I got an interesting question from subscriber earlier this week – one I think you will want to know the answer to as well.

So today, I thought I would share the question (and its answer!) with you…

Here goes…

Question: I have a long term employee who has been with our organisation for 12 years. She performs her role adequately, but due to a downturn in business, we can no longer justify paying her current salary for the role.

Answer: If you think that the salary being paid for a job in your business is excessive (having regard to the tasks, skill and experience required by someone to perform that job), then this is a redundancy situation.

This may mean that you need to offer the new role (with the adjusted rate of pay) to the current occupant. You would also have to offer them any other suitable role that was vacant.

To find out the answers to more frequently asked employment law questions, keep an eye out for the Letters Section in your next Employment Law Practical Handbook update.

It will be packed full of subscriber questions and answers just like this one, and it’s due in your mailbox shortly!

Not yet a subscriber to the handbook? Click here for more information.

Until next time…

Claire Berry
Workplace Bulletin

Sometimes, it can be a little hard to tell exactly when you can dismiss an employee on the grounds of “genuine redundancy”.

So keep this in mind: In order for Fair Work Australia to consider a redundancy “genuine”, you must be able to prove that it was not reasonable for you to redeploy the employee elsewhere in your business.

This can seem daunting, but don’t feel as though you have to offer the employee a role if you don’t have one!

If there are no suitable positions available for the employee, then you won’t be expected to redeploy them.

Like this recent case:

In Manoor v United Petroleum Pty Ltd [2010], the FWA considered the case of a redundancy of a Melbourne-based job where the work had been relocated to Townsville. FWA ruled that it was not reasonable for the employer to offer the employee redeployment in Townsville, because the employee had relatively short service and the relocation would have cost the employer significantly more than recruiting someone locally.

Check out Charles’ article below for more information on how to prove a “genuine” redundancy to Fair Work Australia.

If you have any questions, comments or suggestions about the Bulletin or the Employment Law Practical Handbook service, I would love to hear them.

Shoot me an email to helpdesk@workplacehandbook.com.au with any or all of your ideas!

Until next time…

Claire Berry
Workplace Bulletin

In order to establish grounds of genuine redundancy, you must prove three things.

1. Firstly, you must prove that you dismissed the employee because you no longer required the person’s job to be performed by anyone due to changes in the operational requirements of your business.

Some examples of changes in operational requirements that might establish genuine redundancy are set out below.

• A machine is now available to do the job performed by the employee.
• You are restructuring your business to improve efficiency and you decide to redistribute the tasks done by a particular employee between several other employees.
• Your business is experiencing a downturn and therefore you only need 3 people to do a particular task or duty instead of 5. In this kind of scenario, the process for selecting which employees will be retrenched is irrelevant, so long as the criterion is lawful. For example, in the above scenario, you could choose the 2 employees to go on the basis of poor performance but not because one is pregnant and the other is on WorkCover.

2. Secondly, you must prove that you have complied with any obligation to consult with the employee about the redundancy. Such an obligation may arise under a modern award or enterprise agreement. You do not have to consult with the employee about the redundancy unless a modern award or enterprise agreement requires you to.

3. Finally, you must prove that it would not have been reasonable to redeploy the employee within your business or a related business.

Redeployment means offering the employee another job, even if they do not want to take it. This does not mean you have to create jobs – you only have to offer redeployment to jobs that are vacant.

If there are no suitable positions available for the employee (i.e. positions that match their qualifications or experience), then redeployment is not reasonable.

For more information on genuine redundancies, please see the Redundancy and Retrenchment chapter in your Employment Law Practical Handbook.

Not yet a subscriber to the handbook? Click here for more information.

Regards,

Charles Power
Editor-in-Chief
Employment Law Practical Handbook

If you think there is even the slightest chance you will ever have to make someone redundant, you MUST read this.

The introduction of the Fair Work Act has significantly affected your ability to make redundancies – and January 1 2010 saw even more changes made to redundancy legislation.

So I thought today’s Bulletin would be a good time to recap how the Fair Work Act has changed redundancy laws – and what that means for you!

So here they are…

Your 6 new redundancy requirements under the Fair Work Act

1. If you employ 15 or more staff, you now have to pay retrenched employees minimum notice and redundancy pay.

2. If you employ less than 15 staff and a modern award applies, you now have to pay the same amount of redundancy pay as larger employers – but capped at 8 weeks..

3. The decision to retrench more than one award-based employee is no longer yours alone to make – you must consult with an employee BEFORE you decide to retrench them and explore all reasonable redeployment opportunities.

