Making ‘goodbye’ a little easier

More layoffs could soon be ahead. How can employers make the best of a bad situation? asks

Asecond wave of redundancies could soon hit workers as companies prepare for the extended wage subsidy to run out. Consultations on restructuring and layoffs are expected to begin ramping up again this month, as companies get ahead of the subsidy’s expiry, which begins from August 10.

Jason Ennor, chief executive of employment and HR consultancy MyHR, says he has already helped about 300 of his 800 business clients go through some form of restructure.

And he expects more to come. “I think there will be another wave [of job losses] but not as dramatic as people are predicting.”

Some of his retail clients had their best May ever and have even called it a second Christmas.

Service businesses were also seeing a busy patch, but others are still holding on in the hope that international borders will reopen.

“I think there will be more. Some have yet to lay people off because they are getting the wage subsidy.”

The extended subsidy came into force from June 10 and gave an eightweek extension to businesses which can show a 40 per cent drop in revenue over a 30-day period compared to the same period last year.

Ennor says there is a wrongly held belief that because Covid-19 has created such a special situation, employers can short-cut the consultation process for proposed redundancies or compel staff to take annual leave.

But, he says: “There is no short-cut under Covid.” Employers who don’t follow the law risk a potential personal grievance case being taken against them.

“A $50k settlement is painful,” he says, and so is the time it takes to deal with a complaint that could go to the Employment Relations Authority.

And three months of legal battling can be even harder for a small business owner as it takes time away from working on the business itself.

“It’s much better to get it right.” The first step in the process is consultation on the need for a restructure.

Some employers may have already made up their mind on how many roles and which ones have to go, but the law says you still have to consult staff on those issues, Ennor says.

“They might all agree to work fewer hours and the law allows them to make that suggestion.”

He says it can be easy for an employer whose business has been hit hard by Covid-19 to assume there is nothing that could prevent them from making redundancies.

“That may be the case, but the law still requires you to go through it.”

Ennor says the fastest timeframe in which a restructuring process could be carried out is a week — consultation on Monday, feedback by Wednesday and confirmation of redundancies by Friday.

Others can go on for weeks. But he says any restructuring process that drags on for months at a time means there is something wrong.

“If it goes for three to four months — I just don’t think that is acceptable.

“It is incumbent on the company to make the decision swiftly.”

Feedback time

Karyn McDonald, director at HR associate, says one mistake she sees is not giving people enough time to give feedback on consultation.

“Two days is not enough time in this current environment.”

She recommends a minimum of seven days as good practice, and to give staff time over a weekend so they can talk things through with family.

“I wouldn’t recommend doing it on a Friday.” That’s because staff don’t get the chance to ask questions for a couple of days.

A Tuesday, Wednesday or Thursday are the best days to let employees know about changes you’re thinking of making, she says.

“If you do it on a Tuesday then you can close the consultation the following Tuesday.”

While a two-day consultation period might have been acceptable under lockdown, it isn’t now that things have returned to a seminormal environment, although there is no timeframe defined under the law — it’s all about being reasonable.

“For the sake of a couple of days you might save yourself a bit of pain.”

McDonald suggests bosses also offer workers a chance to give feedback in different ways, including in person or via email.

“And always give people the opportunity to bring a support person to subsequent meetings.”

I know it sounds cheesy, but don’t behave like a robot . . . A bit of compassion goes a long way. Jason Ennor

When people know the numbers they are more likely to accept it. Karyn McDonald

Be specific

It’s not enough to just blame problems on Covid, McDonald says.

While business owners might not want to reveal the exact financials, she says it’s still important to give hard data like percentage figures on how much revenue has fallen.

McDonald says giving people evidence satisfies legal requirements as well as making it easier for staff to accept the situation.

“When people know the numbers they are more likely to accept it.

“When they aren’t given reasons it is hard for them to understand where the boss is coming from.”

Poor performance

Ennor says a big no-no is factoring a person’s job performance into the decision-making.

He says that while having that performance management conversation is a tough one, making the person redundant shouldn’t be used as a way to avoid it. “They need to make sure they have a commercial reason for making the role redundant — and that it’s not about an individual’s behaviour.”

He says that before a 2006 law change, it was more common to make people redundant in order to avoid performance-managing them, but that is no longer allowable.

Ennor says another big thing for employers to watch out for is to make sure they consult everybody who does the same job.

If you need to reduce headcount from 10 chefs to eight, for example, you can’t just consult with the two chefs you pick.

“Choosing a person in advance is predetermination. You need to consult all who do the same job.”

Likewise, he says redeployment needs to be offered if there are other roles open to people.

In a small business that might not be the case, but larger businesses may have a vacancy they need to fill, he says.

It needs to be offered on the basis that it is a suitable alternative, but should still be offered, even if it is at a lower level with lower pay.

It is then up to the individual to decide if they want to take up a redeployment offer.

Show compassion

Ennor says that beyond all the legislative issues, the key is to have compassion for employees.

“I know it sounds cheesy, but don’t behave like a robot.

“A bit of compassion goes a long way.”

He says for some workers it may have been a long time since they were looking for a job. They might not have a CV, or the modern version: a LinkedIn account.

And he says while those who leave need to be supported, the staff left behind are equally important.

“If you run an awful process and are unfair, everyone left behind gets nervous about their own job security. It can undermine the culture.”

He recommends holding a team meeting afterwards to reaffirm the business’ future and strategy.

“Offering EAP [employee assistance programme] is gold.”

He says more and more staff are using an employee assistance programme, which can help people with coping strategies for dealing with what has just happened.

McDonald says it can be a challenge for bosses to see things from an employee perspective.

“It can be an emotional toll on a lot of business owners but it’s also going to impact on the livelihoods of staff and their ability to pay their mortgage or rent.”

If the proposal changes vastly during the consultation process, you may need to do more consultation.

She says some business owners don’t take on staff feedback, which is a shame.

“They can often come up with innovative ways to reduce redundancies.”

Workers may want to take a collective pay cut or reduce their hours, or may have ideas for making revenue in other ways.

McDonald says one of the problems employers have is that many staff don’t understand the difference between a proposal and the final decision.

“They just hear ‘your job is redundant’. It is obviously really emotional and they may not understand it is not a done deal yet.” She says honesty and openness from the start will help people get through things, and feel like it was a good process even if their role is made redundant.

It may be that the person could be rehired in the future, once the business grows again.

“Your current and past staff members are your best advocates. New Zealand is not a very big place.”

Get advice

McDonald says it is really tough for some business leaders and owners to go through a restructuring process, especially as their business could be on the line and suggests they get advice through either an employment lawyer, HR expert or just through ringing MBIE.

“Get it right before you start telling people what you are proposing — it can be difficult to pull back or change tack once you have let the cat out of the bag.”

Ennor says if New Zealand can get through August without a big surge of job losses, he believes the country will be through the worst of it.

He doubts there will be another extension to the wage subsidy.

“I personally don’t think so. But maybe on a targeted basis.

“I don’t think there will be an extension across the board.”

Ennor says another extension could be difficult because of the cost, and he urges business owners not to rely on that happening. “I think we will struggle to afford it.

“I don’t think any employer should rely on that.”