Facebook Live Event 11: Pandemic Leave, Annual Leave, And Job Seeker

Published April 02, 2020 Views: 7

02/04/20

Ed provides an update on the latest government developments, including announcements about pandemic leave, paying half annual leave, and more news on job seeker.

To help your business navigate the COVID-19 crisis Employsure’s founder and Managing Director Ed Mallett is hosting live events on Facebook, to discuss the latest events, burning questions Employsure’s clients are asking and to offer business and management tips. At the end of every session, Ed will answer a few questions that come through the comment section.

Facebook Live Event 11: Pandemic Leave, Annual Leave, and Job Seeker

  • Transcript

    Ed: Hi, everyone, it’s Ed Mallett here, just doing the normal midday live stream for everyone. A few things to cover today and I’m just gonna try and get a bit of structure to try and re-elevate our thinking. We’ve spent the last couple of days looking a lot at JobKeeper. We will do that again today so don’t worry, I’ll answer some more questions on that. A couple of interesting bits of news starting to be murmured about JobKeeper, not yet rules but some interesting news that will start to answer some of the questions that you’ve had. Again, I want to elevate our thinking out of just being down in the weeds, looking at things like JobKeeper, and actually structuring our thinking so that we are all leading and managing our businesses through this crisis, particularly as it relates to workplace relations. To that end, what I’m gonna do is I’m gonna give some updates around some other news, things like pandemic leave, what does that mean?

    The possibility of being able to pay half annual leave, what does that mean? You might have read about it in the newspapers this morning. But I’m gonna use the structure that I’ve been using internally and I’m gonna talk to you a little bit about what we are doing internally at the different stages of the structure right now. So, bear with me, I’m just gonna try and let you see this whiteboard behind me. It didn’t work brilliantly last time I’ve tried this and you’ll have to excuse my handwriting. But you remember that I’ve said before that there is this first stage is that everyone is in denial about the pandemic and most people are now well out of that. I have said that even though I have versions of that where I think, “Oh, it’s gonna end sooner than it might,” and so on. You got to keep reminding yourself to prepare for the worst about how to plan for the best is our strategy here. Stage one which is where a lot of people are still caught, and excuse my handwriting, is crisis management.

    So, crisis management is where you are down in the weeds a bit and you are clicking on news websites and checking for updates as they come in. And that’s what’s leading us all to be wondering what JobKeeper is, how it’s gonna work, should I apply today? Do I need to tell my stuff to leave today? Can I stand them down, can I not? The new things on our radar in that regard as of last night, the thing called pandemic pay appeared on our radar. There’s also this question of half annual leave. And then in Australia and in New Zealand interestingly, the question of annual wage reviews is coming up. So, those are the sort of things that have us just constantly looking at the news cycle, potentially drawing us into worrying, not thinking clearly under pressure, TCUP. It doesn’t mean that you ignore it. You still need to be looking at these things and hopefully getting from sources like this, some information about it. But it is should to a degree be background noise and shouldn’t be infecting your planning cycle and stopping you from really leading your business at this time.

    So, I’m just gonna talk quickly about pandemic leave, half pay, and wages for a moment. Pandemic leave and half pay, first thing to say is neither of them are things that are currently enforced. This was the Fair Work Commission in Australia which is the judicial body that has said, “You know what, I think it would be a good idea if we added in these two things into the mix.” And we’re only gonna add them in for some workers, not for all, so about 103 modern awards. So, I think out of 120 plus they’re suggesting changing. And actually, the things that they are suggesting are not widely revolutionary, to be honest. They’re pretty simple things that were sort of happening anyway. But what they’re trying to do is just bring in some level of protection on structure for work, and so I’ll explain what I mean.

    Pandemic Leave is really quite a narrow concept. What they are saying is if you have been told by the government to self-isolate but you’re not actually unfit for work, and you, therefore, need to be at home. What we have been advising and most people seem to be doing anyway is saying, “Okay, you’ll have to go home on unpaid leave.” Some very generous employers have been saying, “Okay, I’ll pay you anyway.” But the advice that we have been giving is you should go home on unpaid leave. The government or the Fair Work Commission is proposing creating a label for that unpaid leave called Pandemic Leave. And really all they’re trying to do is to stop the less scrupulous…the more unscrupulous employers, sorry, who might be turning around and saying, “Well, don’t blame me if you got to self-isolate. I’m gonna, therefore, cut you from my workforce just because you’ve got to self-isolate.”

    We haven’t seen, to be honest, many examples of that actually happening. But the Fair Work Commission is coming in and saying, “Look, if we put a label on it, if someone steps forward and says, ‘I’ve got to self-isolate,’ then if we have a label on it, then employers won’t be able to fire them for that because they can’t attend work.” That’s what pandemic leave is. Not a big difference, to be honest, in the scheme of things. We’ve all got bigger things to worry about. If the change comes into play, so be it. It’s not gonna make a huge impact on our businesses and certainly not gonna change our cost-base, bearing in mind that it’s unpaid leave. So, the second one, you really can’t read my handwriting here, but is a new concept of half-pay annual leave. So, our advice is being that if you don’t have work for your employees to do or you otherwise need to reduce your employee costs, but you don’t have a true stand-down situation, then what you should do is enter in to a negotiation with the employee to potentially go on unpaid leave, reduced hours, maybe you can reduce their pay, subject to minimum wage.

