Impact of COVID-19 What to do with Staff Moving Forward?
As the coronavirus devastates businesses and the economy, employers are being faced with the difficult decision as to what they can do with staffing levels as business returns to trading levels that are, in many instances, much less than those experienced prior to March this year. The other complicating factor is the reduction in the applicability of JobKeeper and what are your labour costs v turnover going to look like in the next 6-12 months. What options are available to businesses if they need to reduce staffing levels, reduce staffing hours or make people redundant?
No one likes to make this decision but if the decision has to be made, then here are a few of the ground rules:
1. Reducing Staff Hours – This can be done for part-time employees but can only occur if the employee agrees in writing. Employers should explain to employees the state of the business and why hours need to be cut and how this might be able to help everyone in the long run. Awards and agreements often contain specific provisions around the consultation that needs to take place prior to any reduction in hours and ensure that the part-time provision of the Awards or Agreements are complied with.
For casual employees, unless there is a specific provision in the casual employee’s letter of appointment, reducing a casual’s hours is fairly straight forward. As is the case with part-time staff, consultation is the key – so engage with the staff and explain the reasons why the hours need to be reduced.
2. Redundancy – For many, Redundancy may be the only option. If you need to make a position redundant (remember you are making a position redundant, not the person), then there are 2 key elements (a) Consultation with the staff member prior to making the position redundant; and (b) that you examine all areas of re-deployment within the organisation prior to making the position redundant.
There is also the option of “partial redundancy” where a full-time position is made redundant and the staff member is re-engaged as a part-time (or casual) employee. This is becoming a real and common occurrence in the current climate. It may be a good option when considering avenues of re-deployment within the organisation. It also provides a more acceptable option for the staff member and will reduce your redundancy payments. For your valued staff, it also provides business with the opportunity to retain those valued staff for the tough and then hopefully better times ahead. Again, the key element is consultation and making sure you have the discussion with the staff to explain the current trading climate and the reasons and need to reduce labour costs.
3. Standing Down Staff (not including JobKeeper stand down provisions) – Stand down (under Section 524 of the Act) is only allowed if there is a stoppage of work for which the employer cannot be held responsible and the employee can’t be usefully employed (not limited to the work an employee usually performs). Standing down employees because work is drying up and profits are down is not a good enough reason. So this option is not likely to be available unless there is a Government mandate to close the business (eg in the current Victorian circumstances)
For further information about consultation requirements, and the process to be followed for any of the above scenarios, please contact Effective Workplace Solutions.
Greg Arnold & Andrea Vickery