Alternatives for employers during the COVID-19 crisis

- March 27, 2020 2 MIN READ

With many employers having to make some hard decisions about the roles of their workers during the COVID-19 crisis, leading employment advice service Employsure says there are alternatives to mass redundancies and stand-downs.

Hundreds of thousands of workers in a number of industries, including the travel, hospitality and retail sectors are facing months of uncertainty, with COVID-19 expected to further spread before the curve is flattened and business can resume as normal.

While employers may assume mass redundancies are their only option there are other courses of action according to Ed Mallet MD at Employsure.

“Letting go of a worker may not actually be the most cost-effective thing to do,” said Employsure’s Managing Director Ed Mallett.

“If you’ve got employees with long-tenure, they may potentially receive redundancy payments of up to 16 weeks, which is a huge sum of money when you’re cash-strapped. There are provisions in the Fair Work Act where you can apply to reduce or extinguish redundancy payments because you can’t afford them, but it is a tricky process.

However, Mallett says employers taking this route need to be careful.

“Don’t be under the impression that redundancy is a quick and cheap option. It should be a last resort, and only done when it is thoroughly planned.”

Instead of making an employee redundant Mallet suggests speaking with them first to discuss negotiating their work hours. Mallett says this can often reduce staff wage bills by 20-40 per cent.

“An example of this is agreeing to a four, or even three-day workweek. Leave without pay can also be negotiated. Reduced pay is another alternative that can be mutually agreed to, as long as it is above the award rate and minimum wage.

“While letting casual staff go can be an easy option, it should be approached with caution. In certain cases, someone who has worked for a business regularly and systematically, may not be a casual staff member in the eyes of the law.”

Mallet says employers will be making difficult decisions over the coming months”.

“We’re not yet seeing the true raft of redundancy coming into play, which would cause longer-term rises in unemployment. As the Prime Minister has said, every job is essential. The longer we can protect them, the better.”

 If you’re looking for further advice, Employsure has built a free Resource Hub, containing workplace policies, communications, checklists and FAQs. All information is free for business owners.

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