As we work through the effects of government policies being implemented and their effects on business, one of the many focuses will be on staff costs.

What will your turnover look like over the coming months and how will this affect your staff cost base, and any need to reduce this?

A good approach may be to plan for the worst, but hope for the best.

This may include a review of all of your costs, and most likely whether your business needs to reduce staff costs.

This will need to be considered in light of the federal and state governments stimulus packages, which includes wage support for employers,including:

- The Federal Government covering 100% of PAYG Withholding obligations over the coming Business Activity Statements for March and June 2020, up to $100K. (You will still be out of pocket for the net wages paid though, with no direct subsidies on wages announced to date, other than for apprentices, as noted below)

- Apprentice wage subsidies to cover 50% of apprentice wages from 1/1/20 to 30/9/20

- Payroll tax rebates/deferrals

So you will need to decide in light of these benefits on offer, what your best approach is with staff.

If you do need to reduce wage costs, there are several options on how this can be achieved:

1. Collaborative Approach

Talk with staff to see if there are other options to putting people off – can people job share, or work 3 or 4 days per week in the short term to help reduce your staff costs. Communicate your needs to your staff to reduce costs, and listen to their needs regarding continuing to have some income coming in, and see if there is a middle ground where both parties can satisfy your needs

2. Stand Down

This approach is permitted under the Fair Work Act if there is a stoppage in work caused by something outside your control – this would most likely be triggered for those businesses required to shut as part of the latest round of government announcements.

We note, this measure is not allowed by the Fair Work Act if your business has merely suffered a slow down in trade due to the wider effects on the general economy.

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A Stand Down will mean staff are stood down without pay. As a business owner, there may need to be a discussion as to whether you allow employees access to their annual leave, however if you need your wages bill to stop due to closure, you may not wish to have this discussion.

As with Redundancies below, there is a set process which must be followed if you do want to stand down staff:

-         Consult with staff and decide if there is any alternate means of redeployment within the business

-         Meet with staff and make sure they have the opportunity to ask and get a response to any questions

-         Outline this in writing, and it is suggested, for a fixed period – aka to a set date,to be reviewed at this time

If employees are stood down, we note that employees will still accrue entitlements during this period, as it is still treated as continuous employment.

3. Redundancies

If you are looking to make employees redundant, it is important to note that there is a strict process which must be followed. Further, it is important to note, that a redundancy may result in an obligation to make payment to the employee based on the national employment standards/the award etc depending on whether the business meets the definition of a “small business” under the Fair Work Act.   

The Fair Work Act 2009 defines a small business as a business with fewer than 15 employees.

This is calculated on a simple headcount of all employees (including casual staff)who are employed on a regular and systematic basis.

For businesses which qualify as small businesses, they may be exempt from the requirement to make payment to the employee as part of a redundancy, however they will still need to comply with all of the other procedures. For example:

-         Consult with staff on the alternatives, and investigate if there is any other means of redeployment within the business;

-         If there isn’t - moving on to the dismissal process. This all takes time, so if required, you should start the process sooner rather than later

If you are going down this line,we suggest you get specialist advice to ensure you comply with your obligations.

4. Casuals

For those with casual staff, it is the case that there just won’t be any shifts available for them, and as such any wage costs to these employees will cease with any ceasing/downturn in trading. There will also most likely be no employee entitlements to access, so there are no real issued from that standpoint either.

The Fair Work Ombudsman has released a briefing on the below web page, which outlines some of the many frequently asked questions around ending employment in the current conditions: https://www.fairwork.gov.au/ending-employment

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