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Wendy McW
01-12-2009, 01:20 PM
I am interested in finding out how organisations approach redundancy. I work for a very progressive organisation which prides itself as an "employer of Choice". I wonder what other such workplaces include in contracts as redundancy provisions? We are looking to upgrade ours... so I ask you the question. What does your progressive organisation have as redundancy provisions for all levels of the organisation. Does the CEO fair better?
It would be great if you could help me out, I am aware of the minimum standards.... I 'm looking for firms offering better than minimum....... are there any out there?
:)

HRIMHO
01-12-2009, 07:42 PM
Government tends to do a bit better than the minimum (well it's usually a legislated "new" minimum)... and that probably provides for some attraction to this type of employment.

FYI in WA, a State Public Servant gets 3 weeks per year of service, plus up to 12 weeks in lieu of notice.

arowe
02-12-2009, 09:41 AM
I used to work for an International company that provided 4 weeks per year for the first 5 years, then 2 weeks thereafter, capped at 71 weeks, plus all legal entitlements. Pretty good, especially when staff work there for in excess of 20 years!

Wendy McW
02-12-2009, 09:54 AM
I used to work for an International company that provided 4 weeks per year for the first 5 years, then 2 weeks thereafter, capped at 71 weeks, plus all legal entitlements. Pretty good, especially when staff work there for in excess of 20 years!
Thanks for taking the time to feed back. That does sound pretty good. Were you able to take full advantage? (No need to answer.) It is nice to hear good luck stories.

Wendy McW
02-12-2009, 10:41 AM
Government tends to do a bit better than the minimum (well it's usually a legislated "new" minimum)... and that probably provides for some attraction to this type of employment.

FYI in WA, a State Public Servant gets 3 weeks per year of service, plus up to 12 weeks in lieu of notice.

Thanks for your feedback - Is there a cap on that? Could a long term employee, say 35 years, receive 105 weeks?

kevinh
02-12-2009, 12:34 PM
In addition to straight cash you might also want to think about including some counselling and (a good) outplacement service.

Being made redundant, particularly after many years of service can leave people pretty shell shocked emotionally, regardless of how much money you give them. They may also need quite a bit of help getting another job. I know some very experienced and capable people who have experienced this.

I know if they get a big payout it could be argued that they could pay for those services themselves, but the problem is they probably don't recognise that they need those services. In many cases it may be better to reduce the payout if necessary to pay for the outplacement and counselling services.

Wendy McW
02-12-2009, 01:15 PM
In addition to straight cash you might also want to think about including some counselling and (a good) outplacement service.

Being made redundant, particularly after many years of service can leave people pretty shell shocked emotionally, regardless of how much money you give them. They may also need quite a bit of help getting another job. I know some very experienced and capable people who have experienced this.

I know if they get a big payout it could be argued that they could pay for those services themselves, but the problem is they probably don't recognise that they need those services. In many cases it may be better to reduce the payout if necessary to pay for the outplacement and counselling services.

Fantastic advice. Thank you Kevin. I will make sure we include counselling and assistance. Cheers.

HRIMHO
02-12-2009, 07:23 PM
Thanks for your feedback - Is there a cap on that? Could a long term employee, say 35 years, receive 105 weeks?
Yeah sorry, there is a cap of 52 weeks (not including the payment in lieu of notice).

Completely agree with Kevin's post above too.

Pete
04-12-2009, 09:22 AM
From my experience - the way change management/staff surplus is handled (eventually leading to redundancy) is as much or more important that the cash.

Our practice is always that redundancy is the last option, behind reconfirmation, redeployment, natural attrition, retraining (within reason), and early retirement. This is enshrined in our contracts and policy.

How you advise, support, counsel and involve employees in the process has huge impact on how they feel about you as an employer - if you have a reputation as an employer for turning up on Friday with a load of DCM letters (Don't Come Monday) there will be very little you can do in the way of cash to make up for that. Never underestimate the amount of work invovled in dealing fairly, openly and supportively with employees in this situation (if possible, dedicate your time to this task only or assign a team to ensure it gets done).

Use career counselling, outplacement support, financial advice (how not to blow your redundancy in two weeks and then be poor and jobless). We got good feedback from employees and other local employers when we sent details of good staff (with their permission) to prospective new workplaces along with our recommendation and clarification that redundancy was no reflection of the esteem these employees were held in by us. (sometimes you just loose a contract or complete a huge project and it hurts the whole company!).

