Sacking people is never easy but the reality is that the job for life has gone the way of the typewriter and tape recorder. The printing industry has seen its fair share of job cuts, whether through consolidation or company closures. But even in boom times, our technology-driven industry is always pushing toward more automation, which by its nature means fewer hands on deck. But while retrenchments are a fact of life, the process needs to be handled with care. If it isn’t, it can do a lot of damage to the business long after the employees have departed.
It’s not just a matter of obeying the law. Apart from such legal issues as potential litigation and unfair dismissal, there are enormous risks to the company if redundancies are handled badly. There is potential damage to the brand, particularly if many are being retrenched and details leak out to the market and media. Some of the bad feelings about the bigger print groups in Australia can be traced back to disgruntled former employees who were at the sharp end of company consolidation.
There is also the impact on those who remain. Sackings are often traumatic for the survivors who watch friends and colleagues being singled out for the chop. If employees believe management was fair in the way they handled the layoffs, they are more likely to accept the situation. But if they see it as purely driven by profits or to deliver executive bonuses, the atmosphere can turn sour. Staff aren’t at their most productive when they’re watching their backs.
The memories linger long after things recover. In light of the GFC, HR specialists now say that employees, sick of pay freezes and job cuts, will start looking for work as soon as the recovery picks up speed.
Retrenchments due to company closures have been all to common in print lately. Examples include Albury-Wodonga-based Paragon Printing and sister company Moore Office, which went into administration in March. Though the company was saved though a sale to Print Media Group, there are no guarantees that all of its 140 employees would be retained. In its prepared statement, Print Media Group said its “ability to re-employ and grow the number of staff will be dependent upon the level of support received from existing government and corporate customers”.
Leigh Diehm, Victorian north regional organiser for the Australian Manufacturing Workers Union, says 105 AMWU members have been re-employed on a casual basis but expects they will all be given permanent positions. “Twenty seven didn’t get their jobs back,” he says.
In April, Sydney printer Beaver Press was placed in administration. The company had been negotiating a merger agreement with Chippendale Printing to stay afloat. In fact, Beaver’s managing director Robert Francis told ProPrint that “eight or nine” positions would be found at Chippendale.
But he spoke too soon. Chippendale went into administration 10 days later, and was being wound up at time of writing. Business rule number one: putting
two bad companies together does not make a good one.
In April, Paperlinx announced that it would shut down its Burnie paper mill at a cost of up to 170 jobs, after failing to find a buyer for the mill as part of its exit from paper manufacturing in Tasmania to focus on merchanting.
In one of the biggest shock shutdowns, Sydney printer Pettaras Press went into administration in March. Negotiations between the receivers, PPB, and potential bidders dragged on for weeks but eventually attempts to sell the business as a going concern failed. The machinery and equipment had just been sold to fellow Sydney printer STI Lilyfield as ProPrint went to press.
The issues confronting the print industry are not surprising, given the fragile nature of the sector. There will be more job cuts this year. Australian Bureau of Statistics figures show industry growth of 0.1% for the September quarter last year, compared with a 0.5% rise for the Australian economy as a whole. It was the smallest possible increase and represented the first rise for five quarters, with the printing industry recording an annual decline of 15.2%.
Printing still lagged behind the wider recovery in the most recent ABS figures for the March 2010 quarter. Print registered flat growth compared with the 0.7% seen across Australia.
Despite some fluctuations of modest growth, market research company IBISWorld predicts a bad year for the image processing and printing services sector. It forecasts revenue to fall by 5.7% in 2010 to $548m and the number of jobs to fall by 3.7%. If IBISWorld is right, we can expect more people to lose their jobs.
The legal obligations for sacking people are clear. Under Australian law, unfair dismissal occurs when a worker who is sacked feels that the action was harsh, unreasonable and unjust.
By law, it is not an unfair dismissal if the employer is a small business owner who employs fewer than 15 full-time or full-time-equivalent employees and the employer follows the Small Business Fair Dismissal Code (see box).
Unfortunately, the highly paid human resources teams at big printer like PMP would not give ProPrint their advice for smaller printers. Can you blame them? Like many companies, PMP was last year cutting through a swathe of jobs.
Sam Crock who manages the leadership and education programs at the Graphic Arts Merchants Association of Australia (GASAA), says managers and employers need to know how to have sensitive conversations. If the company is going through tough times and if job cuts are expected, the manager needs to talk that through with the employee and help them get ready to move on.
