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Redundancies could be biggest recruitment issue of 2009

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02 February 2009:

Recruitment managers must ensure they`re aware of the "fundamental rules" when it comes to making staff redundant or implementing downsizing alternatives, says RCSA issues and policy manager, Charles Cameron.

In a web seminar this week, Cameron acknowledged that many recruitment company owners and managers are exploring ways to mitigate the impact of lost business.

He reminds them that "there are some fundamental rules that you must adhere to when going through this planning process".

Retrenchment alternatives
Cameron points out that Prime Minister Kevin Rudd recently encouraged business owners to consider moving employees onto part-time work as an alternative to making them redundant.

But, Cameron says, it`s important to remember that an employee`s hours can`t be reduced without their agreement.

Equally, he says, managers can`t unilaterally reduce the salary of permanent full-time or permanent part-time employees.

"If you were to go down this path and tell a particular employee that, for example, `instead of receiving $60,000, we are reducing your salary to $50,000`, or, `we are moving you to four days per week rather than five days per week`, you could very well have a claim for breach of common law contract."

The damages payable in those particular circumstances "could be very significant and could outweigh the cost reduction that you might have achieved by reducing the hours or salary".

Cameron advocates "a very interactive and engaging approach".

"Talk to employees about what you`re experiencing. It`s not like it`s just your company - they are aware of what`s going on globally. Explore the fact that `we want to try and avoid retrenchments; we want to avoid positions becoming redundant; we hope that this is only a short-term thing`."

Employers should consult with workers about whether they would be prepared to work as a team and everyone jointly consider a reduction of hours, he says.

"Try and get their agreement that way, rather than imposing it upon them. I`d hate to see that by imposing it upon them it ends up in some type of common law claim or indeed an unfair dismissal claim, which will cost a lot of money in representation and penalties or the damages."

Cameron believes that, for a while at least, consultants will be willing to consider ways they can help their employers during difficult financial times.

"For employees being told that their hours are being reduced or that they`re being retrenched - there`s going to be a stomach for it for a few months but I think after a little while, individuals will not be prepared to digest that because the novelty of the economic downturn will certainly have worn off, so please be aware of that."

Annual leave
Many employers wrongly believe that staff can be directed to take annual leave when business is slow, Cameron says.

Employers can`t force employees to take annual leave unless it`s during a shut-down, or where they`ve actually accrued two years` worth of leave (i.e. eight weeks, if the employee works full-time), he says.

"Go back and refresh yourself with the Australian Fair Pay and Conditions Standard and remember that it is still quite restrictive."

Retrenchment
"If you are considering retrenchments you need to be careful not to discriminate in the selection criteria, and you may also be obliged by an award or other legislation to consult the employee beforehand," Cameron warns.

"If you don`t, you may well be in breach of a NAPSA or an award, again resulting in further penalty."

He urges employers to "go back to your common law contracts. If you don`t have a common law contract that specifies notice of termination provisions... then in that event, if you retrench an employee they can make a claim in the common law courts for failure to provide reasonable notice. Again, that can result in very significant damages."

To employers confused about whether their staff are covered by awards, Cameron says: "As a general rule, if they`re not doing predominantly or mainly clerical or administrative duties it`s unlikely that they`ll actually be governed by an award, therefore they`ll fall back onto the Australian Fair Pay and Conditions Standard, including the pay scales and the like.

"So currently, there is actually no provision for severance payment within the Workplace Relations Act. Most of the severance or redundancy pay requirements actually arise within awards. Some arise within legislation - state-based legislation which is being converted to a NAPSA... but you certainly need to get advice here.

"Clerical and admin employees are most definitely covered. Those who have a principal or partial sales function could well be covered under Commercial Travellers-style awards. Those who are operating in finance, accounts payable/receivable, or payroll, are quite commonly covered by clerical-style awards and NAPSAs, so don`t presume they`re not governed by an award - go back and check your obligations."

Cameron also points out that there is a general exemption from severance payments for small business, "but remember the definition of small business is 15 employees or less, and employees does include casuals [including temps] employed for a regular and systematic period of 12 months or more".

He says redundancies "may be one of the bigger issues facing the industry moving forward, and of course you`ll need to couple that with the introduction of the new unfair dismissal law if all goes to plan for the first of July".

Source:
http://www.recruiterdaily.com.au/nl06_news_selected.php?act=2&nav=1&selkey=38657
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