What Are The Steps in a Redundancy?

by Oct 9, 2021All Posts, Human Resources

Need to make an employee redundant? 
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If you are considering making an employee redundant there are three things you must consider to avoid a potential Unfair Dismissal claim in the future.

With the huge amount of change small businesses are facing at the moment, there are many people facing redundancy.

As employers, it’s important to follow the steps correctly, both for you and for your employees. 

It’s also important to understand the difference between redundancy and a temporary stand-down. A temporary stand-down is just that, temporary.  If the stand-down is considered a permanent one then this becomes a redundancy. 

You’re still reading so I can assume that means you need to make one or more employees redundant. If that is the case then there are 3 very important things that you must consider.

1. The business no longer requires the role.

If duties can be absorbed by other people still working, or the nature of the business is changing, then redundancy is valid. You’ll need to decide if you need to let the person go completely, or whether you’re able to redeploy them to other tasks within your business.

Once this decision is finalised you need to let the employee know by letter. 

If your business is over 15 people you’ll also need to seek advice regarding redundancy pay. This is also something we can advise you on.

2. Announce potential redundancies to employees

It’s important that your employees receive clear communication about what’s happening in your workplace. A group meeting is important, explaining the reasons for the decision and advice on potential redeployment in the business, followed up by individual meetings with employees facing redundancy.

3. Provide employees with an appropriate final letter

You need to provide the employees facing redundancy with an appropriate final letter.  This letter needs to set out the employee’s final pay and notice period, or in the case of redeployment, a letter that states and sets out the terms of the new employment offer.

It is essential that you ensure the final pay complies with any obligations you have under the National Employment Standards (NES), the Modern Award(s), or Enterprise Bargaining Agreement (EBA) that relates to your business and any obligations you have as part of the termination.

We also recommend you talk to your bookkeeper or accountant in respect to ensuring the correct tax is taken out of the final amount paid. 

Unfortunately, redundancies can be tough on both employees and employers and there is often room for misunderstanding and hurt feelings. You value your employees and want to make sure that things finish well for everyone involved. Take the time and care to consider each step in the process.

Remember even if you do everything correctly when you make someone redundant it doesn’t guarantee that the employee will be satisfied with the outcome. Employees can and often do have a huge emotional investment in their work.  So it is vital that you take the utmost care of each step of the redundancy process.

Helping take you through the journey of doing redundancy well is part of why Assurance HR exists.

We can help you draft termination or redeployment letters if needed.

We can also advise you on what each letter needs to contain. 

And If your business employs over 15 people we can provide the advice you need regarding redundancy pay. 

Most of all we can help you know what to do at each step.

Please get in touch if you need to make an employee redundant to discuss how we might be able to help.

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