction, as they did with Barclays’ decision. Displaced employees’ pursuit of legal action for unfair dismissal can keep the issue in the public eye and continue to batter workplace morale.
Worse still, valuable staff may leave an organisation in the wake of poorly handled redundancies. Survivors start updating their resumes in the expectation that they will be treated similarly.
Australian Human Resources Institute (AHRI) national president and chairman Peter Wilson cites US research which found companies that cut 10 per cent of staff typically lose another 25 per cent voluntarily over the next three years. As a result, they can struggle when business picks up.
“Taking someone’s job away is a very expensive business,” he warns.
Most importantly, a badly handled redundancy can cause significant psychological damage for the individual on the receiving end of the decision.
“There are more bad examples than good in this space – it’s quite tragic,” says Sandy Hutchison, founder of career development and outplacement consultancy Career Money Life.
Although the pain is far less, it’s not easy on the other side of a redundancy decision either. Hutchison admits she never slept the night before she had to make someone redundant.
Then it happened to her.
What best practice looks like
Personal experience showed Hutchison how important it is for organisations to be respectful and considerate and to put the employee first. She stayed on good terms with the company that made her redundant, and it consulted with her and let her stay for three months to finish a project.
Workplace experts say this sort of early preparation and consultation lets people depart with dignity and prevents brand damage to organisations.
It’s important for employers to know their legal obligations in this area. Andrew Jewell, principal of law firm McDonald Murholme, notes that Australia’s Fair Work Act makes it clear that a redundancy must be genuine, or the result of workplace restructuring, rather than used as another way to fire someone.
Companies that can show how they consulted and tried to redeploy people and that redundancies were made on workplace grounds and were not discriminatory are more likely to successfully fight a legal challenge, Jewell points out.
However, he observes that legal outcomes are often determined by how employers treat people. Typically, disgruntled employees complain most about lack of consultation and fast exits – about being called in one morning, told their job no longer exists, handed a cardboard box to fill with personal belongings, and then escorted to the door by a guard.
Today, it is considered better practice to offer employees the choice of working out their notice, so they can farewell colleagues and clients and hand over work. By avoiding the walk of shame, this process also lessens the embarrassment and demoralisation of remaining staff.
Another approach is to involve employees in their own redundancy. To many employers, that may sound like risky business, but AHRI’s Wilson argues that it can minimise the impact on both employer and employee.
Organisations should be open and transparent, he says, and should not fear to ask for employees’ help if the business is going through a difficult time. Redundancies will be less damaging for the people let go as well as those remaining if the workforce has been involved in the process and has seen management trying to protect employment, he says.
Jewell says employees treated this way are less likely to contemplate legal action.
Stuart Taylor, CEO of The Resilience Institute, has a client who began to plan and involve employees in discussions three years ahead of the redundancies. Did it raise the chance that other employees would leave?
“That was a potential risk,” he says, “but that position earned them a lot of trust and respect.”
While companies claim to fear alerting their competition, customers or suppliers about plans for change, Wilson believes that managers use this as an excuse for fast redundancies – “because they don’t have the courage to face it and do it honestly and decently”.
The moment of truth
The Resilience Institute’s Stuart Taylor says the person who delivers the redundancy news should be the employee’s immediate report, but at the same time it must be someone who is trusted and has “a high level of emotional intelligence … so there is a free and frank conversation”.
Obviously, no-one should ever be told of their redundancy by text message, Taylor adds.
Lawyer Andrew Jewell suggests giving employees a list of available jobs, even if they are unlikely to move location. That way, employees can see the employer is trying to help. Better still, they can honestly tell people they were offered other jobs in the company, but decided nothing suited.
Fired and tweeting
Consultation and extended notice periods become more attractive in an era of instant communication. UK music chain HMV suffered the brunt of employee ire in 2013 when sacked staff hijacked the company’s Twitter feed to make several posts about “mass execution” of loyal employees.
Mainstream media picked up the posts in the minutes it took HMV to shut down the site.
Twitter staff were even better placed to vent when their company announced 336 workers would go following the reappointment of Jack Dorsey as CEO last year. Dorsey confirmed his decision to shrink the overall team size with a tweet, and some exiting employees only learned they were jobless when they were shut out of their email accounts.
Not surprisingly, they used their Twitter feeds to say what they really thought about their treatment.
How to manage disruption for mature-age workers
Adrian Choo, Singapore-based business development director at talent development and transition consultancy Lee Hecht Harrison, says the hardest-hit employees he sees are professionals made redundant in their mid-40s and 50s, who often don’t have the career agility to bounce back or to reinvent themselves.
Career development and outplacement expert Sandy Hutchison urges employers planning redundancies to consider the two-way benefit of offering part-time or contract work to older workers.
“These are often very senior people who had a great career and they suddenly are out of work and finding it difficult to get back in at anywhere near the same level,” she says.
At the same time, you shouldn’t assume that everyone who is made redundant immediately wants to look for another job. Many people want to take a break before trying to leap back into the workforce and may find financial or health advice more useful than career counselling – or they may want information about starting their own business.
Reference: ‘The surprisingly better way to handle redundancies in the workplace’, INTHEBLACK, 01 November 2016.