    And what the government is saying is one of the options that is now possible, and you have to agree it, you can’t force anyone to do this, but you could potentially agree with an employee to go on annual leave at half pay. And really, all they’re doing is trying to take the blockages out of the modern awards that might otherwise stop that. And they’re suggesting that this is something you might consider with your employees rather than putting them on leave without pay, or seeking to do some of the other cost-saving measurable, including redundancy. So, they’re saying essentially if someone had two weeks of accrued leave available to them, in fact, you should call that four weeks of leave and pay them half pay over the course of the four weeks rather than full pay over the two.

    Not a great difference, to be honest, because what probably would have happened if you were paying out that leave anyway is that you would have paid them for two weeks and not pay them for two weeks, instead of just paying the half for four weeks. So, again, not ground shaking, don’t get stressed about it. Not much to see there, to be honest. Let’s see if they come into law, I suspect they will over the coming days but they’re not gonna be a big deal is when they do. Next one is wage rates, so there was a murmur in the press today suggesting that the annual wage rate increase on the 1st of June in Australia might be delayed and/or abandoned this year. No news exactly on that yet but there’s a suggestion that it might be. Let’s watch this space, otherwise, we’ll go through the usual challenges on the 1st of June of trying to recalibrate all the modern awards to understand exactly what any wage change means and how much you consequently have to pay your staff.

    The really important thing about that and the reason why we need to keep watching this space but also elevate our thinking is that ultimately any wage rate change here will play into the next stage which is our planning. If wage rates do go up, your cost base will go up as well, even in challenging times. And that might impact your cost-base planning and what you, therefore, need to do of your staff as you start considering your planning in detail. Sure, I’ll answer a few questions on that because it might be an interesting one to look at because even, let’s say a wage increase of 2% to 3%, adding 2% to 3% to your wage bill at the moment could be pretty significant actually to your costs, and may result in you needing to reconsider what your planning strategy is for any staff cost that you’re seeking to reduce. So, no wage announcement yet. Suggested that we may just get a freeze this year, let’s wait and see what happens.

    One other thing that was, if you like, on the news side of things that goes into crisis management planning, the interesting one from my perspective is that the Fair Work Ombudsman have finally given bit of clarification, not great clarification, on how they are interpreting what a stand down is under the Fair Work Act. You have heard me banging on here saying be very careful of stand downs. It’s only applicable in the narrow circumstance when there’s been a true stoppage of work. And my fear is being that people would use stand-down provisions too broadly, later have employees coming back to them saying, “You weren’t allowed to do that to me. You owe me wages for when you stopped paying me.” I don’t wanna see employers with lots of claims like that arising out of misuse of stand-down provisions.

    Fair Work has been slow on this frustratingly, but they’re starting to give some guidance now and they seem to agree with that position. They see stand down as a pretty narrow procedure. They rely heavily on the stoppage of work. They seem to be saying that if your stoppage of work is being caused by government intervention, first and foremost, you’re likely to be able to have a stoppage of work as we’ve seen in some of the industries that have been shut down. They will also include in that if your supply chain has been entirely stopped so you’re not actually able to carry out your work because of a government intervention somewhere else in your supply chain. They would also see that as a stoppage of work. I can answer some questions on that if they arise in response as well.

    So, there’s some of the crisis management stuff. To be honest, even as I’m saying it, I feel a bit dizzy from all of it. It’s so much stuff swirling around and it’s difficult for people to follow it. It’s difficult for you to stand back and look and see how that actually impacts your business. So, for a moment, I’m gonna ask you just to try and elevate up a few thousand feet. Get out of those weeds for the moment, get out of that noise and let’s talk about the planning phase. The stage two is planning. And to give some context to that, I’m gonna tell you exactly what we’re doing at Employsure which may help you to guide your own planning phase through this. So, I’ve mentioned before that at Employsure, we have a crisis management meeting at 8:30 every morning with our group of local directors. And it’s that time that we’ll talk about the new news, what’s happening, what do we need to think about, what’s gonna happen? Will there be further restrictions on social distancing? How does that impact our workforce?

    All of the noise we try and contain into that half an hour. Quite separate to that, we’ve been having twice weekly meetings where we very specifically say, “This is a planning meeting. Don’t bring noise in here. This is where we’re going to do thinking and planning.” They are longer meetings, normally going at least an hour. And we sit down in that meeting and we work out our planning. And I’ve mentioned before that the first stage of that planning was doing a financial model by which we prepared for the worst and we set out a series of presumptions or scenarios into that financial model where we said, “This is what the year looks like if it goes as terribly as we could possibly imagine in terms of our revenue. Now, let’s look at what that means for our cash flow and consequently what sort of costs might we need to save.”

    So, we started out in that position and what we ended up with was a chunk of money which we needed to reduce. A chunk of over-expenditure that we needed to reduce down to as close to, nearly as possible to bridge our gap. Now, what we have now done and we’ve worked through this process is to say, “Okay. We are going to approach that, bridging that gap in two stages, two phases. And the first phase is, as far as possible, not going to impact staff and livelihoods. But what it is gonna do is be quite a big cultural shift for us and we’re gonna start stopping expenditure on the additional things that we maybe spend money on. We’re gonna start stopping projects. We’re going to look at broad recruitment freezes, those sort of things that we’re going through at the moment.” And what’s gonna happen over the next 24 hours here is that, first of all, I’m gonna be going to our staff tonight to tell them that that message is coming and that message…well, the detail of it will be given to them tomorrow.

