Handling Redundancy

By Darren Bourke – Director of Business Influence Pty Ltd

1. Review Your Organisational Chart. First things first. Review your

Organisational Chart in terms of fulfilment of product or service delivery and
the operational necessity of each position. Also consider the impact
a redundancy has on customers, continuing employees, team morale,
revenue and operational efficiency.

2. Review Your Employment Obligations. This is key once you have decided
to make staff redundant. Are your employees covered by an EBA or
Collective Agreement? Is your work force unionised? Are they under an
Employment Agreement? Is there an award that applies also? Be very careful
in understanding your legal obligations fully before taking any action.

3. Understand what Redundancy means. It's important that you get advice to
confirm that your staff cuts are in fact legitimate redundancies. Research first
take action second. After you terminate, it's too late to reverse your actions.

4. Get Advice. Obvious but often overlooked. I could not stress this point
enough. Don't accept advice from a mate, a website or a colleague as gospel.
Spend some money on legal or professional advice here to fully understand
your position. Get it in writing.

5. Determine the total cost of Termination Payments. Get your Internal or

External Accountant to create a spreadsheet of all termination payments after
receiving the advice on your redundancy obligations. Don't forget to include
employee entitlements and other termination payments applicable beyond
any redundancy payout.

6. Budgets & Cashflows. Once you know the total figure of the termination
payments, calculate the impact on your budgets and cashflows from a timing
perspective.

7. Do all your Homework before Execution. You have total flexibility in

scoping redundancies before execution and absolutely none after execution.
The manner in which you handle your terminations is binding so do as much
homework beforehand as possible given financial and time constraints.

8. Don't Over-React in cutting staff. If your forward demand can change from
week to week or a staff member's performance could turn around in the short-
term, don't cut head count too dramatically as you may quickly be under-
resourced.

9. Be Human. While all of this is happening and your gut churning, try and
remind yourself to be human in your approach and interpersonal dealings with
exiting staff. They will never forget the way you behaved. Forever.

© 2009, Business Influence, All Rights Reserved

www.businessinfluence.com.au
10. Be prompt in Redundancy Payments. Once you have budgeted, decided
on action and executed redundancies you must make the payments promptly
as agreed. Holding over payments to your advantage is illegal and unethical.
Your departing staff will hate you for it and you are potentially causing default
on their mortgage payments and rendering them unable to put food on the
table.

11. Explain the situation fully to Exiting Employees. Don't guild the Lily here.
Talk human to human. Explain the situation truthfully and outline your
committed action. Explain to them their Continuing Obligations. Let them
speak providing it remains civil. Let them pause to absorb the news and think
of questions.

12. Explain the situation fully to Continuing Employees. Don't underestimate

the impact of the redundancies on your continuing staff. You've just sacked
their workmates and you may have increased their workload. Again be direct,
truthful and allow grieving and questions.

13. Decide on what Support you will offer if any. Consider if you will act as a
Referee for their future employment. Will you offer counselling services? The
provision of any support must be weighed up and advice taken.

14. Ensure Exiting Employees meet their Continuing Obligations. Protection

of company assets, non-disclosure of intellectual property, poaching of
customers and other actions are often strictly forbidden under employment
obligations that continue after termination. Monitor this.

15. Acknowledge that some Exiting Employees may go Legal. Relationships

change after a divorce. Never assume this can't happen to you despite how
well you believe you behaved.

16. Return of Company Property. Prepare a checklist to tick off receipt of all
company property. Remember that company property can be both tangible
items such as cars and intangible items such as computer files.

17. Acknowledge that You may have to go Legal. As non-litigious as you may
be, an Exiting Employee that creates havoc for your business must be
defended.

18. Consider Security. Depending on your industry, premises and personality

types of Exiting employees, be aware that you may have to increase security
during and following the redundancies.

19. Immediate Departure or Serving of Notice Period. Consider whether you

wish Exiting Employees to serve their notice period or exit immediately. Most
employers request employees exit immediately to reduce risk and protect
morale.

20. Consider the transitional impact on Continuing Employees. Monitor the

workload, productivity and morale of your continuing workforce. Stay close to
this issue and focus on feedback mechanisms both internally and externally.

© 2009, Business Influence, All Rights Reserved

www.businessinfluence.com.au
 21. How will you handle Customers? The delicate decision of how much or
how little to disclose to your Customers after redundancies is a case by case
situation. This needs serious attention around the time of the redundancies
and in the weeks following.

© Darren Bourke, Business Influence, 2009. You are welcome to “reprint” this
article online as long as it remains complete (including the “about the author”
information at the end).

Darren Bourke is a Consultant, Business Coach & Mentor who helps small &
medium businesses struggling to maximise profitability, productivity, people
and performance. His Free Report titled What Successful Owners of Growth
Businesses Do That You Don’t, newsletter and updates are full of strategies
and tips to make your business boom. Sign up now at
www.businessinfluence.com.au

© 2009, Business Influence, All Rights Reserved

www.businessinfluence.com.au