Redundancy Payout

Tough decisions in tough times: how to manage layoffs

A recent survey indicated that SmartCompany over 40% of businesses small and medium businesses in Australia are planning to reduce its workforce over the next 12 months. If you're one of these businesses, here is some advice on how to take this difficult decision.

Firstly, to explore other options

Before considering staff redundancies, find other ways you might be able to reduce your labor costs.

You can reduce overtime, employee time offer more or less downsizing casual or contract. study provides unpaid leave or travel. Encourage people to use their annual leave or to give them the opportunity to take twice the time on half pay.

Parents with children or people close to retirement may welcome a shorter work day or spend 3 or 4 days a week. There are a number of options to consider before making layoffs.

The important thing to remember is to not get caught in the current climate of fear and make drastic changes. It is important to stay calm. Firms remain calm and look for opportunities to grow during recessions.

Get advice

If you decide that you need to lay off staff after exploring the options, make sure that the dismissal decisions are authentic. If not you can be sued for wrongful dismissal.

For example, after someone redundant, it is illegal to advertise or immediately fill it with another employee.

Be sure to comply with the applicable sentence of dismissal or contract work, such as those relating to redundancy payments, consultation procedures or criteria for selection. You will also need to comply with antidiscrimination laws.

Ask your employer group, counsel for employment or Wageline prior to layoffs.

Be decisive

Once you have assessed your options and know what your needs are, do not delay carrying through the difficult decisions.

Your company must be in a strong position to survive and prosper in what could be a long recession. Provides acting early, you can protect your staff, your customers, your suppliers and, of course, you.

Make sure you do not lose good people

Before cutting personal look at the needs of your business. What skills and knowledge are essential to the future success of your business? What will be most difficult to replace when you start to grow again? Who has the greatest potential?

Use this information to decide which positions and people must go. "Last come, first is not the best method and may be illegal.

Use objective criteria such as productivity, attendance, disciplinary records, skill level and work experience to decide who will be dismissed. Score each potential candidate according to these criteria and make sure to keep records in case you need to justify your decision at a later stage.

Communicate often and well

All this time you need to build trust and maintain high morale among your staff. Engage in an open and clear communication is essential to achieve this goal.

Keep everyone informed throughout the process and give a full explanation of how decisions are taken. Insensitive terminations can cause long term damage to your business.

Make sure you communicate the right information and the reasons behind the dismissals. Provide opportunities for people to ask questions - open communication will help put an end to any speculation or gossip between.