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Reserve Bank interest rake hike and job losses

By Alan J. McDonald


The latest shock reserve bank interest rate hike has been roundly criticised. It will cause job losses, whether through business closures or downsizing.

Most employers will be entitled to a redundancy, regardless of the financial position of their employer. If an employer cannot pay, the Australian Government will in some circumstances pay through its Fair Entitlements Guarantee scheme. Nevertheless, it is important that employers follow the right processes in creating redundancies. This means not selecting the wrong workers in breach of the Fair Work Act 2009 (Cth). For example, an employer is not entitled to pick off sick or injured workers, aged workers, pregnant women, or the most highly paid with the longest length of service. It must be remembered that it is the job that is made redundant, not the person.

An employer must look at its structure, even if hastily, to decide the structure it needs in the downturn, including which jobs are essential, and those jobs which are not. An employer must then looks at the skills of its workers and consult with those workers. Some workers will want to stay on, and some workers may want to leave. To the extent that there is flexibility in positions held by the workers, the employer has plenty of scope to achieve its objectives while at the same time not breaching the Fair Work Act 2009 (Cth). If the redundancies have to be created quickly, legal advice should be promptly delivered, giving the employer security against costly litigation from genuinely aggrieved employees.

McDonald Murholme delivers advice to both employers seeking to do the right thing, and employees who have been victims of an employer who flouts the provisions of the Fair Work Act 2009 (Cth).

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