4. Previously, WorkChoices exempted you from unfair dismissal in redundancy cases. Now, an employee you retrenched may be able to bring an unfair dismissal claim against you if you don’t follow award consultation procedures or offer reasonable redeployment!

5. Your redundant employees may now be entitled under awards to ‘interview leave’ – i.e paid time off to seek alternative employment.

6. You are now only able to terminate an employee by delivering them a written notice that clearly states their last day of employment.

If you need more information on your new redundancy obligations under the Fair Work Act, just refer to the Redundancy and Retrenchment chapter in your Employment Law Practical Handbook.

Not yet subscribed to the Employment Law Practical Handbook? Click here to find out more.

Until next time…

Claire

P.S Stay tuned for the next Workplace Bulletin – Charles is going to remind you about exactly which changes you need to make to your employment contracts and policies to ensure they comply with the NES.

• Payments in lieu of notice now attract a superannuation guarantee charge!
• Quick Tip of the Week: How to get more information about superannuation
• Workplace Helpdesk Q and A: Rehiring after a redundancy
• Workplace Wackies: Essential additions to the workplace vocabulary

Dear Reader,

Spring has sprung! And change is certainly still in the air in the world of employment law.

Here’s a new ruling you may not have known about…

In the past, payments made in lieu of notice did not attract a superannuation guarantee charge (SGC). Now, they do!

What is SGC?

SGC is a quarterly charge that the federal government will impose on you if you fail to contribute sufficient superannuation on behalf of your employees.

The minimum level of superannuation (often known as SGC contributions) is 9% of an employee’s earnings base. (On 1 July 2008, the earnings base was standardised to mean an employee’s “ordinary time earnings” or OTE). The requirement to contribute 9% superannuation only applies to a maximum limit of earnings (in 2009-2010 this limit is $40,170 in a quarter).

The new ATO ruling

On 1 July 2009, a new ATO ruling took effect.

This ruling makes it clear that the ATO considers payments in lieu of notice to be OTE. This means that payments in lieu of notice now count towards an employee’s ordinary time earnings. Therefore, they will now attract SGC.

This is a change from the past, as the ATO did not previously consider payments in lieu of notice to be part of an employee’s OTE, and they did not attract SGC.

This ruling does not affect other types of payments – annual leave, redundancy and other leave payments still do not attract SGC.

Remember: You don’t have to make SGC contributions to:

• employees who are under 18;
• employees who are over 69; or
• employees who earn less than $450 per calendar month.

Quick Tip of the Week: More information about your requirements in regards to SGC payments will be outlined in future Employment Law Practical Handbook updates. In the meantime, you can consult the ATO website www.ato.gov.au for more information.

Workplace Helpdesk: Rehiring after a redundancy

Answered by Charles Power, editor-in-chief, Employment Law Practical Handbook.

Q: We are looking to make someone redundant because their position is not currently required within our business. However, it is likely that the position may be required down the track. Is there a specified period (e.g. 12 months) in which we cannot hire (or promote) somebody to fill the position after making the current person redundant?

A: No, there is no specified period that you have to abide by. However, to avoid anyone thinking that the redundancy is a sham, it would be a good idea to allow at least 6 weeks before you promote or hire another person for the role.

Until next time…

Claire Berry
Editor

• Redundancy – Do you know what the new laws will mean for you?
• 5 things you need to know about the new redundancy laws
• Find out your new severance payment and notice obligations

Dear Reader,

It’s been all over the news…the global financial crisis is causing Australian businesses to have a good hard look at its workforce and redundancies are on the rise. But did you know that the federal government’s Fair Work Bill will impose new requirements on employers in regards to redundancy and retrenchment from 1 July 2009?

As an employer, you want to ensure that you comply with the law and keep out of court when dealing with redundancy. But did you know that if you retrench an employee next year you might have to pay them as much as 21 weeks’ severance pay? Are you ready to do this?

There are many other things changing as well…

Previously, WorkChoices exempted you from unfair dismissal in redundancy cases. Well that’s all set to change, because from 1 July 2009 this year, an employee you retrenched will be able to bring an unfair dismissal claim against you in certain circumstances. How? They can do so if it was reasonable for you to offer them another job (either in your business or a related business) and you failed to do so. In circumstances such as these, they will be able to sue you for up to 6 months’ pay.

