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  1. #1
    Join Date
    Feb 2011
    Posts
    22

    Default Role Redundancy - Dismissal - Waiver?

    Hi,
    We have an employee who is not performing to the required standard for their role and is currently on a verbal warning & is working through a performance improvement plan. Unfortunately their performance is not significantly improving and they have suggested that rather than continue the performance improvement plan process (which I estimate will be another 6 months before we would be at a stage to manage out of the role) that they would leave voluntarily with a way out.
    The company is open to this, however, we are cautious and want to ensure no repercussions.
    We would be willing to pay him what he would receive if his role were to be made redundant and would like to have him sign a waiver to say he would not claim unfair dismissal.
    Potentially we could make his role redundant if it "looks" better for him, but there is a chance that we will replace the role so it wouldn't be 100% genuine role redundancy!

    Does anyone have experience of something similar that they could share. I know not 100% straight forward and the "correct" approach is to manage the person out by normal performance management process but we feel that process will be too long & indicators are that the outcome will not be positive regardless so best to break the relationship earlier if the employee is happy to do so as well.

    Your thoughts are appreciated

  2. #2
    Join Date
    May 2010
    Location
    Melbourne
    Posts
    151

    Default

    IMO not worth the hassle if not a genuine redundancy and if the ATO happened to audit the process and found out.

    The cautious (and legal) approach is you can agree to pay them the money they would receive if it was a redunancy, just inform them the payment would be an ETP and taxed as such. It's not uncommon to go the path you are going, particularly when the employee is honest enough to say they don't think they can improve.

    You also have to weigh up any risk the employee could do if you decided to continue down the 6 months of the improvement process (intentional or not), sometimes paying out a few months pay can be considered good insurance.

  3. #3

    Default

    agree with cotton eyes.....plus ensure they sign a very well drafted deed of agreement

  4. #4
    Join Date
    May 2011
    Location
    Melbourne
    Posts
    45

    Default

    I had a similar situation in January this year.

    Without going into to much, we classified it as an "Employment Separation Payment" and that it was in the best interest of the employee concerned given their circumstances - approached with the greatest of sensitivity -

    I recall we taxed the payment as a redundancy payment.

    We did have the employee sign a Deed of Release, (prepared by our legal reps) waiving any action to be against the company. Upon presenting the Deed of Release, we further allowed the employee 7 days to obtain their own independent legal advice.

    Whilst I agree it is not the most appropriate way to remove an employee, sometimes for both parties concerned (like this situation) it can the most appropriate outcome.

  5. #5
    Join Date
    Feb 2011
    Posts
    22

    Default

    Hi,
    Just an update, we proceeded with a Deed of Release based on what would have been received in a redundancy scenario, we had it prepared by a lawyer. The employee accepted and resigned. The payment was taxed as it was not true redundancy.
    thanks for your inputs folks, good to hear others also approached in this way.

  6. #6
    Join Date
    May 2011
    Location
    Melbourne
    Posts
    45

    Default

    Good to hear it worked out well for all.

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