Making employees redundant can be one of HR’s most complicated tasks – due to the potential legal risks, and the need to negotiate with multiple stakeholders.

Last Monday National Australia Bank confirmed it will drop 1,000 staff as part of a longer-term plan to retrench 6,000 workers (about one-in-five members of its workforce). At the same time, it also plans to hire 2,000 technology specialists.  

A big company making mass layoffs is always tricky. Staff want to know they’ll be supported, the wider public could have ethical concerns, and investors want to hear about how the move is not panicking but is rather a well planned strategy that will increase profits through efficiency gains. In that sense, such layoffs require careful marketing.

The narrative NAB has conveyed is of the inevitable rise of automation, and how the cuts are a necessary requirement of rising to the challenges the future presents.

“I think this is one of the big issues in Australia for the next five to 10 years: the new nature of work [is] more casual,” NAB chief executive officer Andrew Thorburn told media earlier this month. “But with the internet, with digital business, [it’s a] huge transformation.”

HR is obviously smack bang in the middle of any planned redundancies, and so has a difficult role to play in looking after the departing employees, reassuring the ones who are remaining, while also holding the organisation’s line.

“NAB wants to be a bank of the future,” chief people officer at NAB Lorraine Murphy told the ABC, “So we want to digitise, we want to make sure we’re easy to do business with.”

A difficult narrative

While automation is certainly a rising tide, it’s not clear why it’s so imminent that these jobs had to go now, or that there shouldn’t have been more of an attempt to retrain some of the retrenched staff. At least, that’s the feeling of the Finance Sector Union national secretary Julia Angrisano.

She told the Australian Financial Review (paywall) that she believes the move is unnecessary and “the lazy option”.

Speaking of narratives, Angrisano goes on to tell the AFR, “We’re not the audience for those announcements. The audience is the stock exchange. [The news] horrifies ordinary people, but if you’re an analyst at the stock exchange that’s actually a good thing.”

Murphy countered this argument in the same article, saying that they have been consulting employees, and have explored deployment options. “For those who do leave us, we will provide best-practice career transition support via our new program – The Bridge. We also value our relationship with the FSU. We have consulted with them about proposed workforce changes, and will continue to do so,” she said.

Is automation really so threatening?

The question remains whether these are really automation cuts. Seemingly working against the NAB’s explanation of events is that the cuts were announced around the same time that the bank posted annual profits of $5.3 billion. Trying to stay lean and prepared for the future are business imperatives, but 6,000 jobs is a lot when you’re not in dire straits.

NAB are not the only big bank to have cut jobs. In November 2016 ANZ announced the removal of 3,600 jobs. There has also been speculation that more staff cuts from the big four could be on the horizon.

Paying for staff makes up 57 per cent of expenses for the big four, but analysts from Macquarie and PwC have said the value of cuts for the banks doesn’t just come from the rise of automation, but might be required because of more basic business inefficiencies. And instead of mass layoffs, Macquarie Bank analyst Victor German’s suggestion was to make the cuts via selective redundancies and natural attrition.

The banks have been in the news for some time now, and not in a good way. Increasing economic and regulatory pressures have threatened their profits and that spooks investors. You know it’s bad when financial and business analysts suggest a lack of trust is hurting the bottom line.

PwC outlined four elements as dampening the future expectations of the big four banks. Here’s the fourth: “The profound non-financial challenges and remediation costs facing the industry in areas such as conduct, compliance, reputation, accountability and trust.”

Dodgy redundancies and legal risks

Given that fact, it will be even more important than normal for the 6,000 redundancies to be above board.

“Sometimes, under the cover of redundancy, companies take the opportunity to dismiss employees who may have been outspoken about employee rights, have suffered bouts of temporary illness, have parental or carer responsibilities and are therefore seen to be less productive than more compliant workers,” says McDonald Murholme Managing Director Alan McDonald.

“Individual employees need to be sure that their job is redundant and not that they are being targeted because of some attribute which is legally protected.”

(To find out more about genuine redundancies, read our guide).

Because that’s the thing about managing – and marketing – a massive retrenchment. It doesn’t end with the announcement. Given the potential for unfair dismissal claims, it can continue even after the staff have been moved on.

Better understand workplace rights under the Fair Work Act, with AHRI’s new eLearning module.