Redundancy is not a dirty word – but getting it wrong can leave you filthy!

Some time ago I had dealings with a business in the construction industry. Not some huge conglomerate or multinational just a tradie who had set up by himself and employed around half a dozen guys and was doing pretty well.

Unfortunately, the owner suffered a quite serious injury which affected both his capacity to work and run the business and so he decided to wind things up. He phoned an online support service to ensure that he understood the process etc and was asked if he had less than 15 staff – to which the answer was of course ‘no’ and was duly informed that there was no requirement under the Act to make redundancy payments. Information that was perfectly accurate. The employer then wound up his affairs, his staff were terminated following due and proper process and that was that.

A few weeks later the ex-employer received a letter from the Ombudsman in response to a complaint from one of his ex-workers in a claim for redundancy.

How was this possible?

The fundamental and regrettable failure was that neither the employer – nor the online service provider – checked which Award covered the employer’s operations. Both the State and Federal Construction Awards have specific redundancy provisions contained within them that override any general provisions that govern eligibility for employees and compliance requirements for employers.

Bearing in mind that the now ex employer was doing it tough due to injuries etc the final outcome were payments collectively owing to employees in excess of $40K.

It is essential that employers check their Award coverage for any specific requirements that may be contained in their conditions that can have potentially serious consequences if they are not adhered to. This applies not just to any payments etc but also to the processes that need to be followed during periods of major and substantive changes to operations.

Whilst the employer relied on advice from a 5-minute telephone call we must remember that the information provided would have been based on, and limited to, the information provided by the employer himself. One might argue that the provider could have and perhaps should have elicited more information before giving some general advice but therein lies the issue with telephone information services with little knowledge of the employer or their operations.

Do you know which Award(s) State or Federal cover your business and are you confident that you understand and comply with their requirements? If not, that sizzling noise you can hear might just be the lighted fuse heading toward the powder barrel.

Make sure you seek assistance and double-check requirements particularly with things like redundancy, after all the word itself isn’t dirty but you wouldn’t want to end up in the manure!

  • Clearwater Workplace Solutions

    Rob Littlewood, is an experienced Risk Manager with a demonstrated history of working in human resources and industrial relations. Rob is a valued friend of Engine Room Hub and is a regular contributor to our platform.