Also, from 1 January 2010, you will not be able to retrench a group of employees suddenly without notice. Instead, you must first discuss options for redeployment or retraining with redundant award covered employees. If you do not do this, you could be sued.

But wait, there are still more changes you need to be aware of!

5 more things you need to know about the new redundancy laws

1. Do you have a workforce of 15 or more staff?

If you employ 15 or more staff from 1 January 2010 you will have to pay retrenched employees minimum notice and redundancy pay – from your CEO down to your line manager. (Please see the section entitled ‘Your new severance payment and notice obligations’ at the end of this bulletin for more information on what your specific notice and severance payment obligations will be.)

2. Do you have a workforce of less than 15 staff?

If you employ less than 15 staff, from 1 January next year you will have to pay the same amount of severance to retrenched award-based employees as larger employers. However, their redundancy pay will be capped at 8 weeks.

3. Who will be able to make the decision to retrench an employee?

The decision to retrench an employee is no longer yours alone to make. You will need to discuss ways to avoid retrenchment with the employee and – if the employee insists – their representative, before making the decision to retrench them. In cases where it is likely that a significant number of award-based employees will become redundant, you will need to supply each employee (and their representative) with written information prior to your meeting with them. This information will need to explain things such as the reasons for the likely redundancies, timeframes, etc. Future Employment Law Practical Handbook updates will give you templates and guidelines to assist you with this process.

4. What new powers will Fair Work Australia have in regards to redundancy?

We know about the risk of unfair dismissal claims after the retrenchment. However, award-based employees who don’t like the way you are handling the redundancy will be able to refer their dispute to the government’s new industrial tribunal – Fair Work Australia. And Fair Work Australia will have more powers to intervene in the dispute before the retrenchment. (Remember, future Employment Law Practical Handbook updates will give you templates and guidelines to help you deal with these circumstances).

5. Do you know what you MUST now do before an employee can be terminated?

You will now only be able to terminate an employee by delivering them a written notice that clearly states what their last day of employment will be.

Here are some other things you might not know…

• Your redundant employees may be entitled to ‘interview leave’!If an award applies to a redundant employee serving notice, the employee will be entitled to one day’s paid ‘interview leave’ for each week of notice. However, you will be able to insist that they make a statutory declaration to prove they attended the interview.

• Redundant employees serving notice may leave their employment at any timeIf an award applies to a redundant employee serving notice, they can leave their employment at any time prior to their termination date without losing their redundancy pay entitlements. But remember, in this case you will not need to pay them for the notice they did not serve.

• You must take certain steps before retrenching 15 or more employeesIf you are retrenching 15 or more employees you need to complete a particular form and fax it to Julia Gillard’s Department (the DEEWR) – but only until 1 July 2009.

What are your new severance payment and notice obligations?

Use this table to check your new severance payment and notice obligations.

Things certainly are changing… but remember, future Employment Law Practical Handbook updates will ensure that you are fully equipped to deal with redundancy in your workplace.

Until next time…

Charles Power

• A guide to dealing with redundancy in your workplace
• Quick Tip of the Week: Watch out for a Workplace Bulletin special edition in your inbox tomorrow!
• Workplace Helpdesk Q and A: Can an employee take back a decision to resign?

Dear Reader,

So you’ve considered the alternatives, ummed and aahhed…but finally come to the decision that you must make some roles in your organisation redundant.

So where should you begin?

Step One: Select the role/s that you will make redundant

In order to do this, you will need to consider carefully those roles that are imperative to the success of your organisation, and those that are not.

Remember, you must ensure that you use proper criteria when selecting roles for redundancy. You will also need to be able to prove that you are retrenching employees for “genuine operational reasons”. In other words, your reasons for selection must not be discriminatory or unlawful.

Step Two: Consider the redundancy payments you will need to make

You will need to ensure that you fully understand any redundancy payment and notice period obligations you may have to departing employees.

A table outlining your new severance pay and notice obligations under the Fair Work Act will be included in tomorrow’s special Workplace Bulletin. Watch out for it in your inbox tomorrow!

Continues below…

Step Three: Inform the employee/s.

While it will no doubt be a difficult conversation, you will have to inform the employee/s that their roles are being made redundant.

In you conversation with them, you will need to ensure that you:

• Explain clearly why their role is being made redundant.
• Discuss with them what happens next. For example, should they leave immediately? Will you offer them any outplacement services?
• Outline the details of their severance package and any notice period requirements.

Quick Tip of the Week: From 1 July 2009, the Fair Work Bill will impose a number of new requirements for employers regarding redundancy and retrenchment.