McGann
07-12-2009, 12:29 PM
Firstly don't put redundancy provisions in your contracts, it will end up biting the company on the proverbial. If you must put something, do the "Company's policy at the time...thing".

Put your redundancy terms in a policy, not in the contract.

Pete
07-12-2009, 12:36 PM
Call me suspicious and cynical, but the last time I saw a policy based redundancy provision like that, was when it was being reported that a large employer had changed it's policy, just in time to make a number of employees redundant!

If you are, like Wendy is, looking for ideas for "progressive" and "employer of choice" provisions, I would have thought that a variable provision based on prevailing policy is not going to be seen as attractive by many potential employees, espcially in current global financial circumstances.

Provision and requirements for consultation, notice periods and support are the most likely to be seen as proactive and best practice.

Cheers

Pete

McGann
07-12-2009, 03:07 PM
LOL Pete I happen to agree. But there are many downsides to including such an arrangement in a contract, not the least being you are trying to summarise what will most likely be quite a detailed policy in a limited number of words. In this vein you are also contracting into those limited words. Much better to have the detail in a policy with a limited reference in the contract.

Indeed many employment lawyers prefer that no redundancy reference (what so ever) is included in a contract.

A perhaps more palatable option is to reference the policy version current at the time the contract is struck. That way you have a policy fixed in time.

In terms of your concerns, there was a very recent case that ruled that such creative policy changes, were invalid due to a number of reasons. Not the least being the interesting timing of the changes.

Akmeemana v Murray & ors [2009] NSWSC 979 (29 September 2009)

kevinh
08-12-2009, 08:21 AM
...Indeed many employment lawyers prefer that no redundancy reference (what so ever) is included in a contract.


However, employment lawyers rarely have any regard whatsoever for the caring "employer of choice" image that you might want to project. Their aim is usually to protect your rights as the employer at every opportunity and give nothing away over and above the bare minimum legislated requirements.

All of your hard work in attracting the very best people to your organisation can be undone when you hand a new potential employee a one sided employment contract written in hard legal language.

Hopefully most people joining your organisation are not thinking too much about the redundancy terms. Nevertheless, as we continue to experience boom and bust economic cycles and merger and acquisition activity, an increasing number of people have a somewhat fatalistic view of employment in the corporate world.

Therefore a generous redundancy policy may be considered a tangible benefit and give some comfort that if (or when) the inevitable happens they will at least be able to afford to take a few months to get another job. So to promote it in the recruitment process as a benefit then say nothing about it in the employment contract may be viewed with suspicion.

On the other hand I can fully understand the desire for an employer to avoid making any financial commitments to new employees that they don't really need to make, especially in the form of a generous redundancy package that needs to be accounted for (as a liability).

Maybe the best approach is to avoid highlighting (or even talking about) your redundancy policy in the recruitment process unless it is specifically raised by the applicant. So if you don't make a big deal about it you are not setting an expectation with the applicant.

Assuming you do actually have a redundancy policy that is more generous than the legislated minimum, and given that each new employee is likely to be required to read your policy manual, then it may be wise to state in the employment contract that "the company may at it's discretion, make redundancy payments in excess of that required by the prevailing legislation and that the company's policy on redundancy may change from time to time." Or words to that effect.

Of course this won't satisfy the cynics, but if someone is cynical from the outset then maybe it's best not to employ them anyway :)

Pete
08-12-2009, 12:12 PM
Of course this won't satisfy the cynics, but if someone is cynical from the outset then maybe it's best not to employ them anyway :)

- aah, would that make you the 'uber-cynic', taking the cynical view of the cynics? (just kidding - I think actually agree with the sentitment, if the biggest questions an applicant has are basically "how much cash is in it for me to take this job" then you are talking to the wrong applicant!)

I also agree with the rest of KevinH's post - lawyers write watertight clauses, not always the most attractive clasues. Be clear with your Business what they want to acheive, then write the clause (or policy) that reflects that - generous, supportive and "attractive" redundancy provisions, or bare minima that you can, at your own discretion, exceed.

Short simple (and possibly generous) redundancy provisions can send the message that you don't expect to use them, and if you do the quality and commitment within your employment relationship will be more important than the technical terms. Detailed, lengthy and watertight clauses can send the image that you are well experienced in using these clauses and learnt from that experience what protections you as an employer need. It's a bit of a balancing act.

