Go-away money on the rise

The new IR laws have been operating since July 1. But in the last week, I have had a number of employers asking me about how to let go staff that are underperforming for a variety of reasons. Yes, the employers have been reading SmartCompany, are across the new rules and understand how to follow the procedures. But they want to know what they should do in their particular circumstance.  

Being curious, I made a few calls to IR lawyers on their behalf and I keep being told the same message: Follow the procedures and then to ensure no further action is taken, get the employee to sign a deed of release and pay them some “go-away money”.  

There are some exceptions: for example if an employee is on a salary of over $108,300 and not part of an enterprise agreement, they can not make an unfair dismissal claim. (Will $108,300 be the new executive salary benchmark, I wonder?)  

But apparently some employers are being advised that the bullet-proof way to ensure you do not get caught up in a time wasting, stressful, exercise of proving it was not an unfair dismissal is to get the employee to sign the deed of release and to pay extra money for them to go.  

The Rudd government insisted their IR new system would reduce go-away money. But when I hear what lawyers are advising clients, I have my doubts. The lawyers make the point that under the new IR laws, all employees can now make a claim of unfair dismissal. As one said to me, if you are an employee, why wouldn’t you lodge a claim just to see where it gets you? And as a frantically busy employer, wouldn’t you just want to make it go away?  

As our legal expert Peter Vitalie makes clear today, there are still a lot of unknowns around the new rules as we lack precedents to interpret how it will all play out. And maybe for smaller businesses, the eight point checklist will end up making it easier to dismiss. But until we have some history, my feeling is that employers will feel unsure and want to play it very safe.

And that means in the short term, an increase in go-away money.