Employers urged to avoid letting go of staff

As businesses across the globe are struggling to cope with the current COVID-19 pandemic crisis, many of them being forced to close shop, there have been concerns about some businesses downsizing staff as a mitigating measure.

This has let to calls for businesses, especially those in affected and critical industries such as travel, hospitality, and retail, to avoid such measure as much as possible and explore other options available.

While employers will often assume that mass redundancies are their only course of action, other options are available and may actually be more cost-effective, according to workplace relations company Employsure.

“Letting go of a worker may not actually be the most cost-effective thing to do,” Employsure’s Managing Director, Ed Mallett, said. “There are provisions in the Fair Work Act where you can apply to reduce or extinguish redundancy payments because you can’t afford them, but it is a tricky process.”

Mallett added, “You need to be very careful and not be under the impression that redundancy is a quick and cheap option. It should be a last resort, and only done when it is thoroughly planned.”

When asked about what other options employers could consider first before redundancy, Mallett said there are several avenues that they could take.

“Re-negotiating the hours employees work during the downturn is one option, often reducing the staff bill 20 to 40 per cent,” Mallett said. “An example of this is agreeing to a four, or even three-day workweek. Leave without pay can also be negotiated.”

Mallett added that reduced pay is another alternative that can be mutually agreed to, as long as it is above the award rate and minimum wage.

“While letting casual staff go can be an easy option, it should be approached with caution. In certain cases, someone who has worked for a business regularly and systematically may not be a casual staff member in the eyes of the law,” Mallett said.

“Employers will be making difficult decisions over the coming months, and we’re not yet seeing the true raft of redundancy coming into play, which would cause longer term rises in unemployment. As the Prime Minister has said, every job is essential. The longer we can protect them, the better.”

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