Socially responsible restructuring
Retrenchment should be a last resort for employers with all options being explored before reducing their workforce.
If retrenchment cannot be avoided, the Good Practice in Socially Responsible Restructuring guide has been developed for employers who may be considering restructuring.
The guide outlines lessons learnt from the collaboration between the government and car companies in the closure of Australia's automotive manufacturing industry. The guide highlights how socially responsible restructuring can transform a stressful experience into a positive career transition for workers. Employers who engaged in responsible restructuring reported increased productivity, reduced absenteeism, higher worker morale and brand loyalty throughout the retrenchment process.
Redundancy Information Statement
If you are restructuring your business that might result in staff being retrenched, the Government can help you though the retrenchment process, including how you can meet your obligations and provide your workers the support they need.
If redundancies will be made involving 15 or more staff, under the Fair Work Act, you need to notify the Australian Government.
If you would like more advice on best practice in supporting your workers and the benefits for your business, look at the Socially Responsible Restructuring guide.
You can provide affected staff with the Redundancy Information Statement. The Statement outlines your staff rights, entitlements and support services available to them.
You may also be eligible to partner with the Australian Government through the Stronger Transitions program in five identified regions.
For further information, contact us at firstname.lastname@example.org.
Retrenchment Rapid Response Framework
The Retrenchment Rapid Response Framework is how the Government supports retrenched workers to make sure they can find a new job as soon as possible, while also helping employers meet their obligations and provide their workers the support they need. The diagram below outlines the Retrenchment Rapid Response Framework.
Before you prepare a letter of termination for any of your employees, there are a number of steps that you should consider in relation to redundancies.
If at any time you need more information or assistance, call the Fair Work Infoline on 13 13 94 or visit the Fair Work website.
Suggested steps for preparing a letter of termination
Step 1: Communicate changes to the employees affected
Regular communication with employees is important during periods when a business is undergoing major workplace change. Most modern awards and enterprise agreements require employers to consult with their employees regarding changes, including changes to production, organisation, structure or technology.
An employer should:
- inform employees about changes within the business that may affect their working arrangements
- provide employees with an opportunity to ask questions, and
- consider all options and alternatives to redundancies, such as redeployment, job sharing and reduced overtime.
For further information on this topic, see the Best Practice Guide: Consultation & cooperation in the workplace.
Step 2: Find out about notice periods and redundancy entitlements
Determine what the minimum notice of termination and redundancy pay entitlements are for affected employees. Notice of termination and redundancy entitlements are contained in the National Employment Standards, however awards and enterprise agreements often include additional redundancy entitlements for employees. If there is an applicable industrial instrument, contract of employment or workplace policy that provides different redundancy amounts than the National Employment Standards, you need to provide the employee with whichever is more generous.
The employee can work the notice period or the employer can pay the employee in lieu of that notice.
If you decide that you no longer want an employee’s job to continue, except where you have made this decision because of becoming insolvent or bankrupt or due to the ordinary or customary turnover of labour, then the job (not the employee) becomes redundant and you can end the employment relationship.
Redundancy does not occur because of the performance or conduct of the employee.
For more information on redundancy and notice periods, visit the Fair Work website or contact the Fair Work Infoline on 13 13 94.
Step 3: Inform Centrelink
If you decide to terminate the employment of 15 or more employees and it is for reasons of an economic, technological, structural or similar nature (or if the reasons include any of these things) you must provide Centrelink with written notice of the dismissals. More information, including details on how to provide written notice to Centrelink can be found on the Department of Human Services website.
Step 4: Create your letter of termination of employment
If an employee’s position becomes redundant you need to give the employee written notice of the termination of their employment. The letter of termination should specify:
- the reason for the termination of the employee’s employment
- the notice period and whether the employee will be paid in lieu of notice
- the date of the employee’s last day of work
- details of the employee’s redundancy pay entitlements, and
- any other entitlements to be paid (like annual leave and long service leave).