Cheers

Pete

l.smith
09-12-2009, 08:01 AM
Not sure about the logic of trying to attract the best people by providing good redundancy provisions. Better to focus on what might keep the best on board. Need also to be aware of new legislation proposed irt senior execs payouts when setting policy and the FWA provisions about redundancy when setting out procedures. Agree with previous comments that it the way people are treated in exit process has the biggest impact on reputation. Also need to try to avoid weak managers using redundancy as a performance management tool - creates friction when redundancy only seems to be available to underperformers.

kevinh
09-12-2009, 08:30 AM
I'm not suggesting using a good redundancy package specifically to attract new people, but it can be a positive factor as part of the overall employment conditions. It suggests that the employer cares about their people, in an age when so many organisations are trying to position themselves as an "employer of choice".

I have never understood the logic in offering redundancy packages to good performers!

This seems to happen in large organisations where a decision is made to shed staff across the board, but it invariably results in the best people leaving and the ones who would struggle to get another job stay. Probably a decision made by bean counters ;)

HeidiC
05-01-2010, 11:17 AM
I was recently made redundant and I can say it was one of the worst experiences of my life. I had no idea it was going to occur and was given one of those DCM (Don't Come Monday) letters with promises of assistance (that never eventuated). I was practcailly pushed out the dooor straight after my meeting. Funnily enough, I was made redundant just 1 month shy of the 12 month Severance payment eligibility cap and felt like it was conspired for a few months to ensured it occured before the I was eligible for a Severance Payment. It probably wasn't, but the way it was communicated to me sounded like they knew this might happen about 3 months prior.

The Redundancy process can never be a pleasant experience for either party, but if it is handled with sensitivity and repect - it will go a long way to being a better experience than I had. I suggest that the employee is informed by a senior person in their reporting chain, of the possible decision of redundancy as soon as it is known that you may have to terminated the position. Inform them of the reasons (without laying blame) and the criteria that will be used to determine if the position will be redundant. When you offer assistance after the fact, follow up on it and deliver. Have a counsellor on hand after the meeting and take the employee straight to them to help them process. In regards to money - yeah it does help, but I would have rathered that someone help me get another job than give me a lump sum and a locked door.

Wendy McW
11-01-2010, 11:03 AM
Thanks for your feed back Heidi. Your experience sounds just awful. Your advice is excellent, based on real experience and therefore very valuable. Hope all is well for you soon.

LML_2010
21-04-2010, 06:15 PM
Hi there...was wondering if anyone could make a recommendation for an outplacement provider? I am currently researching this for my organisation but have no way of validating their effectiveness...

Mark D
10-05-2010, 03:02 PM
Hi there...was wondering if anyone could make a recommendation for an outplacement provider? I am currently researching this for my organisation but have no way of validating their effectiveness...


We use Quadrant and have had good feedback from former employees about the experience. They are a smaller operation and have a personal touch that some of the bigger providers lack. Quadrant are Melbourne based but have affiliates in other states as well.

LML_2010
10-05-2010, 04:43 PM
Thanks Mark, will give them a call :)

Cottoneyes
19-05-2010, 01:58 PM
What does your progressive organisation have as redundancy provisions for all levels of the organisation. Does the CEO fair better?
:)

Hi Wendy,

I've done rem & benefits for 5 companies in the last decade and during that time would estimate to have done 300 redundancies and about 4 times that many quotes. Working for an investment bank during the GFC saw me do around 250 quotes in 2 days alone.

In my experience only one private company and 1 govt agency I worked for actually had a redundancy provision in a policy that was available to the general population. The other companies had 'no official policy' above the standards of the time, or else it was kept private to HR only. When the policy existed it was a standard notice period plus x number of weeks for each completed year of service with a cap at x weeks - either 52 or 78. It also contained support provisions and the processes which others have already replied on.

Does the CEO fair better? In the policies themselves - no. Everyone is treated as equal.

In practice however I've seen just about every redundancy for higher management that is well and above the standard. The higher you are and the more you know, the more you get paid. I've also seen these employees get their quote, and then negotiate up to double the amount during the initial talks. They usually have much higher notice periods on their employment contracts as well too which gives them an even higher amount of pay.

One other trick I've seen, is the company takes the stand of not paying the redundancy until the employee signs the release forms. The employee can be smart and refuse to sign until after 1 July to get it into the next year for tax purposes. It matters to some companies more than others and I'm not sure if there is a work around it for everyone, but something to think about.