    Between my message tonight and my message tomorrow, I will be going to all of our managers and giving them a one-page document saying, “This is exactly what’s happening. This is the message that I want you to be able to communicate to your staff so that you feel confident in it, and so that we’re all aligned.” The last thing I want in the business at this stage is a load of rumor and innuendo about redundancies and staff costs and livelihoods which aren’t true. And what I want is highly accurate information and consistent messaging throughout the business, so I’m gonna be working hard over the next 24 hours to make sure I achieve that, first of all, through our managers before I then make the announcement to staff. I’m not, for obvious reasons, given I’ve not announced it to the staff at all here. I’m not gonna go into the detail of all of our different cost saving measures, but it does come with a strap line.

    I’d encourage anyone that’s going through any challenges at the moment to use which is we’re in a cash preservation mode. We are preparing for the worst, but planning for the best. And stage one for us looks like cash preservation, the first phase of this. And we’re doing that and we’re changing our culture in order of that we can reduce the impact on jobs and livelihoods. So, the aim is that we do a number of things at this stage to reduce. If things go as badly as we are preparing for, we can reduce the need to impact livelihoods in due course. So, that’s the objective and hopefully that’s the message that our staff take positively and say, “You know what, we’ll tighten the belt at this stage because we’re all in this together and the aim is to reduce any bigger impacts down the line.”

    Now, of course, what we will then be doing over the coming couple of weeks is monitoring our cash flows, our new business, and our retained business, and seeing where we sit against our worst-case scenario and modeling. The hope is that we’re gonna be sitting above that and then when we get to the next phase of cost reduction, we don’t need to make as big a cost reductions as we might otherwise be planning for. What you’re hopefully hearing there, and if you look at it just on the basic level, I’ve got two very clear stages within my planning. I’ve already done the modeling and so forth, but I’m now in cash preserve, that’s my first stage. So, I haven’t rushed to staff cost-cutting, I haven’t rushed to redundancies, I haven’t actually rushed to putting people on unpaid leave or any of the other things that we’ve been talking about yet. I’m thinking about all of those things and I’m looking at what sort of cost savings that they are going to achieve.

    There’s a big difference between thinking and procrastinating. It’s not that I’m not making the decisions. I’m not just running around with a big swashbuckling knife making cuts left, right, and center, and consequently causing unnecessary panic amongst the business. I’m giving, hopefully, clear messaging, simple messaging, and protective messaging and saying, “Guys, in line with our business objectives, and very much in line with our culture and our values, what we’re gonna do is tighten our belt first, cash preservation before then we get on to the question of staff costs.” Within staff costs and the good thing about this for me is that what that gives me is another two weeks during which I’m gonna monitor cash flow and business performance. And during those two weeks, things like JobKeeper will become much clearer.

    So, hopefully, JobKeeper will have been passed into legislation by then. And what I won’t be doing is having to make difficult decisions that I’m seeing a number of businesses at the moment grappling with which is, “Do I pay someone today? I don’t even know if I’m gonna be able to get that back from the government in a few months’ time. I don’t really want to end up being Centrelink for the government and just bridging some sort of cash loan-ish thing to my employees.” So, hopefully, the dust will have settle on JobKeeper by then. I’ll have a clear understanding of who can apply and when, and what therefore we’ll be able to get out of the business. I will at first and foremost that making those cost reductions to the extent that they are necessary without any permanent reduction in head count or anything like that, and things that JobKeeper will play a big part in that for me.

    So, just pausing on JobKeeper for a moment. JobKeeper’s got a load of technical questions swirling around it and I’ll talk to a couple of them in a moment. But what I wanted, I’ve been thinking quite a lot about it and what I wanted to say about JobKeeper is this. It will not suit everyone. The people that it will suit most are the people that have a continuing need for their staff to be doing work of at least the value of $1,500 a fortnight. Because essentially what the government will be doing then is refunding you for work that you needed doing anyway. For people that don’t have the need for their staff, let’s say you’re a business that has been shut down and consequently you’ve been through a stand down, and you currently have staff out on unpaid leave under stand-down arrangement, it won’t really suit those businesses generally. Because what the government is asking you to do is fish into your pocket, give $1,500 per fortnight to those people who are otherwise not working and otherwise not getting paid. And the government will come back and pay you later.

    So, they’re asking you essentially to bridge the position between them paying you and you paying your staff member, asking you to be a bank to them essentially. And as someone said in one of the questions, they said, “Basically, the government is asking me to be Centrelink to reduce the queues at Centrelink.” Which is sort of true, frankly, if you’re in that set of circumstances, you have employees who are not working or otherwise not getting paid and you would be required to actually start paying them $1,500 a fortnight, particularly for those employees who are on less than $1,500 a fortnight and the government is asking you to cash flow top them up out of your own pocket on the presumption that you will be getting paid back some months later.