The Termination of employment letter template has been colour coded to assist you to complete it accurately. You simply need to replace the red text with what applies to your employee and situation. Some of the sections are optional because they might not apply to your employee and can simply be deleted. Explanatory information is shown in blue italics to assist you and should be deleted once you have finished the letter.
Step 5: Meet with the employee to provide notice of termination
Meet with the employee to give them the letter, explain the reasons the position has been made redundant and provide them with the opportunity to ask questions. Carefully explain the information in the letter and ensure the employee understands.
The written notice can also be delivered or posted to the employee’s last known address.
You should keep a copy of the letter for your records.
Important: An employee may choose to submit a complaint or claim against you (e.g. unfair dismissal, discrimination) even if you follow these steps.
Step 6: Examples for best practice
Coca-Cola Amatil support package after closure
In early 2017, Coca-Cola Amatil announced they would be shutting down their South Australian manufacturing operations (one of six bottling plants in Australia). The shutdown would be complete by 2019 and result in the loss of almost 180 jobs.
By providing two years’ notice, Coca-Cola Amatil demonstrated the company’s socially responsibility to their workers.
Additionally Coca-Cola Amatil worked in partnership with the South Australian Government to provide a transition hub and access to an assistance package of up to $4000 per worker to prepare for their transition.
The assistance package helped workers with financial counselling, career advice and training costs.
When a business needs to restructure in order to compete, the transition can be a stressful time for workers.
By providing support and time to prepare these workers were able to change a negative experience into a positive career transition.
Resource: Coca-Cola’s support package.
Australia Post people first workforce planning
When faced with the challenges of creating a workforce for the future Australia Post made their priority the development of an internal labour market with its ‘Post People 1st’ strategy.
Advancements to modes of transport, mechanisation of equipment and changing workforce pools have enabled the government-owned service provider to adapt and expand throughout its 207-year history. But the transition to the digital era presented a challenge to Australia Post core business of letter delivery and urgent reforms of the business were necessary.
Australia Post set about developing an internal labour market and Post People 1st was launched.
Post People 1st offers free online training courses to help people upgrade their skills and a free phone coaching service, so workers could call up for assistance on everything from writing a CV and interview role plays, information about where to get pre-retirement financial advice or what other Australia Post jobs they might be suited to.
Find out more about how Australia Post went about their future workforce planning.
Nokia’s Bridge inspires entrepreneurship
In 2011, Nokia switched its mobile phone operating system to Windows. This caused a significant restructuring of the company, shedding many jobs.
At about the same time as the switch, Nokia launched the Bridge programme, a scheme offering financial help and training to the workers who were about to leave. It was Nokia’s commitment to providing services beyond their legal requirements to 18,000 affected staff across 13 countries.
It offered employees with the following options:
- finding new positions within Nokia or with another company
- help for entrepreneurs to start their own company
- training for a new profession
The entrepreneur element proved to be popular. Through the Nokia’s Bridge program 400 new companies were created. Find out more about how Nokia’s Bridge inspired entrepreneurs.
AT&T reskilling workers to meet future need
American Telco AT&T saw that their business was moving from cables and hardware to the internet. New skills were needed in the company to keep them competitive.
Rather than restructuring their company and hiring new talent, AT&T made the decision to retrain its existing workforce and build a culture of continual learning. The decision also made an impact by significantly reducing the cost of hiring new staff and being able to retain their corporate knowledge.
The retraining programme is a multiyear project, with workers being provided with a roadmap on what jobs will be demand in the future, what skills they will need and the course available to train for these roles.
By 2020, it is projected that AT&T will have re-trained 100,000 employees for new jobs with cutting-edge skills, and created the workforce to meet the future needs of the company.
Find out more on how AT&T is reskilling nearly half its workforce.
For further examples of Best Practice see the Good Practice Guide in Socially Responsible Restructuring guide or contact us at email@example.com.