Separation – Redundancy

Purpose

The purpose of this policy is to ensure that all employees are treated fairly in cases of retrenchment, relevant documents are completed, requirements met and entitlements paid correctly.

From time to time [enter-your-company-name-here] may have to initiate the retrenchment of an employee or employees due to insufficient business demand, changes to the organisational structure, introduction of new technology or other operational reasons.

In these circumstances [enter-your-company-name-here] is obliged to meet certain requirements in respect to termination of an employment contract. These requirements are prescribed by relevant legislation and community expectations and relate to communication, notification, notice periods, process and reasoning.

Policy

[enter-your-company-name-here] will ensure that all employees are made aware of, and fully understand, the company’s business needs and performance as soon as practicable.

Where [enter-your-company-name-here] is faced with an excess of employees in a particular area as a result of a reduction in business demand or for another operational reason, a process of full and open communication shall be implemented.

[enter-your-company-name-here] will investigate all alternatives to retrenchment including redeployment, the utilisation of accrued leave, or other viable options before any final decisions are made.  These alternatives aim to meet the needs and expectations of the employee, as well as to protect [enter-your-company-name-here]a’s investment in its employees.

When redundancy is unavoidable, [enter-your-company-name-here] will ensure that all entitlements are met and employees are treated fairly, equitably and with dignity during the process.

Staff retrenchments will only be undertaken as a last resort, when all other options have been examined.

Responsibilities

It is the responsibility of the Chief Executive Officer to ensure that:

• any decision made in relation to the retrenchment of employees is based on sound and objective operational criteria and that the positions selected for redundancy are the most appropriate.

It is the responsibility of the General Manager to ensure that:

• any decision made in relation to the retrenchment of employees is made on sound and objective operational criteria and that the positions selected for redundancy are the most appropriate.

It is the responsibility of Management to ensure that:

• any decision made in relation to the retrenchment of employees is made on sound and objective operational criteria and that the positions selected for redundancy are the most appropriate
• all alternatives to retrenchment are fully explored, including redeployment, either within the department or within [enter-your-company-name-here] generally
• the retrenchment message is delivered in an appropriate, confidential and sensitive manner
• all required documentation is completed to ensure the employee receives all correct entitlements
• all company property is accounted for at the time of retrenchment

It is the responsibility of all Employees to ensure that:

• full consideration is given to any options or alternatives that are offered to them.
• normal work is continued during the process of communication and notice period if applicable.

It is responsibility of the Human Resources Department to ensure that:

• all cases of retrenchment follow full and detailed operational analysis and that decisions made are based on all relevant facts
• all retrenchment cases follow due processes and are subject to full and open communication with the employees concerned
• all documentation is completed to ensure employees receive their correct entitlements as soon as possible after the retrenchment has taken place

Redundancy procedure

When a manager considers that retrenchment of an employee may be necessary, they should contact the Human Resources Department immediately.  The Manager and the Human Resources Department will review the situation to ensure that all relevant issues have been considered.

A termination must be substantively fair.  That is that employers must take into account the employee’s length of service, range of skills and experience, and the nature of his/her duties. 

Before retrenchment of an employee, in particular with long service and especially 25 years or more, it is required that:

• sympathetic consideration be given to the case
• a determined effort is made to place the employee elsewhere in the same general area of work or, failing that, elsewhere in [enter-your-company-name-here].

Employees to be retrenched shall be determined, firstly on a voluntary redundancy basis, followed by a last-on, first-off basis, taking into account the need to maintain efficient operation of the Business Activity where the reductions have to be made.

The Manager and the Human Resources Department will formulate an objective process of selection of the positions to be made redundant.  This will be without regard to the incumbents, except in the case of retention of specialist skills, knowledge, competencies and/or relationship that are required.

Whenever an individual who is currently on worker’s compensation is being considered for retrenchment, this should be discussed with the Human Resources Department before any action is taken.

Every effort will be made to identify opportunities in other areas of the organisation, commensurate with the skills and experience of the employees who are being considered for redundancy.  Employees will be given the opportunity and adequate time to consider the alternatives and to respond accordingly.

It is a condition of employment with [enter-your-company-name-here] that the company shall be able to arrange a transfer when the overall business circumstances warrant such a move. Transfers of this nature, that do not materially prejudice the terms of employment of the employee, will not be considered as retrenchments under the terms of this policy.

However, when determining a transfer to an alternative position, careful consideration should be given to the distance and location of the new position.  This should be considered with the assistance of the Human Resource Department. If it is available, and the employee is in agreement, any transfer will be subject to the same notice period as a termination.

A redundancy will not occur where alternative work is offered on substantially the same terms and conditions. Or where specific site or contract agreements provide for the possibility of discontinuity of employment.

If an alternative position is not acceptable to the employee, then there will be no retrenchment payment.  If the option of an internal position is not accepted, the employee shall have a negotiated payment in lieu of notice, at the rate of pay that applied prior to the employee receiving notice of alternative work.

In some cases, external out-placement/career consultants may be engaged to provide counselling for both employees to be retrenched and the remaining employees.  The Manager shall consider this option with the Human Resources Department. 

Paperwork

When it is deemed that all alternatives to retrenchment have been exhausted, the Human Resources Department will prepare a Certificate of Service to be forwarded as part of the retrenchment package.  A copy of a Certificate of Service will be included in the employee’s personal file.

