'Consideration should be given to what other roles employees may be qualified for,' says Amanda Lyras
As Australians rein in spending to offset a higher cost of living, business owners are watching for signs of stress. In sectors that rely on discretionary whims, revenue targets can evaporate in a rush.
Fashion brand Dion Lee, for example, entered administration in May and was placed into liquidation in late August, owing $35 million to creditors.
The label had six stores in Australia and 160 around the world.
Retail workers have keen antennae for jitters in the economy, and Amanda Lyras, partner in workplace relations, employment and safety at Clayton Utz, told HRD that business owners facing a shutdown should be clear with staff about looming risks.
Where a business is facing a potential shutdown, it must comply with legal requirements but also engage soft HR skills to support the workforce through a transition, Lyras said.
“The rumour mill can be in overdrive in those instances, and employees can be fearful about what the repercussions may be for them personally,” she said. “One thing that’s really key is how you communicate with the workforce.”
Open and frank communication can take the form of group discussions or a town hall-style meeting to announce changes, at least a week or two before they are due to be actioned.
“The key is to ensure that messaging is consistent and that businesses are as transparent as possible, so different messages are not going to different cohorts,” Lyras said.
A regular newsletter might then be issued to keep workers updated on developments, she said, and one-on-one consultations scheduled with staff.
“That can often dovetail into formal consultation obligations that can arise under certain industrial instruments,” she said.
Employment award agreements and enterprise agreements that cover particular workforces and unions will typically have consultation obligations that require employees to be informed in writing about changes that will affect them, how they may be affected and measures that might be taken to mitigate the impact of those changes, she said.
“They are intended to be a forum where employees are armed with information about what is changing and what the impact will be on them,” Lyras said. “It is a meaningful way to gather feedback from employees about changes.”
For HR teams, it is critical that no decision is made about the ultimate outcome of a shutdown process on the employment of workers until those workers have been given a chance to provide their feedback where those obligations apply, she said.
“It will involve considering any feedback employees have given you and then communicating the outcome of the process on each person’s employment,” Lyras said.
A forum for feedback will allow an employee to suggest a role where they might be redeployed, whereas a shutdown scenario can be more straightforward.
“If only part of the business is being shut down, consideration should be given to what other roles within the broader business employees may be qualified for,” Lyras said. “In a shutdown circumstance, it often will be the case that there won’t be any redeployment opportunities.”
It’s a time when HR teams must draw on their full portfolio of skills. That can include assistance with outplacement opportunities, help with resume writing, providing references, suggesting where workers can seek support beyond HR employee assistance programs and other practical forms of support that can be drawn on, Lyras said.
“Those are the sorts of things HR can assist employees with to put them in a position where they are able to obtain the next job,” she said. “It is necessary to take a sensitive approach and to put yourself in the employee’s shoes; to consider what they may be concerned about and what questions they might have.”
It’s never pleasant to lose a job but workers might feel better about it if they know how much money they are owed and when they will receive it. Certain employees may be eligible for redundancy pay under the Fair Work Act, but not all.
A worker typically must have at least 12 months’ service with an employer to access redundancy payments, Lyras said, whereas others may not be entitled to severance, based on the nature in which they are engaged. Workers in organisations with fewer than 15 employees are not entitled to severance.
“It is common for consideration to be given as to whether there may be extra payments made to employees under company policy or otherwise in a shutdown circumstance, where there are usually less funds to play with,” Lyras said. “Those arrangements may be less common, but it is something businesses can give consideration to.”
In the stressful time of winding down a business, HR workers must keep focus. There are serious consequences for slip-ups, she said.
“Getting your legal obligations wrong can result in disputation in the workplace, particularly if there are unions representing employees who may be concerned that processes under industrial instruments weren’t followed,” Lyras said.
If a grinding slowdown is expected before the final shutdown, HR must consider the best strategies to retain key personnel, Lyras said.
“A business will likely have difficulty recruiting for new roles in this sort of environment, so it is critical to incentivise existing employees you will need to lean on through these times.”
If some staff or assets are expected to be transferred to another business following closure, Lyras said it is important to follow rules that apply in the Fair Work Act.