    So, it suits the businesses that are still operating and have the need for their staff at at least $1,500 a fortnight. Less suits those businesses that are in some form of shutdown. And it really doesn’t suit, I think, those sorts of businesses that might be operating at some level, but their staff are being paid less, so significantly less in some cases of $1,500 a fortnight. Because then you’ve got an imposition where you’re actually being asked to pay out more cash to those staff than you were in the first place which, in any sensible environment to the moment, I can’t see many business owners saying, “You know what, I can, A, afford to pay out more cash right now, it completely undermine the concept of cash preservation. Or B, that I’m gonna go out and take a loan or something like that and put my business at further risk by leveraging it in order to facilitate a government scheme.” That, again, just seems slightly mad. Why would you do that as a business frankly at this time when so much is unknown?

    So, there are really, let’s say, three types of businesses, only one of which JobKeeper really suits, that is you’re still operating and the government is about to pay you roughly 30% of your wage bill to carry on operating. Fantastic if you can get it in that situation. Less suits those businesses that are in shutdown, it really doesn’t suit those businesses where people are operating with their stuff typically in less than $1,500 a fortnight because you’re going to end up funding them at a cash flow level that you’re not currently having to do anyway. There’s a bit about JobKeeper. The couple of updates I had on that though just from the news today. So, there already seems to be a suggestion, as I’ve been hoping, that this 30% reduction in business is going to be quite broadly applied.

    The language coming out of the treasury at the moment is that, yeah, don’t get too stressed about the 30% March on March rule. It will be broader than that and the ATO will talk to you about that. And my suspicion is that when it comes to it, there will be some sort of self-certification and that the various types of businesses like new businesses, businesses that have been growing and therefore their March on March numbers don’t look that bad at the moment, but they will in April, and all of the myriad of issues that have come out through the questions I think are gonna be addressed through the legislation. But the current position from the treasury is that we can have some level of flexibility on this. So that’s good news overnight. So, when it comes to a JobKeeper, it should hopefully have some pretty broad application.

    So, there’s a bit of an update on JobKeeper, a bit of an update on what we’re doing in planning. I’m just gonna finish by starting the opportunity conversation. I think it’s really important to stress this because, again, if we all get stuck in crisis management, even in the planning stage, you’ll never get on to thinking about opportunity. I was really proud to see on the news last night one of our clients called Four Pillars Distillery that makes that beautiful gin. We’re talking about how they’ve had to pivot to running a new type of business where they’re actually moving from distilling gin to distilling hand sanitizer. And they’re actually finding an opportunity in this which is fantastic. They’ve moved really quickly to this opportunity level and I’m very proud to see that. Anyone else that’s got any great shout outs about how you are pivoting, please let me know. I’d love to hear them for my own interest to help me keep thinking about opportunity.

    So, if you’ve got any, please post them, direct message me, anything like that. I’d love to hear about anyone that’s finding opportunity in this, both short-term, medium, and long-term. What I would encourage you to do is break down your opportunity thinking into two levels and that’s what we’re trying to do here. It enforces us to keep thinking about it. What opportunities are there at the revenue level and what opportunities are there at the cost level? So, the revenue thinking might be that you find that there is a new product that you can go into like Four Pillars have done. It might be that you can maximize your product in different ways. You can open up your market, maybe your sales team somehow could be more productive because they’re responding to a product that’s needed both today and maybe in the near future as well.

    The cost side is in some ways easier thinking, in that you’ll be starting to see coming out of this things like, the fact that maybe your cost base with relation to your staff was inefficient, and in fact, you could be operating with a lower cost base. It maybe that you’re thinking about your staff now being productive working from home and you’ll gonna have more flexible position in terms of how you employ your staff, which may help you cost base. It may be that you are starting to use technology in different ways and that you think, “Actually, you know what, I had a doctor’s appointment this morning and it was done by video conference. And that’s gonna change the way doctors work in the future.” I’m sure we’ve got plenty of clients at the doctor surgeries and that could really, quite interestingly, change their business model from a cost perspective.

    They could be seeing a lot more people through telehealth. They could be having a different shape practices. They could be much more efficient in the way they engage locum doctors and things like that. So, there are lots of cost efficiencies that you could be looking at as well. So, I’d really like you to start thinking about that and hopefully over the coming days we can discuss that and keep going forward with this, not just getting trapped in crisis management, move into planning. Force yourself into moving to opportunity because you have to be like that spring, remember, you have to be ready to bounce back for this. The best businesses are gonna be those that are opportunity thinking already, not those that are stuck in crisis management, clicking on the newspaper, reading the next bit of news that they don’t fully understand and can’t interpret as to how it affects their business. You got to drag yourself away from that mouse, guys, and start getting simple, singular sources for key information, hopefully this is one of them. And we can translate that for you as advisers into then helping you move forward to planning and then opportunity.

    So, guys, that’s it for me in terms of me banging on today. Let’s start answering some questions and see what people are asking today. Stu.

    Stu: Let’s kick off with one that’s coming through, [inaudible 00:27:35]. And we’re getting a lot of questions already about public holidays, because there’s actually Easter approaching.

    Ed: Good question.

    Stu: “What is your advice to business owners who may have to navigate leave entitlements, potential JobKeeper payments, and public holidays?”

