Replaced by a cheaper worker
Replaced By A Cheaper Worker is particularly relevant at the moment. The current economic environment has put employers are under pressure to reduce their workforce for reasons such as reducing their cost base. Higher paid employees, especially those with a shorter service with the company are being replaced by cheaper workers. There is much lower cost to the employer for making an employee redundant who has been in employment for a shorter time. As there is 21 days for an employee to make a claim via unfair dismissal or general protections, many employers just wait the time out before advertising the role at a reduced salary.
Replaced By A Cheaper Worker
This was highlighted recently in the Fair Work Commission decision by Deputy President Mansini (5th June 2020). The unfair dismissal case of Toni Perret v Ayers Real Estate U2020/6336 when the employee only after the 21 day time to lodge a claim had expired sited their position on “seek.com.au” and “indeed.com”. It appeared the only change was the title of the position had changed and it was indicated the “new” position will be at a reduced salary. This dismissal at its worst, we live in a country where we all are supposed to do better than this.
The Deputy President clearly could see what was going on here, indicated that it met the “exceptional circumstances” test and has allowed the unfair dismissal claim to proceed although out of time.
Claim age discrimination
Being replaced by a cheaper worker is not the only discrimination to be found. If your replacement is younger, there is a chance you could claim age discrimination. This can be tough but sometimes it’s too obvious to ignore – especially if the younger person is also cheaper.
Other groups we see dismissed by way of redundancy are:
- Workers compensations victims.
- Older employees developing health issues
- Women on maternity leave.
- Employees who ask for a pay rise, complaining about there has been no pay rise for years.
Unfair dismissal, redundancy in changing times
I saw this behaviour at the end of the mining boom. Where many miners were on extraordinary wages, and mining companies were on a mission to average their payroll down. Usually, as an employee left or was dismissed they would be replaced by a cheaper worker. This time around with the worst economic conditions in anybody’s lifetime, many companies will not wait.
A favorite way employers are dismissing employees is by serious misconduct. A cursory workplace investigation occurs, then its found that you need to be terminated. What’s the benefits to the employer?
Replaced by a cheaper worker./
Don’t have to pay notice (could be up to 5 weeks pay
Forfeiture of long service leave, could be up to 10-12 weeks pay.
In some industries ie, the mining or construction industries where employees can be on $3-4,000 per week. The potential savings to the employer cannot be ignored particularly when they are under cost reduction pressures.
Mergers and Buyouts
Across gender, occupation and age groups, employees in high-pay categories display a higher probability, relative to their control group, of separating from the firm after the buyout.
Employees who leave after a buyout are significantly more expensive than those who stay. In the year before the closing of the deal, men, managers and older employees who would leave post-buyout are paid 8.7 percent, 6.9 percent and 16.8 percent more than those who stay, in each respective category.
To be clear, the target firms do not reduce total headcount. Staffing numbers remain equivalent, but expensive men and managers are replaced with new employees of the same category but cheaper. As for older employees, they are replaced by younger (hence cheaper) employees. Remaining employees, including younger ones, experience small pay increases.
Newly hired men and managers are paid 13 percent and 12 percent less on average than employees in these two categories (inclusive of both those who left and those who stayed). Finally, firms hire fewer older employees to replace those who separated from the firm: Relative to control firms, the share of old employees at target firms after the buyout declines by 6 percent.
https://knowledge.insead.edu/economics-finance/the-unexpected-role-of-pe-firms-in-reducing-within-firm-pay-inequality-17801
Contracted labor
A lot of larger companies are contracting out the maintenance of services. By outsourcing it can be done cheaper. This has been going on for years. An example of this is Telstra out sourced the maintenance of its exchanges to IBM. So what’s wrong with that? Nothing IBM probably doing the work cheaper and better. This is business decision, its not for me to tell Telstra how to run itself. Mind you, you feel sorry for the 1000’s of Telstra workers out of work.
The real issue is the outsourcing for an example by the big mining companies. Where they have their own work forced and then supposedly supplemented by contact labor from labor hire companies at reduced labor rates. Usually on a casual basis. So you end up with two classes of workers on different pay grades doing the same job. A clever way of reducing wages. Employees will still work for the labor hire companies because the wages are still quite lucrative. But that not the point, its becoming a slippery slide as more and more migrant workers come in and take casual reduced pay roles.
How to reduce salaries (Replaced By A Cheaper Worker)
The above comments raise “how to reduce salaries” to a whole new level, its clever how to reduce cost. There are consulting firms that its all they do, reduce wages, get around the unions. The Fair work Act and any other government body that’s in the way of the seller and the buyer making more money. Without getting off point here, don’t be naïve that the company will look after you, I hope they do. Look at Jobkeeper scheme, it achieved the purpose for which it was set out for. To stop business from going broke during the early days of the pandemic.
But billionaire companies were taking Jobkeeper monies (lets not forget taxpayers funds), then refusing to pay it back through legal loopholes. Morally corrupt, disgraceful, and you assume they will not reduce salaries when the opportunity arises in a merger or takeover. Good luck. Have a question, think something underhanded going on, or just want to chat, give me a call.
Constructive Dismissal (constructive dismissal)
You can lodge an unfair dismissal claim if your salary or salary package has been significantly reduced. The key word is significant, there is no hard and fast rule what this means. It depends on the individual circumstances. Get advice before you resign. There is a strict 21 days to lodge an unfair dismissal claim. My view too many employees resign without first researching the employment market to see what the prospects and salaries are. They are just totally disgruntled and quit. Slow it down, think it through.
Times are changing as the pandemic continues
We are noticing an increase in calls and emails regarding sexual harassment. Its like a implied culture, of the manager, supervisor , positions of influence of “you look after me, I’ll look after you”. In other words I will not reduce your salary, hours, move you to a lower paid job in a restructure, but I want something in return. Quidproquo the Americans call it. If your subject to this type of behaviour you can do something about it. There is the new stop orders for sexual harassment at the FWC, we can take your claim. Or your concerns to a Equal Opportunity Commission or tribunal and get rightful compensation give us a call immediately.
We are leading workplace advisors, 9we are not lawyers) any concerns, issues, just want to talk about your redundancy or situation, give us a call. Its certainly tough times out there, and knowing your rights is so much more important. “every kick has to be a winner” as they say. We can represent you in any workplace matter. All Fairwork Australia, Fair work Commission matters. Including unfair dismissals, redundancy, general protections claims, probation, serious misconduct, constructive dismissal.
Call 1800 333 666 for free prompt confidential advice. Or www.unfairdismissalsustralia.com.au
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