EMPLOYERS who dismiss staff over recession fears are discovering that knee jerk reactions are hitting them where it hurts - in the hip pocket.
Research from Griffith Business School has shown that every time a person quits their job, it costs $9800 in recruitment and training costs.
According to Gold Coast employment lawyer Brett Wilson, employers should avoid ‘the sky is falling’ panic fuelled by fears of a recession and that dismissing staff should be a last resort option. He says businesses contemplating staff cuts must consider whether redundancies are based on reality.
“Employers need to realise that if this happens, those laid off might seek redress through the unfair dismissal laws if they feel they have been dismissed for the wrong reasons,” says Wilson.
“Dismissed staff will also certainly demand their legal entitlements for holiday pay, sick pay and any other monies due to them. This could place further financial pressure on a business, especially if the employer has been a bit lax about putting money aside for such things.”
Wilson blames the volatility in the employment law landscape on dated Howard government WorkChoices laws.
“There’s an assumption that employers with fewer than 100 staff can sack people without risk of any comeback. This is not so. Sacked employees are turning to the Anti Discrimination Commission and also seeking common law remedies through the courts for breach of contract,” he says.
Several cases are now underway with more likely to follow. A recent example involved the sacking of an employee because of the economic crisis. He called at the office a day or two later, only to find a new employee at his desk, doing his job.
“If the employer thought he was being clever, he’s now going to have to deal with an unfair dismissal case. I sympathise with the pressure employers are feeling, but it’s crucial they seek professional advice before implementing cost-cutting moves that might cost them more than they save,” says Wilson.
“Any review of a business plan which includes dismissing staff needs to be carefully thought through. Employees will not just go quietly if they feel they have done nothing wrong and are being deprived of their employment rights.
“My general advice to employers at a time like this is to be fair with how you manage staff in any restructuring and have procedures in place to document any disciplinary or dismissal actions. This proof may assist you later if former staff take legal action over their dismissal.”
Wilson suggests employers exercise a calm and rational look at their operations and not be spooked into panic reactions.
“If an employer wants to lay off some people, there are set processes to be worked through. Just dismissing people could lead to unexpected costs that could be enough to send a business under,” says Wilson.
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