The Human Resources Department will prepare a letter outlining the reasons for retrenchment which will be tailored to meet the individual circumstances of the situation. The letter will indicate that the termination of employment results from a redundancy and is through no fault of the employee.

Termination payments

The Human Resources Department will arrange for Payroll to calculate all entitlements and prepare final payments.

Where possible, the Human Resources Officer will prepare a letter, detailing payments, for the final interview.

The retrenchment interview

The Manager shall arrange a meeting with the employee to advise him/her of the redundancy. 

The Manager, preferably in conjunction with the Human Resources Department, shall communicate to the other employees in the area the reasons, future plans and any other relevant information.

A standard exit interview is not appropriate in the case of redundancy as this is a highly emotional time for employees and the information they may provide about the company may be biased.  However, Managers should arrange to meet with the departing employee prior to them leaving.

During the final meeting, the Manager shall recover all company property.  The Manager and the Employee shall complete a Termination Checklist detailing all company property to be returned and other internal issues to be completed.

On the satisfactory completion of the Termination Checklist, the Manager will pass on to the employee the Retrenchment package prepared by the Human Resources Department.  This will contain the Certificate of Service and the Retrenchment letter.  It is the responsibility of the Manager to ensure that all company property has been returned before the employee receives their final payment.

The Manager should forward all final documentation to the Human Resources Department for filing.

Continuity of employment

If a retrenched employee is again employed by [enter-your-company-name-here] within a three-month period, continuity of service may be granted (less the period of absence) with respect to certain conditions of employment.  Specifically, sick leave, annual leave and long service leave will continue (less entitlements already granted).

In the case of superannuation, the [enter-your-company-name-here] Superannuation Fund allows employees who have been retrenched and subsequently re-employed to allow the prior period of employment to be counted in the determination of total membership for vesting purposes.  The maximum break in employment allowable for this purpose will be 24 months.

In this situation there will be no requirement for the benefits paid to the employee to be repaid.  However, where such entitlements are not repaid, benefit accruals will commence only from the date that the member rejoins the Fund.

Counselling/career outplacement support services

The Human Resources Department will assist in determining when Out-placement Services should be engaged. 

As a guide, there are three important aspects of such services:

• Assisting an organisation to plan and accomplish the termination of an individual or group of employees.
• Working with the individual(s) who are retrenched to help them come to terms with the termination and to develop the skills and knowledge to assist them secure a suitable position.
• Support of those staff who will remain in the organisation.  While access to the counselling service is primarily for the person who is being retrenched, it should also be available to others, for example:
• the individual delivering the retrenchment message may require access to counselling as well as briefing/training on how to deliver the message
• where there are large numbers retrenched, it may be helpful for all staff to have access to counselling during the restructuring, decision-making and implementation process
• for those remaining, following the exit of those retrenched, as part of the rebuilding process

Elements of counselling/career transition/out-placement support may include:

• personal counselling for the employee and perhaps his/her immediate family
• financial advice
• job search skills
• planning and job search campaign
• networking skills and their role in job search.

Delivering the retrenchment message

It is important to be mindful about the importance of work in people’s lives and appreciate that retrenchment will be significantly traumatic to employees. The nature of retrenchments is such that there should be considerable sensitivity in the way that they are handled.  Confidentiality is crucial; it is important to avoid gossip about impending terminations as this can encourage negative reactions.

Type of meeting

If a group is to be retrenched at the same time, determine whether they should be advised as a group or in individual meetings.  Although groups of staff may be told about retrenchments being probable, in most cases individuals should be given the termination message in a private interview rather than as a group.

Who should deliver the retrenchment message

Identify who will deliver the retrenchment message.  Ideally, it should be the employee’s supervisor or manager.  It is also appropriate for a member of the Human Resources Department to be present during the interview, and for the individual to be given the opportunity to meet with a member of the Human Resources Department after being advised of the termination.

Timing

Decide on the time of week to deliver the retrenchment message.  It is preferable to hold the termination meeting early in the week.  This enables outplacement/career transition support to commence the following day and allows for the necessary contact to be made and for planning to commence during the working week.

Decide on the time of day to deliver the retrenchment message. Mid-afternoon is preferable because it is more in line with the normal departure time, and support mechanisms – family or friends – are more likely to be available.  For executives, mid-afternoon also enables a preliminary meeting with an out-placement consultant immediately following a termination meeting.

Location

Individual termination meetings should take place in the office of the Manager delivering the message.  This re-states the authority from which the decision has been reached and its finality.  It also ensures privacy.

Group termination meetings should take place in an environment in which the group will feel comfortable but which will ensure privacy.

What to say and how to react

The manner in which the termination meeting is conducted plays a vital role in achieving a successful retrenchment. 

Generally, the following is important in managing the meeting:

• Prepare a written script of what will be said in the meeting and do not deviate from the general tenor of that script; re-stating particular points as appropriate.
• Do not engage in “small talk”. Go straight to the point and communicate the decision in the first few minutes of the meeting.
• Restrict the meeting to 15 minutes; saying too little is preferable to saying too much.
• Be empathetic but in control. Be prepared to listen and allow the employee to vent emotion.
• Do not become defensive, argue or threaten, personalise anger, or debate the finality of the decision.  Do not deviate from the script.
• Prepare for a range of reactions to the termination message; for example, anger, shock, denial or silence.
• Ensure that the person has heard and understood the message.

Remember the person’s position is redundant and the termination is not performance related.  An appeal against unfair dismissal can occur if retrenchment is performance related.