Tomorrow the Workplace Bulletin will send you a very special email, outlining what you need to know about new redundancy laws. Watch out for it in your inbox tomorrow!

Workplace Helpdesk: Can an employee take back a decision to resign?

Answered by Charles Power, editor-in-chief, Employment Law Practical Handbook.

Q: One of our employees resigned and we accepted his resignation in writing. The resignation is to be effective from April 28 of this year. However, the employee now wants to come back to his role. Are we obligated to take him back as the resignation date has not passed?

A: No, a resignation can only be revoked by agreement of both parties. As your employee has already informed you of his decision to resign, and you have formally accepted, you are not obligated to take him back, even though he has yet to leave your workplace.

Until next time…

Claire Berry

Editor

• Consider these 4 alternatives to redundancy
• How to stop your employees taking “sickies”
• Quick Tip of the Week: Consider the effect that employees taking unpaid leave will have on your business
• Workplace Helpdesk Q and A: Can you enforce a maximum leave allowance?

Dear Reader,

In these turbulent economic times, it is natural that you may be contemplating making certain roles in your organisation redundant in order to save money.

However, before you take that step, it is important to first consider the alternatives. Some of the following options may just work better for your business….

1. Reducing annual leave accruals

You may recall that two weeks ago, the Workplace Bulletin discussed the importance of not allowing your employees to accrue an excessive amount of annual leave. Well, reducing your leave liability is one way to help you reduce costs. (To view and action the advice from the February 24th edition of the Workplace Bulletin – Annual Leave Accrual: Do You Know Where You Stand? click here).

2. Redeployment

Consider negotiating a different employment arrangement with employees. For instance, you could offer a 9 day fortnight (which in effect is converting a full-time employee to part-time). You could apply a temporary pay cut. Or you could seek to move the employee to a different role elsewhere in your organisation. In all cases, these will require the employee’s agreement. That agreement should not be obtained by a threat of dismissal or some other harm to their employment. If agreement is obtained, make sure it is documented and that you make clear that other existing employment conditions continue to apply.

3. A freeze on hiring or recruiting new employees

By putting a freeze on both hiring new employees and replacing those employees that leave, you can cut your costs.

4. Expanding the circumstances in which employees can take unpaid leave

You might introduce policies that enable people to take extended unpaid leave, for example career break leave, study leave or extended parental leave.

Before resorting to redundancy, consider these options to reduce your labour costs.

Quick Tip of the Week: You will need to consider the effect that employees taking unpaid leave will have on your business. For example, would the absence of your employees adversely affect vital areas such as client relations, fulfilment and distribution or customer service levels? Remember that you may end up losing more than you would save by not having to pay wages.

Continues below…

They are the scourge of every business…

Those who routinely take the “Monday morning sickie”… those who are conveniently “ill” on the last day of the final Ashes test… on Grand Prix day… or the Tuesday after a public holiday.

You want to haul them over the coals… but you can’t prove a thing.

So how DO you to deal with employees that constantly abuse their leave entitlements – without exposing yourself to unfair dismissal laws?

Workplace Helpdesk: Can you enforce a maximum leave allowance?

Answered by Charles Power, editor-in-chief, Employment Law Practical Handbook.

Q: During the current climate, our company has enforced a strictly maximum 2 week annual leave allowance. However, I have an employee wanting to take Long Service Leave (Queensland) – are we able to enforce this ruling on Long Service Leave as well?

A: I think you need to be careful applying a universal rule in either case. Instead I suggest you convey the message to employees in the following terms:

“Given current economic conditions the Company will only grant periods of paid annual leave in excess of 2 weeks and long service leave in excess of 4 weeks if, having regards to the circumstances of each case, there is a fair balance between the needs of the business and the employee concerned.”

The 4 week minimum I suggest for LSL reflects the QLD LSL Act.

Until next time…

Claire Berry

Editor

• Considering Salary Increases: Part One
• Quick Tip of the Week: What you can’t do when reducing an employee’s wages
• Workplace Helpdesk Q and A: Can you retract an offer of employment?

Dear Reader,

Given the current economic climate, you’re probably asking yourself if you should be more cautious than usual in relation to salary increases. You can look at this issue from two perspectives – the legal one and the bigger ‘market-related’ picture.

This week, the Workplace Bulletin will cover your legal obligations when it comes to salary increases, while next weeks Bulletin will alert you to the wider issues you should consider.