    Ed: A really good question. So, there’s a myriad of questions that flow from the public holiday one. One we’ve been looking at closely here, the biggest one is will you have to pay public holidays on shutdown? So, the way in which the Fair Work Act is a bit curiously on this is that if you are shut down and you have, therefore, stood down and formally stood down under the Fair Work Act to your staff, it looks likely, we’re seeking confirmation on this, that you will still have to pay for public holidays if your staff were either meant to work or meant to be on leave. So, there will not be a nil payroll during that month. Again, seeking clarification. And that it’s not just in accrual but actually there’ll need to be payment. Perversely, that’s different to unpaid leave if that’s been agreed. So, you don’t have a full shutdown, you haven’t been able to do a stand down. You’ve gone on to agreed unpaid leave. It does not appear that you will need to pay or accrue for those public holidays in that circumstance.

    So, two really quite difficult and tricky positions there. You chuck into the mix JobKeeper. Don’t worry about JobKeeper at the moment in that regard, is my advice because, one, it doesn’t exist yet. And two, all JobKeeper will do is essentially provide you of a credit if you’re entitled to it in due course when you do your BAS. So, that’s a really tricky thing. We’ll be putting some information on our Coronavirus hub at employsure.com.au, and employsure.co.nz/coronavirus, because there’s some really important things to get right. We’re about to go into this pile of public holidays that you need to understand what you’re doing as a business through that in terms of either, A, actually having to pay your staff, or B, accruing leave against them.

    Stu: Quite a few people following. This question’s from Alberto. “As an employer, if I have confirmed to suspended staff that I would pay them their annual leave to keep them employed, would I be reimbursed by the JobKeeper payment? Would I then reinstate the employee’s annual leave to the value of this payment?”

    Ed: Good question. Alberto asking, he’s got people on paid annual leave at the moment and so he has essentially agreed that they go on annual leave and he’s paying them for it right now, asking that under JobKeeper, will he get that money back? And if so, does he have to reinstate the accrued annual leave entitlements for his employees? The answer to that is it’s not clear. My best guess at this stage is that you are paying wages at the moment through annual leave, and that you will receive the credit back but there won’t necessarily be a requirement to refill their entitlements as a result. Annual leave is ultimately payment of wages and it seems to me that you’re doing the best you can at the moment, and there’s no reason you should get the benefit of JobKeeper taking away from you, so that it’s just purely a staff benefit. But we’ll see what the legislation says.

    Stu: From a client Janice. “If JobKeeper and pandemic leave go ahead, will Employsure develop new documents for us?”

    Ed: Yes, certainly we’ll be updating any relevant documents and going out to clients. We have a whole team here who work just purely on looking at the legislation as it’s changing, the news as it’s coming out and interpreting what that means for the advice we’re giving across all of our advisers, but also the documents that we give you as part of that advice.

    Stu: From Danielle, “Do you think I can stand down both myself and my husband (owners and employees), but access JobKeeper for our other eligible staff?”

    Ed: Yes. I mean, if yourself…it’s Danielle, was it, who is asking whether as an owner and an employee she can stand down herself and her husband but also to claim JobKeeper for the other employees. There’s no reason in principle that if you’re employees of your business, you can’t claim JobKeeper for yourself as well. So, you might continue to pay yourselves $1,500 a fortnight and claim that back, as well as $1,500 a fortnight against each of your employees, if it passes into legislation as they suggested.

    Stu: You’ve touched on this but this is going further. From Rebecca, “How do we clearly confirm if we are eligible 30% decline before confirming staff plans? As a company trust where we pay ourselves through PAYG, are we included in the JobKeeper?”

    Ed: A couple of questions there. As a company trust, are you included in the JobKeeper? And she says pays herself PAYG. The answer is yes. But what’s not clear at the moment is people that are taking drawings out of their business elsehow and have employees, how they are gonna be treated. And the question is how will we know whether the 30% downturn applies to us? It’s unclear at the moment. I believe that they will need to give some confidence that you’re going to get JobKeeper rather than just waiting for your BAS return, and hoping come May that you actually get the credit having already paid out the money to staff. They’re gonna need some, get some confidence, some level of certification if you’d like from the ATO that you will get it when the time comes.

    Stu: From Samantha, “We’ve dropped some of our full-time employees from five days to four days per week. A couple of these people have elected for their day off to be Friday. What impact does the Good Friday public holiday have?”

    Ed: So, there’s been an agreed reduction in hours for the employees from five to four days. And some people have elected for that fifth day for them to be Friday. And that Friday obviously assume becomes a Good Friday. The question is will they be paid for that day? The answer is no, because they wouldn’t ordinarily be working on that day. They’ve agreed not to work Fridays. That Friday is therefore not a work day that they would otherwise get paid for.

    Stu: From Megan from 123FOUR Early Learning Center, asking on behalf of her employee, “Does JobKeeper mean if we are forced to shut down, will I still be paid my wage, as in the government will give my employer money to pay me?”

    Ed: So, a child care center asking on behalf of an employee, “Does JobKeeper mean that I’ll get my wage even if we get shut down?” The answer is only if you are getting paid by your employer. So, if you get shut down and consequently get stood down, technically stand down is without pay. And if your employer doesn’t pay you $1,500 during stand down because they might not be able to afford it for cash flow reasons, then they wouldn’t consequently receive JobKeeper. So, your employer is not obliged to pay you during any stand down but they might choose to do so.

