Running a business at any time can be tough, now it is even tougher. While JobKeeper has been a saviour for many, it will not last forever. When it ends, businesses may be faced with hard decisions to secure their future viability.
Wages are a significant overhead and with businesses having the ability to reduce employee numbers relatively quickly, it is no surprise that some will be thinking about letting people go.
If you are looking to reduce your workforce, here are some things to think about:
- Are staff prepared to agree to reduce their hours or take unpaid leave?
If you are no longer able to rely on a JobKeeper stand down enabling provision to reduce staff hours, you can seek your employees’ agreement to reduce their hours. Remember though, as hours of work are a fundamental term of any employment agreement they cannot be reduced without the employee’s agreement and there may be a minimum notice period.
Any agreed reduction in hours should be in writing and be signed by both you and your employee.
If reduced hours is not suitable consider leave without pay, for a block of time or for a regular number of days or weeks, especially if you only need a relatively short period in which to reduce the number of hours you need employees to work.
Given it is hard to find good people and it takes time and effort to train new employees, holding on to those you have may be a good business decision.
And while employees may not be initially keen on reducing their hours for an extended period, they may be willing to accept this if the alternative is redundancy.
- What roles are essential to your business?
Before deciding to let anyone go, look closely at all roles in your business and work out which are critical. If it would be difficult for your business to operate without particular jobs being done (by someone other than you as the business owner), you should do all you can to retain the employee who performs that work.
- Freezing pay, bonuses and new hires
While you may usually offer employees a pay rise each year, it may be necessary to put this on hold. A wage freeze to maintain your current employee wage overheads may be enough to ride out a downturn.
Likewise, if your business offers discretionary bonuses, you may choose not to offer these this year. Be careful, though, if bonuses are a term (either express or implied) of your employee’s employment contract as failure to pay them may be a breach.
Another option is to impose a hiring freeze. This means that if someone leaves, you don’t replace them. If work has slowed, it may be possible for existing staff to absorb the work that was done by the employee who has left.
If after considering all of the above options further steps are required, then the only option you may have is redundancy. Next week we will provide some guidance on how to minimise the risks involved in this process. The last thing you want is an unfair dismissal claim on your hands.
At Robertson Hyetts, we are ready to help businesses of all sizes with their employment law needs. Call us today on 03 5434 6666 (Bendigo) or 03 5472 1588 (Castlemaine).