This Sunday, the 28th of March, will mark the end of Jobkeeper, which has been crucial in helping countless business owners weather the pandemic storm. Is your business prepared for the changes to come, asks Ben Thompson, CEO and co-founder of Employment Hero.
This year, I’ve seen hopeful glimpses of economic recovery from our customers’ influx in recruitment activity. The focus has shifted from laying off talent to seeking talent and there is clear data that the recruitment drive has bounced back to pre-pandemic levels for many. Even so, over 1.54 million Australians collected Jobkeeper payments in the most recent reported period between October to December 2020, suggesting that the reliance on the subsidy remains high.
Official numbers reveal that about 3.5 million Australians have been supported by the scheme throughout the course of the program, totalling a spend of around $80 billion by the Federal Government.
So how can you prepare for business post JobKeeper?
However, as the sun sets on the subsidy, small business owners must take action to ensure that they’re equipped to face the circumstances of a post-Jobkeeper economy and have prepared their employees for the changes to come.
Forecast cashflow for the next quarter
If your business has been reliant on Jobkeeper payments up until now, it’s vital to take immediate action to forecast your cashflow for the next quarter. As a first step, take stock of your income – potential sales figures based on previous years’ activity, investments, incoming grants, tax refunds – and outgoing expenses – office space rental costs, salaries, operational costs, marketing, loan repayments.
Importantly, remember that business might not be as consistent as it has been in previous years. While we continue to navigate the effects of the pandemic, snap lockdowns – like the one seen in Melbourne earlier this year – and other public health measures can threaten cashflow, so keep this in mind when forecasting.
Having an overview of your income and expenses will help you balance your books and give you an idea of whether you’ll have a positive or negative flow figure. If your business finances are a little more complex, consider seeking the help of an accountant. Once you know what the next few months will look like in financial terms, you can then proceed to make necessary adjustments – whether that includes changes to staffing, operations or spending.
Prepare to revert back to pre-COVID contracts
There were several measures introduced to empower business owners to take advantage of the Jobkeeper scheme. These measures included the stand down directions that enabled employers to reduce employees’ hours, the ability to amend employees’ usual duties, and the right to require employees to perform duties outside of their usual place of work. These measures superseded terms outlined in the Fair Work Act or contract of employment.
At midnight on March 28, Jobkeeper enabling instructions that you’ve given to your employees will cease to exist; and employment contracts, including hours of work and other conditions, will return to their pre-COVID state.
Before this time, make sure that your cashflow forecasts are wrapped up and you’ve finalised any decisions that need to be made. If these decisions include staffing changes, ensure you’re scheduling individual conversations with your staff as soon as possible – the earlier the better.
If necessary budget cuts have to affect your staff, consider making redundancies as an absolute last option. Before terminating employment, think about whether or not you can reach a mutual agreement with your team members about reduced hours or pay, as this would benefit the team as a whole. Other options may be allowing employees to take leave, switching to job sharing – where two employees share the load of one full-time role – or switching to a three or four-day working week, as a business.
Having conversations about pay cuts and reduced hours will be challenging but be honest and upfront with your employees and give them a transparent lay of the land. Letting your employees know the true state of the business and your intentions to implement cuts to pay and/or working hours as a temporary measure will give you a better chance of getting buy-in from your staff.
If you have no other option than to make permanent staffing cuts, be sure to understand your legal obligations when terminating employees – particularly if they are on part-time or full-time contracts. You may have to make payments for annual leave accrued or redundancies and may have to provide notice.
What if I need more support?
The Federal Government has been adamant about its intentions to stop the Jobkeeper scheme after the 28th of March. However, they have recently introduced the JobMaker scheme, which incentivises businesses to employ young job seekers by providing them with ‘JobMaker Hiring Credits’. These ‘credits’ will provide eligible employers with payments of up to:
- $200 per week for each eligible additional employee aged 16–29 years old inclusive
- $100 per week for each eligible additional employee aged 30–35 years old inclusive
The JobMaker Hiring Credits will be available for employers for the 12 months since it was introduced, from 7 October 2020, for a maximum claim period of 12 months from the new employees’ start date. More information about eligibility and claiming can be found on the ATO’s website.
If this scheme might not be relevant to you, don’t lose hope. There may be grants, tax relief initiatives and one-off support payments available to help support you and your business, depending on your industry and individual circumstances, so be sure to do your research and don’t hesitate to apply for the available opportunities.