Losing your job is a trying time for any employee. Discovering your job no longer exists via social media can, understandably, increase the stress levels.

Canadian retailer, Kit and Ace, announced via Facebook and Instagram that it was closing its stores in Australia before notifying the team in-person. The statements made on its Instagram and Facebook pages shocked Australian staff (and likely employees in the US and UK).

Kit and Ace Instagram

(The post made by the Canadian company on 27 April 2017 on their Instagram profile).

The Australian administrator has since informed employees that Kit and Ace is shutting down its stores and making their roles redundant.

There is a right way and wrong way to fire employees. Kit and Ace serves as a reminder for Australian employers of their obligations when making employees redundant. We revisit these below.

Timing is Everything

Kit and Ace mistimed their posts. The administrator had not yet contacted staff about the stores’ closures and their resulting termination. Employers should consider how announcing significant decisions via social media will impact staff. 

Before announcing to the media your intention to make employees redundant on a large scale, it’s sensible to first consult with your staff. This is particularly important if the business is still trading. You can read more about the consultation process in our article, ‘7 practical steps involved in a redundancy consultation‘.

If your business’ headquarters are overseas or you work with companies abroad, the Australian company must still comply with the Fair Work Act 2009 (Cth) and other obligations under Australian employment law. Develop a robust training program to educate staff overseas on Australian workplace laws and the processes employers must comply with when making staff redundant.

The Business is in Voluntary Administration

If the business is still trading but placed in voluntary administration, the administrator will either:

  • continue paying the employees if they are still working; or 
  • undertake a process with the creditors to determine what they can pay employees and when.  

During this period, the administrators will manage the redundancy process and contact employees.

Employees should confirm whether their employer is required to pay redundancy payments. This will depend on the size of the business and the length of time the employee has worked for the business.

The Business is in Liquidation

If the business enters into liquidation, and the employer or administrator have not paid employees their entitlements, the Fair Entitlements Guarantee can assist. This scheme helps eligible employees claim entitlements that would otherwise be due, even if the employer can’t pay because they are insolvent. These include: 

  • up to 13 weeks of unpaid wages;
  • annual leave and long service leave;
  • payment instead of a notice of termination (maximum five weeks); and
  • redundancy pay (maximum four weeks per full 12 months of service).

Key Takeaways

The process for making an employee redundant differs depending on whether the company is still trading but in voluntary administration or is insolvent. If it is the later option, the employer should consult with employees, and if they can’t redeploy the team member to an appropriate position, they will provide notice and redundancy pay (if it’s due).

Closing down a business and terminating employees is a difficult time for both parties. If you have any questions about how to consult with your staff about major workplace changes, get in touch with our specialist employment lawyers on 1300 544 755.

Edith Moss
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