The economy is being impacting by the coronavirus (COVID-19) pandemic and the government measures to contain the spread. Businesses are all considering ways to cut costs.
The greatest expense for many businesses is salaries and wages and, therefore, reducing employee hours has become a focus. Remember that you have invested time and money in finding and training good people and that you must retain the ability to re-start once this difficult time has passed.
This brief article outlines your options to reduce employee costs.
Option 1: TEMPORARY FLEXIBLE WORKING ARRANGEMENTS
Consider all flexible working arrangement options, such as working from home or flexible work hours. If you are changing working conditions remember:
- Awards may require you to consult with employees about changes to their working conditions
- Your workplace flexible working policies and procedures should be reviewed – you will still have a duty of care to employees who work from home
- Your awards may provide that you give employees a certain amount of notice for changes to their roster
- Consider providing a letter of Variation of Employment Conditions
OPTION 2: PAID OR UNPAID LEAVE
Sometimes it is not practical for employees to work from home.
You may be able to direct employees to take annual leave. However, the limitations of enterprise agreements and awards still apply in relation to how much leave you can direct employees to take and the amount of notice that you must give them.
Maintain open communication with your employees about the impact of coronavirus on the business and their employment options. They may well agree to take accrued leave to help safeguard the business and their job.
OPTION 3: STAND DOWN
You can stand down employees in accordance with the Fair Work Act, an enterprise agreement or a modern award. Generally, you can stand down employees without pay if:
- the employees cannot usefully be employed;
- work is stopping for reasons outside your (the employer’s) control.
However, meeting the above conditions is not simple, so think carefully about using a stand down. Also, some employees can be stood down while others – who can still be usefully employed – are not.
As part of the consultation with employees about stand down, some employees may request paid leave (such as annual leave or long service leave) during the stand down
Employees who have been stood down may be able to access Centrelink benefits.
OPTION 4: REDUNDANCY
If your employees’ roles are no longer required due to the loss of work, you can commence the redundancy process. To avoid unfair dismissal claims, make sure you strictly comply with your consultation obligations under any applicable modern award or enterprise agreement. As part of the redundancy process you should also explore other options such as
- reduced hours; or
- taking a temporary period of unpaid leave.
Seek legal advice before starting any redundancy process.
Maeve Doyle is a senior employment lawyer with Nexus. If you need further advice or support, she can be contacted on email@example.com or by telephone 0417 451 638 or +612 9016 0141.
This publication is © Nexus Law Group and is for general guidance only. Legal advice should be sought before taking action in relation to any specific issues.