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Retrenchment done right

Employers who engage in socially responsible restructuring report increased productivity, reduced absenteeism, higher worker morale and higher brand loyalty among their employees. Socially responsible restructuring can transform a negative experience into a positive career transition for workers.

This page contains information about government programs and resources that can help you with a smooth transition.

Socially responsible restructuring

Retrenchment should be a last resort for employers. You should explore all options before reducing your workforce. For more information, go to the Alternatives to retrenchment page.

The Good Practice in Socially Responsible Restructuring helps employers who may be considering restructuring make the best decisions for their staff and their business. The guide highlights how socially responsible restructuring can transform a stressful experience into a positive career transition for workers. Employers who have engaged in responsible restructuring have reported increased productivity, reduced absenteeism, higher worker morale and greater brand loyalty throughout the retrenchment process.

For examples of best practice in social responsible restructuring, go to the Case studies page.

If at any time you need more information or assistance, call the Fair Work Infoline on 13 13 94 or visit the Fair Work website.

Stronger Transitions

Stronger Transitions helps workers facing retrenchment find new jobs and train for the jobs of the future in five regions across Australia.

If you are retrenching staff and your business operates in one of the regions below, our Employment Facilitators can provide support to your staff by connecting them with training, job opportunities and other support.

The Employment Facilitator in each Stronger Transitions region are:

To find out more about how Stronger Transitions can help support businesses and workers facing retrenchment, visit the Stronger Transitions page.

Redundancy Information Statement

If you faced with having to retrench some or all of your staff, the Government can help meet your obligations and provide your workers the support they need.

The Redundancy Information Statement (RIS) is a resource designed to help educate workers about all of their rights and entitlements in the event they are retrenched.

The RIS includes information on redundancy pay, notice periods and financial entitlements. It also outlines support services they can access if you they have been made redundant, such as help finding a new job, financial advice, and looking after health and wellbeing. It is a good idea to provide a copy of the RIS to your staff.

You can contact the Employment Services Information Line on 13 62 68 or email retrenchment@jobs.gov.au to find out what other information and support is available to you.

Note: If you are retrenching 15 or more staff, you need to notify the Australian Government in accordance with the Fair Work Act 2009.

You may also be eligible to partner with the Australian Government through the Stronger Transitions program in five identified regions. For further information, contact us at retrenchment@jobs.gov.au.

Retrenchment Rapid Response Framework

Our Retrenchment Rapid Response Framework supports retrenched workers to make sure they can find a new job as soon as possible. The Framework also helps employers meet their obligations and provide their workers the support they need. The diagram below outlines the Retrenchment Rapid Response Framework.

Are you an employer who is downsizing?

Yes

Are you retrenching 15 or more staff?

If so, as a part of your obligations under the Fair Work Act 2009 you are required to give formal notification to the Department of Human Services (Centrelink), who will contact the Department of Jobs and Small Business about the retrenchments.

 

Are you retrenching less than 15 staff?

We still encourage you to contact us on the Employment Services Information Line on 13 17 15 or email retrenchment@jobs.gov.au for information on assistance available for your workers.

We encourage you to contact us about information and support available to your workers. The Department of Jobs and Small Business may deliver a retrenchment information session for your workers, which could include information on employment assistance and financial advice available to help retrenched workers.

Suggested steps for preparing a letter of termination

A Termination of employment letter template is available to help you. It is colour coded to assist you to complete it accurately. Replace the red writing with what applies to your employee and situation. Any sections that do not apply to your employee can simply be deleted. Information in blue italics is there to assist you and should be deleted once you have finished the letter.

For more information about notice of termination and redundancy pay, see the Fair Work Australia website.

Detailed steps to explain more about the letter of termination are below.

Step 1: Communicate changes to the employees affected

If your business is undergoing major workplace change, it is important to upkeep regular communication with employees. Most modern awards and enterprise agreements require employers to consult with their employees regarding changes such as changes to production, organisation, structure or technology.

An employer should:

  • inform employees about changes within the business that may affect their working arrangements;
  • provide employees with an opportunity to ask questions, and
  • consider all the options and alternatives to redundancies, such as redeployment, job sharing and reduced overtime.

