25/02/2021

Are you prepared for when JobKeeper ends?

Are you prepared for when JobKeeper ends

JobKeeper has been the saviour for many business owners across the country. Yet many businesses still receiving the subsidy have not thought about what will happen after 28 March 2021 when it comes to an abrupt end.

This is a question businesses still on JobKeeper need to consider sooner rather than later. Business advisors across the nation are preparing for another period of uncertainty when business owners realise the wage subsidiary they were receiving will no longer exist.

Not only does the money tree end but businesses need to prepare for what they are going to do with their employees.

When we say consider this, that means asking the questions:

  • How will I afford to employ them?
  • Do I need to make changes to current resources?
  • Are employees working under JobKeeper enabling directions that also end once the subsidy does?
    With all these questions, come actions that need to be taken. While it may seem practical for a boss to simply terminate employment or change an employee’s position, these actions must still be in line with the Fair Work Act and not contravene obligations as an employer.

Like many decisions in business, it takes time to assess the situation, evaluate options and consider risk. This process must start now because it may be too late to wait until 29 March 2021 when JobKeeper is no longer available.

Employers need to evaluate their human capital and determine what will remain in place afterwards.

Review your employment options

Ending an employee’s employment is not a task anyone likes to do, so here are some options for consideration starting from the top.

Review financial position

Evaluate what the financial position will look like post JobKeeper and determine if the current resources are sustainable when the wage subsidiary ends. Forecast your sales, review sales confirmed, look at the bank account and determine the businesses cash position over the next three, six and 12 months.

Review organisational structure

Take time to review the organisational structure compared to the financial position the business will be in. If you need to make changes to survive, determine what positions must remain, what roles you could do without and the positions with a question mark over them.

Once you have a plan of what changes need to be made, determine the best way to make these changes. There are several ways to make changes to staffing levels. Options to consider:

Probation

Are there employees still under a probation period? If yes, this is the most straight forward approach to take when reducing headcount. Removing an employee under probation will cost a business one week’s notice period plus accrued annual leave.

Redundancy

Can positions be made redundant? Can roles be absorbed into one another? Can improved technology reduce headcount? Is outsourcing an option?

Redundancy will cost a business the employee’s notice period and potentially redundancy pay. Businesses defined as a small business (fewer than 15 employees) under the Fair Work Act are not required to make a redundancy payment.

Performance management

Are there employees in the business who are underperforming? Can performance management action be taken? This is a practical option that should be considered but one that can take time to execute in line with the Fair Work Act.

JobMaker

Then there is the JobMaker program whereby businesses can receive a subsidiary for hiring a certain individual based on a criteria.

Review your new hirers from 7 October 2020 and see if anyone is eligible to assist with the business’ cashflow.

Heading into the next phase of the economic downturn Covid-19 requires you to be organised, plan ahead and start taking action before JobKeeper ends.