Redundancy notice letter free template

What is redundancy?

Redundancy is when an employer no longer requires an existing employee’s job to be performed by anyone. In the case of COVID-19, one of the reasons may be due to a significant downturn in business.

Due to financial difficulties, businesses may need to find ways to reduce costs, and reducing the number of employees is often one of the first options they turn to.

Redundancy can be a cost-effective way to reduce wage costs, but it should only be considered as a last resort after all other avenues have been explored.

What are some suitable alternatives to redundancy?

With COVID-19 causing so much uncertainty in Australia and updates changing multiple times throughout the day, many of our clients have been looking to us for advice. We’ve answered the most common COVID-19 questions we’ve received here in this blog.

When we’ve recovered from the impact of COVID-19, and we’re back to business as usual, businesses will scramble to hire new employees if mass redundancies are made.

In such an uncertain economic environment, here are five alternatives to redundancy you can choose for your team.

1. Allow employees to take their paid leave

No one knows the true timeframe of the impact COVID-19 will have on Australians. With this in mind, if employees have annual leave or long service leave, you should allow them to take it before you opt straight to redundancy.

However, this is dependent on the terms of the modern award or enterprise agreement that applies to the business. In regards to long service leave, this also depends on the terms of the applicable state or territory legislation.

With annual leave, award-free employees can be directed to take their annual leave when it is considered ‘reasonable’.

Given the current COVID-19 pandemic, it is likely many employers will direct employees to take annual leave. For those employed under a modern award, some awards allow an employer to direct employees to take annual leave during a temporary shutdown (but usually only where the employee is given a set period of notice). Where the award is silent, the employee cannot be forced to take leave.

2. Switch the business to a 3 or 4-day work week

If your business is experiencing a reduction in business and the workload is decreasing, introducing a shorter working week can help ease the pressure. While hopefully temporary, this will provide your employees with the structure to their days and weeks, allowing them to complete required work and also help support them financially in these unprecedented times. You can formalize this change with our Reduced Hours Agreement Template, which is fully customizable and approved by our in-house Employment Lawyers.

Expect some pushback on the reduced income. One way to navigate this conversation is to stress the importance of an ‘all for one, one for all’ mindset. In order to preserve colleagues’ jobs, everyone has to pitch in.

Download the agreement for reduced pay letter template here.

3. Switch to job sharing

Job sharing is the process whereby two employees share the equivalent of one full-time role. This reduces the cost of one full-time employee whilst allowing two employees to work reduced hours. This allows employees to retain some work and income.

4. Switch to one week on, one week off

If you are experiencing a period of reduced business, switching to one week on, one week off for your employees can help ease the financial pressure caused by COVID-19. Similar to job sharing, it allows employees to maintain their roles and income while everyone navigates through uncharted waters. If you decide to go down this path, ensure that these new arrangements are formally recorded.

5. Stand downs

Commonly, it’s not possible for employers to force employees to take periods of unpaid leave. This remains true even in the event the downturn is caused by external factors outside the employer’s control.

In Australia however, with the stoppage of work caused by the impact of COVID-19, it is possible for employers to direct employees to take a period of unpaid leave under the “stand down” provisions of the Fair Work Act 2009.

Factors that can cause this to occur in a business include a direction from the Australian government, such as instruction not to operate for a period of time. If the employee agrees to take leave without pay, the agreement needs to be formally recorded. For a complete guide on handling layoffs and redundancies, refer to our article on What Twitter’s Mass Layoffs Teach Us About Redundancy.

If the redundancy alternatives are not feasible

If your business has to proceed with dismissing an employee due to redundancy, download our redundancy notice letter now. You can also use our Termination of Employment Template to formally notify your employees of their termination.

Here are more resources on handling an employee’s exit:

• Employee exit interview template
• Employee offboarding checklist
• Employee resignation announcement template
• How offboarding software can help with the process