For further information go to Fair Work Australia’s Best Practice Guide: Consultation & cooperation in the workplace.

Step 2: Find out about notice periods and redundancy entitlements

Determine what the minimum notice of termination and redundancy pay entitlements are for affected employees. Notice of termination and redundancy entitlements are contained in the National Employment Standards, however awards and enterprise agreements often include additional redundancy entitlements for employees. If there is an applicable industrial instrument, contract of employment or workplace policy that provides different redundancy amounts than the National Employment Standards, you need to provide the employee with whichever is more generous.

The employee can work the notice period or the employer can pay the employee in lieu of that notice.

If you decide that you no longer want an employee’s job to continue, except where you have made this decision because of becoming insolvent or bankrupt or due to the ordinary or customary turnover of labour, then the job (not the employee) becomes redundant and you can end the employment relationship.

Redundancy does not occur because of the performance or conduct of the employee.

For more information on redundancy and notice periods, visit the Fair Work website or contact the Fair Work Infoline on 13 13 94.

Step 3: Inform Centrelink

If you need to terminate the employment of more than 15 or more employees for economic, technological, or structural reasons you must provide Centrelink with written notice of the dismissals. More information, including details on how to provide written notice to Centrelink can be found on the Department of Human Services website.

Step 4: Create your letter of termination of employment

If an employee’s position becomes redundant, you need to provide the employee with a written notice of the termination of their employment. The letter should explain:

  • the reason for the termination of the employee’s employment;
  • the notice period and whether the employee will be paid in lieu of notice;
  • the date of the employee’s last day of work;
  • details of the employee’s redundancy pay entitlements; and
  • any other entitlements to be paid (for example annual leave and long service leave).

A Termination of employment letter template is available to help you. It is colour coded to assist you to complete it accurately. Replace the red writing with what applies to your employee and situation. Any sections that do not apply to your employee can simply be deleted. Information in blue italics is there to assist you and should be deleted once you have finished the letter.

For more information about notice of termination and redundancy pay, see the Fair Work Australia website.

Step 5: Meet with the employee to provide notice of termination

Meet with the employee to provide them with the termination letter. Explain the reasons the position has been made redundant and allow them the opportunity to ask questions. Carefully explain the information in the letter to ensure the employee understands.

The written notice can also be delivered or posted to the employee’s last known address. 

You should keep a copy of the letter for your records.

Important: An employee may choose to submit a complaint or claim against you (eg unfair dismissal, discrimination) even if you follow these steps.

Examples for best practice

Links to existing case studies on the What’sNext? website

If you would like examples of best practice, go to the Case studies page. To be connected with employers who have successfully downsized, contact the Department of Jobs and Small Business.

Additional support and information

Australian Government Department of Human Services – Centrelink

Centrelink provides a range of services and printable claim forms that can be completed and returned by mail or electronically. This includes:

  • Advice and assistance on completing Centrelink forms, such as Separation Certificates and Employer Contact Certificates; and
  • General information on Centrelink issues and referrals to other government agencies.

Contact Centrelink by going to the Centerlink website or by calling 13 11 58.

Australian Tax Office (ATO)

The ATO holds tax seminars and webinars to provide a basic understanding of business tax issues and obligations. You can ask questions and learn about the many services and programs the ATO has available to support and assist you in running your business.

Contact the ATO by going to the ATO website or by calling 13 72 26.

Business

The bus.gov website is an online government resource for the Australian business community. The bus.gov website offers you simple and convenient access to all of the government information, assistance, forms and services you need. It's a whole-of-government service providing essential information on planning, starting and growing your business. You can also call 13 28 46.

Fair Work Ombudsman

The Fair Work Ombudsman is an independent body that helps employers and employees understand their rights and responsibilities at work by promoting harmonious, productive and cooperative workplace relations and ensuring compliance with Australian workplace laws.

Contact the FWO by going to the FWO website or by calling 13 13 94.

Australian Securities and Investments Commission (ASIC)

The Australian Securities and Investments Commission (ASIC) offers a range of financial information on insolvency and winding up solvent companies, as well as voluntary deregistration.

Contact ASIC by going to the ASIC website or by calling 1300 300 630.