What the end of JobKeeper means for your business

As the final JobKeeper scheme has ended at midnight on Sunday 28 March 2021, employers are advised to prepare for how this will impact their business either directly or indirectly. If structural changes are required to future-proof your business, you should be preparing now to implement those changes to ensure that you meet all the procedural requirements to protect against unfair dismissal or other employment related claims.

From 29 March 2021 any modified conditions to employee’s employment for JobKeeper-receiving employers will revert back to pre-COVID conditions. Any modification to hours, salary or other conditions will need to be in agreement with staff after 28 March 2021.

How will the end of JobKeeper affect my business?

The COVID-19 pandemic has significantly impacted the economy domestically and abroad. In Australia, many businesses have been able to continue operations due to a variety of Government stimulus initiatives, including JobKeeper. With JobKeeper ending at midnight on Sunday 28 March 2021, you should be considering how this will impact your business. Even if your business has not been eligible, or required the JobKeeper stimulus to operate, this may not be the case for other players in your supply chain, such as clients and suppliers.

Business owners might consider right-sizing their operations now, to suit post-JobKeeper conditions. Changes may result from your own loss of the stimulus, or how the loss of JobKeeper will affect others in your supply chain and have a secondary impact on your organisation.

Presently the Fair Work Act 2009 (Cth) (FWA) permits employers receiving JobKeeper to issue directions altering an employee’s work duties, hours or location by agreement, or stand down employees. When JobKeeper ends at midnight on 28 March 2021, arrangements in place to alter employee’s conditions such as their salary or hours as a result of COVID-19 will cease to be in effect pursuant to section 789GP of the FWA. Importantly, any alteration to an employee’s conditions as may have occurred under the JobKeeper direction provisions, will need to occur by agreement with the employee from 29 March 2021.

If you are unable to sustain the number of staff currently employed, you will need to consider the cost of paying out annual leave, long service leave and potentially payment in lieu of notice (depending on the circumstances of the termination of employment). If employees are terminated by redundancy, and you are not a small business employer, redundancy pay may be an additional cost to consider if staff are terminated.

How can I start preparing?

For employers continuing to feel the impact of COVID-19 it may not be sustainable to revert back to pre-JobKeeper conditions with staff. Employers should conduct an audit of their business and assess the impact of the end of JobKeeper on their operations when projecting cashflow. This includes consulting with others in your supply chain to plan for any secondary unexpected consequences on your business after 28 March 2021. If your operations are going to be affected, consider planning now for changes affecting your workforce as a result of JobKeeper ending.

Most modern awards and enterprise agreements contain provisions which require you to consult with employees in specific ways in the event of organisational changes which may affect their jobs. Failure to follow the required process may give rise to a claim of unfair dismissal. Often this occurs where an employer fails to follow the consultation process prescribed by the award, enterprise agreement or workplace policy, such as failure to afford procedural fairness (for example, not providing the employee with an opportunity to be heard before making a decision affecting their interests or pre-judging a decision). Importantly, even if an employee’s role is genuinely redundant because of the impact of COVID-19, it may be considered an unfair dismissal if the agreed procedure was not followed.

It is important to communicate clearly and openly with employees during this time to facilitate confidence and trust amongst staff. Achieving this may also involve supporting frontline managers to have difficult conversations with staff, in addition to consistent supportive messaging to improve or maintain morale. Whilst COVID-19 continues to cause difficult and sometimes catastrophic consequences, it is important to consider communication with employees as employee satisfaction fundamentally affects employees’ productivity, turnover intentions and absenteeism.

What does a fair procedure look like?

(a) Identify the applicable procedure: The procedure you need to follow will be outlined in the modern award, enterprise agreement, contracts of employment and any relevant policies and procedures which apply to your business.

(b) Consult with employees as required by the applicable procedure: Generally, the procedure requires you to meet with your employees and their representatives before any final decisions are made, and provide them with written information about the proposed changes. The specific process will be determined by the applicable procedure in the circumstances of your business.

(c) Consider your employees’ responses: Employees are entitled to provide their views on the changes, and make any recommendations about how the effects of the changes may be mitigated to lower their impact on employees. Employers must take these recommendations into consideration before making any final decisions, and respond to them appropriately (as required for procedural fairness to be afforded).

(d) Make the decision: Finally, notify employees of your decision on consideration of their views. You might also consider any avenues of appeal by the employee that may be outlined in the procedure followed.

Time is of the essence

As you can appreciate, the consultation process may take some time to complete, particularly if your workplace is large or complex. To ensure your business is right-sized at the right time, you should start preparations now.

The impact of COVID-19 is individual to each business. If you require any assistance to identify the appropriate process you should be following, implementing that process or preparing relevant documentation, please contact Warwick Ryan at Hicksons Lawyers on (02) 9293 5448 or [email protected]