Last Sunday, 27 September marked the final day of the Federal Government's original JobKeeper wage subsidy scheme under which eligible employers received $1,500 per fortnight in respect of their eligible employees. On Monday, 28 September, the first JobKeeper extension (also referred to as JobKeeper 2.0) commenced, with eligible employers still able to access JobKeeper payments, albeit at a reduced rate.
The first phase of JobKeeper 2.0 sees eligible employers receiving $1,200 per fortnight for each qualifying employee working an average of 20 or more hours per week, and $750 per fortnight for those working less than an average of 20 hours per week. These amounts will be further reduced during the second stage of JobKeeper 2.0, which begins in January 2021.
The latest figures from the Australian Bureau of Statistics showed a decline in Australia's unemployment rate since July. While this sounds promising (given we are now officially in a recession) a shift is likely to now take place as some businesses who were relying on the $1,500 fortnightly subsidy will find themselves grappling with their labour costs.
Redundancies are a typical course of action for businesses who need to cut staff costs. However, now, more so than ever, employees are challenging redundancies. For instance, in May 2020, the Fair Work Commission revealed that unfair dismissal claims increased by 70% off the back of the COVID-19 pandemic. Employees' emotions are no doubt heightened as they face the tough task of re-entering the job market.
Our advice: be prepared. Redundancies need to be managed properly as there can be serious ramifications for employers who get it wrong.
Employers need to ensure that there is a real and objective reason for eliminating a person's position. While it may seem like an apt opportunity to rid the business of a problematic employee, this may result in the employee bringing one of a number of claims against the business. For example, only recently Sydney's Macquarie University was ordered to pay more than $600,000 in compensation and penalties to a former "difficult" employee for making her position redundant because she had complained about her supervisor. Discrimination complaints may also be raised if the employee feels they were selected for redundancy due to the existence of a protected attribute (such as their sex, race or parental responsibilities).
Under the Fair Work Act, employees are entitled to up to 16 weeks' redundancy pay, depending on their length of service. Small businesses (those with fewer than 15 employees, including regular and systematic casuals) are excused from paying redundancy pay, however some cash-strapped employers may apply to pay a reduced amount (or nothing) if they are able to show they do not have the capacity to pay.
Some businesses will have their own redundancy schemes entitling the employee to additional benefits such as increased redundancy pay, redeployment opportunities, or outplacement services, which the employer must adhere to.
Redundancies are a challenging time for employees and businesses alike, but taking the time to carry out a redundancy correctly can save a cash-poor business additional money and stress down the line.
*This article was first published by Smart Company.