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Category Archives: redundancy

07 July 2009 8:42am

Employers that retrench workers without ensuring their financial wellbeing run the risk of damaging their brands – and facing litigation, says ipac corporate consultant Nola Rihani.

While the majority of employers “have genuine aspirations of a duty of care” for employees they make redundant, Rihani says, many regard the financial issues faced by those departing the responsibility of either outplacement service providers or the workers themselves.

Consequently, retrenched employees are rarely made aware of the financial decisions – relating, for instance, to superannuation and life insurance – that they need to make prior to their departure, she says.

Employees are at risk of missing out on a host of entitlements, she says, and employers can, and have been, held to account for this loss.

In one case, Rihani says, an employer failed to inform a retrenched employee of the option to continue his life insurance policy before the option had lapsed.

The employee had health problems, and the insurance policy he had acquired through his employment was the only one he had been able to obtain.

The employer was found liable for the worker’s loss and ordered to pay more than $1 million in underwriting his insurance, she says.

Save money through redundancy alternatives
Rihani’s comments come after an ipac study – based on a survey of senior HR professionals and outplacement providers from Sydney and Melbourne – revealed that:
many HR professionals and managers are dealing with the redundancy process for the first time;

“ownership” of the process is unclear. With HR moving “towards a more advisory role in the transition process”, Rihani says, laying off workers is often left up to line managers. However, many line managers lack the necessary “tools”;

almost 50 per cent of restructures, which often include redundancies, under-deliver on projected savings;

employers are often torn between the duty of care for retrenched employees and the cost of outplacement and other transition programs; and

the cost of “separation” is getting higher.
Employers, therefore, should explore all alternatives to retrenchment, including redeployment, Rihani says.

(Indeed, as of last week they are legally obliged to do so. See related article.)

She says they could put in place “transition-to-retirement” strategies (in which mature-aged workers are offered “grandparental leave” or other flexible arrangements, but their knowledge is retained), reduce annual-leave balances or freeze salaries.

Other cost-cutting measures, Rihani says, include:
reducing corporate travel or opting for economy fares;

eliminating non-essential expenses, such as “internal entertainment”; and

cutting contractor numbers.
“Even basic things like cutting back on a newspaper subscription can save a job,” Rihani says.

Employees should also be tapped for cost-cutting initiatives and alternatives to retrenchments, she says, and be encouraged to develop and achieve those ideas within timelines. Employees, she says, often come up with proposals that “save the company more than required’.

Best practice process
When forced to lay-off staff, however, employers “can enhance their transition programs with better targeted and relevant financial advice provided prior to the employee’s departure”, Rihani says.

This will not only protect the employer’s reputation, and protect it from litigation, she says, but will give departing employees “peace of mind” and help them to “stretch their transition capital”.

A best practice process, Rihani says, involves addressing all of the departing employee’s financial concerns and ensuring that financial education is a measurable component of the outplacement contract.

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SARAH MARTIN
May 15, 2009 12:01am

BRIDGESTONE has cut three production shifts at its Salisbury factory as demand slumps for its truck and trailer tyres.

The company told workers this week it needed to reduce inventory levels to match sales, which have fallen during the economic downturn.

Workers will be given other duties during the seven-week hiatus, which will cut truck and bus tyre production by 20 hours a week.

The production shutdown came into force last night and will continue until the end of June.

A spokeswoman for Bridgestone insisted the company had not cut any shifts, but that “we have simply adapted our production mix to meet customer needs”.

“As a result, there has been a simple reallocation of duties for our employees,” she said.

The Advertiser understands affected workers are being deployed in cleaning and painting duties.

In a notice issued to employees, managing director Shawn Hara said the global financial crisis was affecting the automotive industry particularly hard.

“Truck and trailer manufacturers have recently announced the need to reduce their daily build rates due to falling customer sales,” he said. “Additionally, there has been a decline in commercial TBR (tyre, bus radials) replacement demand (and) as a result we need to adjust TBR inventory levels to the market demand.”

The Bridgestone spokeswoman said the situation was “something we normally do as demand fluctuates”, but general manager John Signoriello said the adjustment was a result of current economic conditions.

In a factory notice, Mr Signoriello said there would be no change to passenger and light vehicle tyre production as inventory adjustments had been ongoing since February.

Last month, the factory closed for two weeks to reduce inventory.

There are 600 employees at the Salisbury factory, which is Australia’s only tyre manufacturing plant.

Earlier this year, business information analyst IBISWorld ranked tyre manufacturing in its 10 most risky Australian industries for 2009.

Bridgestone has previously said it was committed to maintaining tyre production at Salisbury, despite the tough economic conditions.

http://www.news.com.au/adelaidenow/story/0,22606,25484604-2682,00.html