The coronavirus outbreak (COVID-19) has had a monumental impact on businesses. Recent Australian Bureau of Statistics data found that two-thirds of Australian businesses reported adverse effects to revenue and cash flow as a result of the pandemic1. With decreased revenue, many businesses are considering measures, such as periods of unpaid leave or redundancy, to help manage costs associated with staff.
If you’re unsure how to keep staff costs manageable during coronavirus, here are some options to consider:
The JobKeeper payment was introduced by the Australia Federal Government in March 2020 to assist eligible business owners (including those in the categories of sole trader, trust, partnership, not-for-profit and charity) to pay staffing costs during the coronavirus pandemic. The payment is $1,500 per full-time, part-time and eligible casual employee each fortnight. It’s paid to businesses for a six-month period between 30 March and 27 September, to subsidise employees’ wages.
Apprentice and trainee support
If you employ an apprentice or trainee, you may be eligible for a wage subsidy of 50% of their wage. Business could be reimbursed up to $7,000 per employee per quarter and up to a maximum of $21,000 per eligible apprentice or trainee for the period of 1 January to 30 September. Note that from 1 April 2020, this cannot be combined with the JobKeeper payment2. If you meet the criteria for this wage subsidy, it’s important to note all claims must be lodged by 31 December 2020.
Cash flow boosts for small businesses
To help with the cash flow of small businesses, the government is offering two tax-free cashflow boosts3 to eligible businesses.
Eligible businesses and not-for-profit (NFP) organisations may receive between $20,000 to $100,000 in cash flow boost amounts by lodging their activity statements up to the month or quarter of September 2020.
The cash flow boosts will be delivered as credits in the activity statement system, and will generally be equivalent to the amount withheld from wages paid to employees for each monthly or quarterly period from March to June 20204 .
Alternative options for managing staffing costs
Standing down staff
If you’re considering standing down some of your staff, the website of the Fair Work Ombudsman is a good starting place to get across your rights and obligations as an employer.
Some companies have opted to ‘stand down’ some of their workforce in the wake of the coronavirus pandemic and have been able to do so as a result of new measures introduced in the Fair Work Act to support the implementation of the JobKeeper payment5 . This means the affected staff may be required to take a type of unpaid leave. Being ‘stood down’ means staff are no longer working or receiving pay but remain employed by the business throughout the stand-down period.
There are specific reasons that must be demonstrable for a ‘stand down’ to be valid under coronavirus grounds6 . For stand down requirements under non COVID-19 grounds, please refer to FairWork website for information on inclement weather and stand downs7 .
You should check your eligibility to see if you can apply for the JobKeeper payment for employees you may have had to stand down8.
If the best option is to terminate a staff member’s employment, there are requirements you’ll need to meet9. These include giving the mandated amount of notice, upholding any entitlements owed to the employee, such as redundancy pay, and providing a relevant reason for ending the contract. It’s important you inform yourself of your obligations before taking steps to terminate someone’s employment.
Other staffing considerations to think about
The wellbeing and mental health of your staff – as well as yourself – is of particular importance. The impact of coronavirus is stressful for everyone, so try to be considerate and understanding when evaluating the situation of each staff member when it comes to the reduction of their hours or pay. This may mean taking into account how long they’ve worked for you, their personal circumstances and their role in your business.
All of these options should be checked from a legal standpoint to make sure you’re not in breach of contract or your employees’ legislated entitlements. These could involve the upkeep of superannuation guarantee payments. If you have any employee earning more than $450 per calendar month, you’ll still need to factor in the additional 9.5% to contribute to their super10.
1 Australian Bureau of Statistics: Business indicators, business impacts of COVID-19, March 2020
2 Australian Government: JobKeeper payment – frequently asked questions
3 Australian Taxation Office: Boosting cash flow for employees
4 Australian Taxation Office: Boosting cash flow for employees
5 Fair Work Ombudsman: Pay during inclement weather & stand down
6 Fair Work Ombudsman: Coronavirus and Australian workplace law
7 Fair Work Ombudsman: Pay during inclement weather & stand down
8 Australian Government: JobKeeper payment – frequently asked questions
9 Work Ombudsman: Ending employment during coronavirus
10 Australian Taxation Office: Working out if you have to pay super
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