Before you make a decision about retrenchments, and managing the process with staff, here are some questions and considerations to help you prepare for your discussions with your Victorian Government Business Office and your employees.

Have you considered what will happen when the skills, knowledge and duties of the position are gone?  

If you make positions redundant, keep in mind the skills and knowledge you might need again, e.g. when business bounces back, and what it will take to replace them.

Some positions and duties will be essential to cash flow, safety or compliance.

Is redundancy and then retrenchment the only option? Can you prove this to a third party?

Can you show that retrenchment was the last resort? Make sure you have financial and other records you can use, e.g. cash flow projections for after a retrenchment, or other financial statements to support your decision.

Is your business requiring or undergoing broader transformation?

Retrenching positions may not address broader issues with your businesses such as changing market demands or technological development.Investing in the upskilling or retraining of your workers may serve to improve the long-term viability of your business. The Federal and State Government may be able to provide assistance to businesses undergoing transition.

Can the position be turned into a part-time or casual position? 

Technically, this will be a redundancy. You should consult a professional adviser to determine what, if any, entitlements must be paid at the time the change takes place. You should also be sure to consult within your workplace, and possibly with the union, whether replacing full-time positions with part-time or casual positions is practicable.

Have you considered and made provisions for the severance pay and other entitlements you will need to pay?    

Casual positions and workers who have worked with the business for less than 12 months are not generally entitled to severance pay. However, they must still be paid other entitlements, where eligible, and treated fairly to avoid unfair and unlawful dismissal claims.

Have you consulted with employees and unions on the planned changes?       

The sooner you do this, the better. Early consultation with workers (and unions), even in confidence, will encourage smoother change and may give you some invaluable ideas on how to reduce the impact of retrenchment on your employees.

Do you know the legally required notice period?        

The award, contract or Fair Work Act 2009, will list the legally required minimum notice period, if it is not stated in the employee’s letter of offer or contract.

Does the redundancy/retrenchment process need to be compulsory?

Employers can offer employees the option to resign without a compulsory selection process – this is known as voluntary redundancy.

What selection process should I use for selecting retrenched workers?  

The Victorian Equal Opportunity and Human Rights Commission website has an employer’s guide to avoiding discrimination.

You will need to be able to demonstrate how you made the selection and that you explored other options in case there is a claim later for unfair or unlawful dismissal or discrimination.

What can I do to reduce the stress of an employee’s job loss?

Keeping people up-to-date reduces the sense of uncertainty, fear, and therefore stress.

  • Organise information seminars (offered by a third party); offer time-off to look for work; investigate retraining opportunities; offer financial planning and specialist support ‘outplacement consultants’.
  • Prepare redundancy materials and support for all workers through a Human Resource (HR) Transition Plan.
  • Jobs Victoria Workers in Transition can support your business and retrenched workers during the process.
  • Organise a farewell event to demonstrate gratitude and appreciation for employees who are leaving.

Have you checked to see whether counselling and other assistance for both retrenched employees and remaining employees are mentioned in awards, agreements or contracts?

While providing counselling might be beyond smaller businesses, there are free services you can refer employees to, such as MoneyHelp.

You should be able to offer the employee useful feedback on their strengths to help them plan for their next job. If you have an apprentice, talk to your contact at Australian Apprenticeships or your Group Training Organisation to transfer the apprentice to another organisation.

What can you do if you are bankrupt and cannot pay your employees their entitlements?      

Advise your employees to contact the Fair Entitlements Guarantee (FEG) on 1300 135 040. FEG helps employees when a business cannot pay its workers their redundancy payments. You should advise employees that, generally, the time limit for lodging an FEG claim is 12 months.

Have you done your best to avoid unfair dismissal or unlawful dismissal?

Make sure you explore other options; document your research and discussions with employees; use a fair and consistent selection process and err on the side of generosity if you can. Maintain open communications from the start and treat people with respect during what can be a stressful time.