“Best practice is that there are no surprises in the conversation,” says Crock. “It shouldn’t be fearful, last-minute and it should not be a surprise. It should be expected, anticipated and well thought out. It shouldn’t come as a surprise when you have a good working relationship with your people.”
This means the discussion needs with the employee needs to be done on a business-like basis. There should be no emotional outbursts or recriminations and definitely no references to past performance issues that might no longer be relevant. Departure dates and packages need to be organised. There is no legal obligation in Australia to provide outplacement services or financial counselling. However, doing this is regarded as good practice.
It is important to inform remaining staff of the developments. In small printing businesses, this can be done by having a meeting. Larger organisations can do it by email. It is also regarded as good practice to give the person leaving the opportunity to have a farewell, particularly if they had spent many years at the organisation. If nothing else, it provides some closure.
How much time does one allow the person to stay on once they have been made redundant? That depends fully on the circumstances. If, for example, there are security concerns, the employee might be required to leave straight away. It is known for salespeople to be frog marched out the building to protect a company’s client lists. Some companies tell the employee they have until the end of the week. Others require the employee to work longer for handover purposes.
However, most outplacement specialists will say that the number of people who do something inappropriate during the workout period is miniscule. On the other hand, they warn that too long a workout period, say for three months, can be demoralising.
Employee entitlements generally cover outstanding wages, including penalty rates and allowances, accrued annual leave entitlement, accrued or pro-rata long-service leave an, if applicable, redundancy pay entitlements.
Many companies now are also mindful of the need to protect intellectual property. If this is an issue, the employee should return everything belonging to the company. The employee should also be required to sign an undertaking that they have done so. That said, the best IP protections are always set up well in advance with properly drafted contracts. These can include post employment restraints of trade and policies including confidential information and IT policies.
Painful as they can be, layoffs can also focus the company on important goals and sort out staff issues. A final bit of advice is to cut deep but cut once. Multiple cuts can do lots of damage. There is no pleasant way to sack people but there is always the right way.
Business tips: redundancies
• Make sure you follow the law covering such issues as entitlements and unfair dismissal. Small businesses employing fewer than 15 or fewer have more latitude with respect to the dismissal process and exposure generally.
• An employee of a small business will not be able to bring an unfair dismissal claim where that business has less than 12 months service and where the small business has complied with the Small Business Fair Dismissal Code.
• Train managers to have the right conversations. There should be no surprises and staff should be prepared for the prospect of redundancies.
• Watch out for discrimination and reverse discrimination.
• There is no legal obligation to provide outplacement or financial counselling but this is generally considered to be good practice.
• It is important to inform staff of these developments. This keeps them in the loop and reduces the likelihood of them being traumatised by the events.
Code of conduct: Unfair dismissal
The Unfair Dismissal Code came into force in July 2009. It states that small business employees cannot make a claim for unfair dismissal in the first 12 months. If they are dismissed after this period, and if the employer has followed the code, the dismissal will be deemed to be fair. An employer can dismiss an employee without notice or warning when the employer believes the employee’s conduct is sufficiently serious to warrant dismissal. Serious misconduct includes theft, fraud, violence and breaches of occupational health and safety.
In other cases, the employer is required to give the employee a reason why they are at risk of being dismissed. This can be done verbally, but preferably in writing. The employee needs to be given the opportunity to respond to the warning. Employees earning more than six figures cannot bring an unfair dismissal claim.
The employee needs to be given the opportunity to explain their actions and provide information on circumstances that might be affecting performance. The employee should be provided with counselling so that they understand the standards expected of them, and given the opportunity to comment on written records. Also, the employee needs to given adequate time to improve and if there is no improvement at the end of this time, the employer has to issue a final warning in writing, informing the employee that they are at risk of disciplinary action, possibly including dismissal if they do not cease the unsatisfactory behaviour. All records need to be kept confidential and the employee needs to be provided with a copy of any written records including any formal warning letters.
From a legal point of view, the main considerations for a company is that it needs to be careful not to unlawfully discriminate against a staff member by, for example, selecting an employee for redundancy because of race, sex, union membership or non-membership.
Employers also need to be mindful about indirect discrimination. For example, a company might have started employing more women in recent years. However, if it has to start laying people and brings in a “last in, first off” policy, it could be interpreted as indirect discrimination against women.
Companies should watch out for obligations under an enterprise agreement or some other industrial arrangement. If the agreement has a provision for the company to call for volunteers first, that procedure that the company has agreed to needs to be followed.
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