    Stu: From Margaret, “Any potential force, specific relief, or waiving of public holiday rates over the Easter period?”

    Ed: I’ve not heard anything rumored about waiving public holiday rates. As I mentioned earlier, what I’m hoping is to see some clarification on this from the government because on a technical basis under the Fair Work Act at the moment, basically, what’s gonna happen is you’re gonna have groups of employees, and their employers are gonna have to fish in to their pocket and pay for those days, even though they’re otherwise not meant to be paying their staff.

    Stu: From Daniel, “Do you know if a staff member can access Centrelink benefits and the $10,000 superannuation if they resign, rather than us going down a redundancy process? Our business is real estate and still trading, but hasn’t had a 30% downturn?”

    Ed: So, the question is can someone access benefits if they resign? I don’t know the answer technically and all I know is that benefits and going to Centrelink for those benefits is subject to assessment. I suspect that they would as long as they otherwise qualify under that assessment that they will be able to go through to get the JobSeeker allowance, and also otherwise look at applying for things like the superannuation access subject to qualification. But I don’t think resignation will prevent them from doing that, but that’s really a problem for the employee to work out before they resign.

    Stu: Again, to do with JobKeeper from Suzy. “What are my liabilities to three [SP] staff who will be eligible for JobKeeper, but they’re at home because we don’t have work for them? They’re contracted and paid by us. What happens if they hurt themselves at home?”

    Ed: Okay. So, they’re at home, they’re not working. Is that right?

    Stu: Not working.

    Ed: So, these are people that have been either agreed on paid leave or are being stood down or at home not working but eligible for JobKeeper. So, you end up paying them $1,500 a fortnight in order that you then consequently get that back from the government. The question is, what are your liabilities for their safety at home and behavior at home? The answer is you don’t have any because they are at home essentially on leave, just as you don’t have any responsibility for the safety of an employee when they’re on holiday. It’s only when they’re working that you would have that responsibility.

    Stu: From Vicky, a client. “With the new announcement that construction sites are able to operate seven days a week on ordinary hours, does that mean that if we need to work overtime or on a Saturday, we can pay our guys their base hourly rate? That is no overtime or penalty rates?”

    Ed: That’s a good question, Vicky. I’ll have to check that. I don’t want to answer it off the cuff. So seven day a week construction sites, what’s the position on penalty rates at weekends? Let us go back and have a look at that. We’ll answer to you specifically on the questions, Vicky, because it’s an important one for a lot of our clients. We wanna make sure we get that right.

    Stu: A lot of followers following a particular question from Lee. “We’ve made a profit for the first quarter. I’ve been looking at a 90% reduction in revenue for the second quarter. Does this mean we’ll only be eligible for JobKeeper after we submit our BAS for the second quarter, that is the June quarter?”

    Ed: So, another question asking in essence, “I’m not showing 30% down at the moment but I think I will be in the future. What’s gonna happen for me with JobKeeper?” The answer is I hope that broad-brush approach will be taken by the government and we’ll be able to apply. Employsure interestingly will probably have something similar to that. So, we’re going to be speaking to the government, to the ATO, and saying, “Okay, what do we do about that if we want to access JobKeeper?” Because we don’t wanna see a whole raft of businesses that can’t access JobKeeper because on their face they don’t appear to have a 30% downturn but actually are gonna suffer the downturn later on and they can already see that coming. My expectation is that a broad-brush approach will be taken and some clarification will come due course.

    Stu: From Daniel, “Can some people at the workplace be stood down from stoppage in their department or does the entire workforce have to be stood down?”

    Ed: So, again, being careful with the term stood down, if there’s a technical stand down because there’s a stoppage and it could in potential be aspects of the business and not others. So, the classic one at the moment is restaurants and cafes. So, we’re advising that you are able to stand down certain staff because of the stoppage caused by the government to ordinary service. But other staff might not be able to stood down because it might just be a slowing of, say, kitchen work, because you’re not doing as much business or as many covers as you might normally because you’re only doing takeaways. So, yes, you can do it by department if there’s a true stoppage by department.

    Stu: From Christy, “Any thoughts on what we should say to employees who may be unable to work due to needing to do homeschool, especially if schools do not reopen after the holidays?”

    Ed: Good question. The school question from Christy saying, “What can we say to employees if they’re unable to work because of schools perhaps not opening after holidays?” The answer to that is that we’re now out of the stage in our view that anyone could reasonably argue that there’s been an emergency, such that they should access carer’s leave in order to look after their children at home, given that the news about schools is now week’s old here. Other arrangements should have been made. So, if someone is saying, “I can’t work because I need to care for my child.” Typically, what you’d be saying to your employee is, “Okay. Then what we’re doing is putting you on unpaid leave on your agreement.” And they would go off on unpaid leave. But, technically, they should be looking for alternative arrangements to come back to work. But if they can’t, you might as employer agree on paid leave with them.

    Stu: We touched on this one yesterday but it’s worth, I think, touching on again. From the Beach Street Center, “Can JobKeeper be paid to employees after the employer receives the payment if all of our employees are in agreement?”

