Do You Need To Restructure Your Workforce?

Early childhood education in many areas nationally is struggling with competition from over supply, and in other areas, economic downturn in the community is seeing a reduction in the numbers of children being placed in care.

With over half the cost of operating a service being spent on staff, with reduced income, staffing needs to be reviewed and rationalised to ensure ongoing viability.

In general terms, if staffing costs represent more than 55% of your income, you have a problem. So how do we reduce staff overheads without impacting quality of education and care.

The Basics

Nowhere in the Fair Work Act 2009 does it say you can’t reduce staffing levels or staff arrangements however it’s important to consider we exist to provide education and care and not convenient employment. Employees need to work in with what the service is trying to provide, not the other way around.

Equally, existing and experienced staff are hard to find or replace. If you must reduce staff numbers, or staff hours, how do you do that without compromising those relationships or the quality of care.

There are several options for services who find themselves overstaffed due to a downturn in attendance with no immediate prospect of improvement. The variations can be permanent or temporary and can impact on all or just some of the staff depending on service’s needs. Keep in mind that if you must go down the path of formal restructuring and redundancies, it’s important that you can demonstrate you had no other option and that staff have been involved (consulted) about the need for change. Equally you need also to be able to demonstrate you have explored other options and nothing viable has presented itself.

Reducing or Changing Hours of Staff

You can do almost anything by agreement provided the minimum employment standards under the applicable award and the National Employment Standards are maintained.

We have attached an “Agreed Variation to Working Hours” form to this service update which can be used to change hours’ arrangements with staff by agreement.

Rather than trying to make changes on the fly as it were, it is better to properly set up part time arrangements in the beginning so that staff have a minimum of hours on regular employment with additional hours being available subject to operational needs and the availability of the employee. If set up correctly, this gives you the flexibility to send staff home when necessary or reduce hours to a minimum during low occupancy periods.

Full time employment needs to be reserved for senior or hard to replace staff who have good training and well developed skills and expertise. In general, this is usually Directors, Senior Teachers and Senior Diploma staff.

For DJMIR subscribers, you can download a formatted part-time employment offer from the website library that provides this structure.

So, what do you do if staff don’t want to consent to reduce hours or you don’t have flexible arrangements already in place.

Reduction of Hours by Restructuring (Redundancy)

If you staff are not flexible or unable to respond to your service’s needs, you can restructure through redundancy provided you follow the required steps.

Firstly, although the Act allows you to terminate employees if the work they are doing is no longer required to be done by anyone, this needs to be offset by the fact that the employer must be able to demonstrate operational need and that the change required is not seasonally predictable.

The second step is that employers must be able to demonstrate that they have been in discussions and consultation with staff about the issue “before” a decision is made to make positions redundant. Consulted does not mean that they have agreed to your proposed changes just that they have had an opportunity to contribute to the discussion before a final decision is made.

Keep in mind also that Redundancy payments are not applicable to all employers and in some cases, an employer can ask the Fair Work Commission to wave redundancy entitlements.

Like all things, get some advice before you do it but for every problem there is a solution.

Further help and assistance

If you need assistance to develop or review your offers of employment, restraint or confidentiality agreements, contact DJMIR on (02) 6236 8966 or my email via djm@djmir.com.au