Many readers will be aware about the end of the JobKeeper wage subsidy scheme in Australia.
There is no doubt that this scheme has kept many businesses afloat. For many, its end means they will have to ‘stand on their own two feet’ again.
Workers, as well, are concerned about retaining their jobs. Unfortunately, some layoffs will be necessary – particularly for small and medium businesses.
At least part of the insolvency sector has been preparing for an upturn in business. The overall economy may be affected, perhaps significantly. Courtesy primarily of JobKeeper, the rate of insolvencies (pertains to companies) and bankruptcies (individuals) actually decreased during the pandemic.
Opinions about the likely magnitude of these effects are beyond the scope of this article.
What can be said, however, is that people have had notice about the scheme’s end. Many businesses have been planning for this although some others may be less well prepared.
The end of the JobKeeper coincides with the winding up of other support measures such as the temporary moratorium on insolvent trading. Arguably, this will increase pressure on some companies.
To manage, businesses should engage early with their accountant and/or their insolvency advisor. Arguably as a last resort, legal advisors should be consulted.
The short, medium and long-term health of the business should be considered. In some cases, it may be possible and advisable to reduce non-employee related costs (employee costs are dealt with below). Technology can create efficiencies. Issues such as rent reductions and deferrals may have to be dealt with. Many arrangements which were adopted under the National Mandatory Code of Conduct which was put in place last year and ran into early this year now have to be re-visited.
Some industries will be particularly hard hit. As well as tourism, this extends through to retail and manufacturing. Apart from universities, however (which were not eligible for the scheme), any industry can be affected.
As some businesses downsize their workforce, the law delivers protection and requires that a process be followed. Conversely, those seeking to grow their headcount can now access an expanded pool of available talent.
For those seeking to engage in redundancies (due to a downturn or restructuring), caution should be observed in cases where the termination has been driven by one or more other reasons. Should these prove to be discriminatory, the termination could be deemed unlawful notwithstanding that the worker was let go because of valid business requirements associated with the redundancy.
Employers could also face unfair dismissal claims if they fail to follow the correct process. This is the case despite the termination having arisen out of a restructure which arose out of the end of JobKeeper.
A common mistake involves a lack of consultation. Under the Fair Work Act, employers who engage in redundancies are required to consult with their employee about the redundancy and to afford them the opportunity to raise possible alternatives such as working part time. Many times, however, employers will simply call workers into meetings with no warning and tell them that they are out of a job. Hopefully, this reflects a lack of understanding of what is needed rather than bad faith from the employer. Nevertheless, such an approach opens the way for unfair dismissal claims.
As they grapple with these issues, businesses should consult knowledgeable advisors.
Normality was and remains the goal, ‘beyond COVID normality’.
With the ongoing threat of snap lockdowns, however, total normality is likely a fair way off.