    Ed: So, this is a really good question, it’s about a cash flow of JobKeeper. It really comes from the same place of saying, “Look, this seems a bit unfair. I’m being asked to cash flow subsidize the government by paying my employees today and then not getting paid back until later.” Probably, at earliest in May for the first chance [SP] of JobKeeper, assuming a pass is. So, people are saying, “Can we not just agree with the employees to pay it once we get it in our hands?” The answer is technically not unless you were submitting your BAS statement pretending that you had paid employees a certain amount. Because you have to show in your BAS statement that you’ve made the payments in order for you to recoup them. So, the government’s very purposefully saying, “Look, let’s get the money paid to employees as soon as possible, and then we’ll pay you back later.” So, they’re sort of making no secret as to using businesses to fund the cash flow of this subsidy.

    Stu: From Pat, “Many of our staff have car allowances as part of their package. Is there something we can cut down or get rid of that staff not traveling anywhere? If so, how do we go about that, consultation followed by written clarification?”

    Ed: Great question from Pat asking about car allowances. “Staff aren’t traveling at the moment, what can we do about it? Can we reduce that cost?” You’ll need to look at specific terms of the car allowance agreement that you have with them probably in the contract or in your employee handbook. And consequently as you’ve suggested, consult with them about it, assuming they’ve got a contractual right to that car allowance, as people typically would. And then you’d look to negotiate down that contractual allowance to make sure it’s documented. The difficulty, of course, is that people might not be traveling but if you’ve given them a car allowance, they might have [inaudible 00:43:22] commitments to things like car leases and taking that away from them at this time could be quite inflammatory. So, you’re gonna have some challenging conversations, I’d say, around that.

    Stu: From a client Anita. “We have casual staff (uni students) on stand down but they’re in Australia on visas. They can’t access Centrelink. What advice do you have for them? Do you think they will be eligible for JobKeeper?”

    Ed: Good question. So, casual staff, uni students on visa holders at various types perhaps but they’re student visas, I’m presuming. And the question is, “If we stand them down, they can’t get Centrelink, can I give them JobKeeper?” The answer is no, unfortunately. There was an article in the SMH today about this, which it really poses quite difficult employment relations questions. I won’t go too far into here but essentially what the government is doing is setting up the system where you are being encouraged to favor the continued employment of Australians or residents here at least at the expense of people who might be on visas. They’re technically doing that discriminatory, and you could end up with claims from people saying, “Well, hang on a second, you didn’t pay me, or you stood me down, or you retrenched me only because of my nationality.” And that could be a potential issue for businesses in the future and that’s just starting to unfold now.

    But the reality is that people have decentralized from keeping people on their books that are visa holders. A good one to note here and I’ll just flash this out. Not for people on student visas but if you’re sponsoring people, if you have to stand them down or otherwise agree some certain paid leave, remember they’re still on your books at that age which is important. Because if they’re not on your books, then there are obligations under their visas to leave the country. And if they are required to leave the country, you actually as the sponsoring business are required to pay for them to exit the country, i.e., pay for that flight home. You don’t wanna be responsible for that cost at this stage, so be careful. You might wanna try and keep people on a stand down or on paid leave to avoid having to start paying for their flights home and things like that.

    Stu: From Tony, “I haven’t seen too much of a drop in cash flow just yet. Should I be discussing with employees to lower their salaries, to reserve cash flow on the off chance we get a shutdown?”

    Ed: Tony is saying he’s not seeing too much of a downturn in business yet. What should he be doing? Tony, my advice is you’re in the best possible position to prepare for the worst but plan for the best. I think, excuse me, sorry for my language on this but you’d be mad not to prepare for the worst at this stage. Your job as a business owner is to manage the risk in your business, and whilst you might be seeing a little bit of downturn at the moment, we might be at the very early stages of this. I can’t possibly be sure about that, I’m not an expert on the medical aspects of this in any way. But certainly, I’m anticipating and preparing as it might get worst from here. You should as well, Tony, and that includes looking at your cost base. I’d encourage you to look at things other than staff, first of all, as we’re doing here. But that doesn’t mean that you won’t look at staff as well in due course.

    Stu: Again, a lot of people following this particular question from Everlocks Colors. Can we reduce our full-time employees’ hours to equal the value of $1,500 per fortnight? If so, what procedure do we need to follow?”

    Ed: So, asking whether you can reduce hours and/or pay down to $1,500 per fortnight. The answer is yes subject to, A, agreement. So, what you would do is consult with your employees. Depending on how many there are, you’d initially have some sort of group communication saying that you want to speak to people about reduced hours and/or pay, and then you’d have individual meetings, negotiating. I’m seeing too many examples, you might have seen this as well, sort of flashes coming up on social media where people have handled this badly and employees coming up saying, “Look at this. Can you believe I’ve got treated in this way?” And none of us want to become opposed to of how not to treat your staff during this time. So, be careful on that, make sure you consult properly, know your lateral decisions. And also, if you are reducing pay and/or hours, make sure you’re not going below minimum wage.

    Stu: From Lawrence, “Can you please confirm that we can access JobSeeker for staff that we have moved to annual leave for a period of time?”

    Ed: Hi, Lawrence. I can’t fully confirm that. If they’re stood down, the government has said subject to them otherwise being able to access JobSeeker, they can. If they are on unpaid annual leave, the government still hasn’t clarified whether the unpaid annual leave people are allowed to get JobSeeker. My presumption is that they are and what I’m suggesting to you is to go say to your staff, “Go and check. And if you can’t, come and speak to me and we’ll see where we need to re-plan our arrangement.”

