“Doing nothing is a terrible idea”: How should SMEs approach post-JobKeeper lay-offs?

When the JobKeeper wage subsidy came to an end, the COVID-19 crisis did not. With many businesses still struggling, the inevitable lay-offs started to happen.

But for employees that had been stood down for some time, or those working fewer hours, the legal waters have become murky. Reports are surfacing of employers letting long-term team members go without redundancy payments or even clarity around whether they’re still employed or not.

In a report from the ABC this morning, Zana Bytheway, chief executive of community legal centre JobWatch, said the service has seen an influx of calls from people saying they have been stood down, had their hours reduced or been forced to resign or terminated, without a redundancy package in place.

Others have reportedly not been paid out their annual leave or superannuation entitlements.

Speaking to SmartCompany, Athena Koelmeyer, managing director and principal of Workplace Law, notes that for many businesses still badly affected by the COVID-19 pandemic, nothing has actually improved.

For those that rely on international tourism, for example, as long as international borders remain closed owners must choose between what Koelmeyer calls “mothballing” until they can re-open again, or shutting their doors for good.

Either way, employees that were previously stood down with JobKeeper payments will now be stood down without pay.

And making redundancies can be constantly in itself.

If a business has had no income for the best part of 18 months, and doesn’t have any money in the bank, then they may not be able to afford the cost of redundancy and annual leave payouts.

That becomes “a pretty awkward situation”, Koelmeyer says.

“If you want to hang on and you think there will be light at the end of the tunnel at some point, you don’t necessarily want to wind the whole thing up,” she explains.

“But if you incur the debt that was the result of the redundancy payments you might be forced to wind up or go into administration.”

What are your options?

For small business owners that have found themselves in a situation like this post-JobKeeper, Koelmeyer stresses that there are options.

For the majority of businesses with fewer than 15 employees, there is relief under the Fair Work Act for redundancy payments, meaning no redundancy is payable for very small businesses.

“That’s just something people should remember if they’re sitting there not knowing what to do

If you’re a business of that size and unsure of what to do, “don’t hesitate,” she advises.

“Do your redundancies the right way — the law is still the law and unfair dismissal still applies,” she adds.

“But that relief is there, it’s always been there.”

There is also the possibility of businesses with 15 employees or more applying to the Fair Work Commission for eligibility to offer reduced redundancy packages.

It’s not an easy process, and will require business owners to share a lot of information about their financial situation, but it is a possibility.

“There is a mechanism there for that.”

Communication is key

The most common mistake business owners are making is in their communication with employees.

That means explaining to them that they remain stood down but without JobKeeper, and so without pay.

The relationship between employer and employee remains until one party does something to end it, Koelmeyer notes.

But it stands to reason those employees will look for another source of income. If they do, that may open up a conversation employers can open up.

“That may be an opportunity for a discussion to take place about whether or not they’re going to move on permanently, or whether they have any plans to come back.”

If they’re not coming back, that employment relationship can be wound up.

If you’re planning on waiting it out and re-opening when things pick up, let your employees know, Koelmeyer stresses. And if you don’t think re-opening is going to be a possibility, let them know.

She acknowledges that for those in industries still badly affected by COVID-19, the situation is “pretty depressing”.

She herself has worked with entrepreneurs who have built out their businesses over 20 years or more, only to lose everything. For many business owners, these are heartbreaking decisions to make.

“I can understand why some people are not feeling like communicating with anyone, let alone their employees,” Koelmeyer says.

“But you still have obligations, just like you do in terms of paying tax and rent.”

That means business owners can’t bury their heads in the sand. They have to face up to these decisions at some point, and sooner rather than later.

“Doing nothing is a terrible idea,” she says.