In legal terms…

• Your employees don’t have a legal right to a salary review or an increase (and a review doesn’t necessarily mean an increase) unless you have specifically agreed to it in their employment contracts.
• You need an employee’s agreement before you can reduce their salary. The employee can agree expressly (i.e. by signing a notice to confirm that they agree) or impliedly (i.e. by continuing to work without objection following the salary reduction).

One approach is to write to employees along the following lines:

“Due to the recent downturn in trade we have reviewed options to reduce business costs. Where possible, we want to avoid losing people who have had made a valuable contribution to this organisation. For that reason we are proposing a universal reduction in salaries in the gross amount of $5,000 per annum. When conditions improve we will review the need for this measure. If you have any queries regarding this step or you do not wish to be employed on this basis please let me know. If you have no queries, the reduction will take effect on [insert date 5 weeks from date of notice].”

You should remember that there are legal risks associated with this approach. For example, if an employee objects to the reduction, you cannot proceed with it. If you do, you may find yourself exposed to an unfair dismissal claim (if the employee decides to launch one) or obliged to pay redundancy pay if the employee refuses to take the pay cut.

Quick Tip of the Week: Remember, you cannot reduce employee’s wages below their statutory minimum entitlement!

Workplace Helpdesk: Can you retract an offer of employment?
Answered by Charles Power, editor-in-chief, Employment Law Practical Handbook.

Q: Can an employer make a verbal offer of employment to a potential new employee and then contact the potential new employee and advise they will not be proceeding with the offer?

A: Yes, you can terminate a verbal employment offer at any time, as long as you do so lawfully. In this regard, you need to keep in mind the following:

• If the notice period in the contract is greater than the period between the time of notifying the employee and the commencement date, you may have to offer the difference in pay e.g. the commencement date is Monday week. You tell the employee today. The agreed notice period was 2 weeks. You should offer one weeks’ pay as an ‘ex gratia payment in mitigation of any inconvenience caused’.
• Obviously you will have exposure if the reason for not proceeding with the contract is discriminatory i.e. you discover the employee is pregnant.

Furthermore, if the employee has quit a job to take up the offer and you did not have reasonable grounds for not proceeding with the new employment, you may be exposed to a claim of misleading and deceptive conduct under trade practices legislation. However, a claim of this kind should be dealt with if and when it occurs. It is a complex claim to make, and is therefore not launched often.

Until next time…

Claire Berry
Editor

• Your obligations when it comes to redundancy
• Workplace Helpdesk Q and A: Relocation of Business

Dear Reader,

Fairfax Media’s recent decision to cut 550 jobs across its Australian and New Zealand workforce has brought the issue of redundancy into the spotlight.

But do you know your obligations when it comes to retrenching employees?

When a position becomes redundant (i.e. it is no longer necessary or required), there are a number of issues you must take into consideration before deciding to retrench an employee.

They include:

• The employee’s entitlement to severance pay (if any).
• The taxation of severance pay.
• Exposure to unfair dismissal laws. (At the moment, federal system employers are not subject to unfair dismissal laws when they genuinely retrench staff. However, this exemption will be significantly narrowed by legislation proposed for later this year).
• Employee redeployment (transferring them to a different role within the organisiation).
• Notice period requirements.
• Any requirement to consult with the employee or their relevant union about the retrenchment.
• Your obligations if the redundancy is a result of a transmission of business situation.

Remember, you will need to consider the circumstances of each individual employee before retrenchment, as your obligations will often depend upon specific provisions in awards, employment contracts or agreements.

For more detailed information on how to deal properly with redundancy in your workplace, please refer to chapter R2 Redundancy and Retrenchment in your handbook.

Workplace Helpdesk: Relocation of Business

Answered by Charles Power, editor-in-chief, Employment Law Practical Handbook.

Q: Our business is being relocated approximately 20km from its current site. Do I have any legal responsibilities to my employees?

A: The relocation may cause jobs at your existing location to become redundant. For example, the relocation may cause significant hardship for certain employees because of the extra traveling time and costs. You will also need to consider whether your employment contracts made a provision for the job location to change.

If you know of employees that could make a redundancy claim on hardship grounds, you might need to offer some benefit to the employees in order to secure their agreement to the relocation.

Absent those circumstances, you can simply direct employees to attend work at the new location. If they refuse, you would be entitled to terminate their employment for disobedience.

Have you got a short employment law question? Can’t find the answer in your handbook?

Just e-mail your query to helpdesk@workplacehandbook.com.au

Until next time…

Claire Berry
Editor