    Stu: From Victor, “An employee won’t come into work because his wife’s business has high-risk clients. Does he have to come in?”

    Ed: A really good question. This is a sort of thing that pandemic leave might cover. It doesn’t quite cover that at the moment so this is someone that doesn’t want to come into work because his wife’s business has high-risk clients. So, he’s sort of almost nobly saying, “I don’t wanna bring any potential infection to work.” But he’s otherwise fit for work. In the moment, under government advice, he’s not required to self-isolate. So, he should be going into work. And if he isn’t, at one end of the spectrum if you wanted to be really tough about it, you’d be saying, “Turn up to work or else this becomes a disciplinary issue.” If you’re wanna take a more measured approach, you might say, “Okay, let’s agree a period of unpaid leave for you.” If you were at the very upper end of the spectrum and being super generous, you might say, “Good on you, thank you. Let’s payout some of your entitlements and I’ll pay you annual leave.” My recommendation on balance would be to go with the, “Okay, if you don’t want to come into work, then it’s a period of unpaid leave.” Bear in mind that’s sort of what the government is saying through the pandemic leave, they’re not expecting anyone to pay for someone to not turn up to work that can turn up to work.

    Stu: From Renato, “What if someone earns $2,000 per fortnight currently, on JobKeeper, will we still need to pay $2,000 per fortnight?”

    Ed: So, if someone earns $2,000 per fortnight, JobKeeper, will you still be required to pay that? Yes, subject to agreed variation of their contract. So, let’s say you’re not asking them to work as many hours, you might ask them to reduce their pay as well down to $1,500 per fortnight. But unless there’s an agreed variation, then yes, you pay the $2,000 and you get $1,500 back.

    Stu: From Rebecca with a few people following this. “We’ve stood down our employees (gymnastics club which is being forced into closure). However, some staff have been volunteering their time to create online content. I would be happy to use JobKeeper for those staff that had been volunteering as they are still providing value to the business, but we will not be able to afford to do this with all staff. Is this possible?”

    Ed: So, some staff at the gymnastic center are being doing online content, keeping people engaged. Can I pay them and consequently recover JobKeeper but not others? My suggestion there would be that you formalize the arrangement of what those staff are currently, you say, volunteering to do and actually turn it into a work arrangement and say, you know, “You are doing X hours. I will therefore pay you for that at the rate of $1,500 a fortnight. I’ll seek to recover it.” There’s no obligation to them pay all other staff $1,500 a fortnight as well.

    Stu: From Kylie, “If we were to test positive to COVID-19, does the entire workplace have to self-isolate for 14 days or just that employee and the workplace can remain open?”

    Ed: The current advice is the workplace can remain open, you look for other people’s symptoms as well. If other people get it, they need to then go and self-isolate. There’s no requirement to shut an entire workplace as a result of someone either having symptoms or them being diagnosed with COVID-19.

    Stu: From Matt, “If employees refuse shifts because they will get the $1,500 per fortnight JobKeeper payment, where does that leave the employer?”

    Ed: If employees refuse shifts because they’ll get the $1,500 per fortnight, they won’t get the $1,500 per fortnight. Remember, the $1,500 per fortnight will be paid by the employer. So, if someone is not turning up to work or refusing shifts, then don’t pay them. You won’t be able to recover it either, but you’re only recovering it to cover off the money that you already would have paid, just don’t pay the employee. This isn’t some sort of guarantee or subsidy for employees independent of whatever decision you make. I suppose, the big point is that you sit between the government and the employee on this. You’re the one deciding whether you’re gonna pay them. If they’re doing work, it’s fairly obvious that you need to pay them. If they’re not doing work, then you don’t need to pay them but you might choose to do so and then recover the money later.

    Stu: From Yankin [SP], “Should a struggling shut-down business offer their employees JobKeeper, or advise them to apply the Centrelink? Our cash flow is nonexistent.”

    Ed: Should someone with no cash flow pay JobKeeper or advise employees to go to Centrelink? My practical advice is the latter, say to your employee, “Please go and try and get Centrelink.” Just see, I can’t see a world in which it is in the best interest of the business to start taking out loans to fund JobKeeper, it’s in sense sort of cash flow provider to the government. It just doesn’t make sense to me. So, my recommendation is that they go to Centrelink.

    So, we’d be going a good time there, almost an hour actually, which is great. Just a final flag. New Zealand minimum wage goes to $18.90 as of yesterday, so make sure that you are preparing for that. We’re providing a guide to clients on employsure.co.nz if you’re a New Zealand client. I appreciate most of this is being about Australian changes. So, you might’ve tuned out by now but if not, it’s on there. For Australian businesses, employsure.com.au/coronavirus. As ever, we will continue to answer these questions during the day. Thank you very much for your time. Keep planning, guys, and let’s keep talking about the opportunities as well. I really wanna hear some stories from you guys, about great opportunities. I’ll do some shout outs to businesses that have pivoted and are doings things that we can all learn from to make sure we’re thinking in the right way. Thank you.

Have a question?

Have a question that hasn’t been answered? Fill in the form below and one of our experts will contact you back.

  • This field is for validation purposes and should be left unchanged.

Call Now

1300 207 182

Live Chat

Click here