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Business Insights – 16th August 2021 – Lockdown restrictions and offsetting wage costs

I’m here with insights for Australian businesses on 16th August 2021.

With Melbourne Metro’s lockdown expanded and extended for another 2 weeks (until 2nd September), and the Sydney lockdown expanded to all of NSW , I want to explain how you can use the government COVID-19 disaster payment to support your workers and your cash flow.

As a reminder, the federal government is providing COVID-19 disaster payments for employees who have their hours reduced due to government enforced restrictions.

Before I get into the details, I want to acknowledge every Tenfold client and business owner who has committed to supporting their team members through these lockdowns. Many large businesses are quick to lay off their workforce as soon as restrictions commence, whereas we have many examples of business owners doing it tough to retain and support their teams. Now with these expanded lockdowns I want to show you several scenarios whereby you can use the federal government COVID-19 Disaster Payment to minimise the financial burden on you.

 

Explained: Offsetting wage costs

If you have to reduce your team members’ hours by between 8 to 20 hours in a week, the COVID-19 Disaster Payment amount they may be eligible to receive is $450 per pay period. If you have to reduce their hours by more than 20 hours, the payment is $750.

Here’s a worked example of how this could be used based on a team member on a $100,000 salary ($1,923 per week) and a reduction in their workload of 20% and 50%:

 

How this can support your business

Think of the COVID-19 Disaster Payment as a kind of alternative to JobKeeper. The main difference is that it gets paid to the worker, rather than to the business.

If your business is light on work due to the lockdown, you could reduce your employee’s hours to make them eligible for the disaster payment. You’ll be able to reduce your wage costs while your employee’s income will be topped up by the federal government subsidy.

As you can see from the example, in both scenarios the team members actually gets paid MORE than if they had have worked their full 38 hour week.

I know Tenfold clients feel a high level of responsibility for your employees’ financial security. To help you understand and feel comfortable with this model, the coaches have a tool to calculate the options.

A couple of points to note:

  • The reduction in your employee’s hours needs to be at least one work day (8 hours) to be eligible for the COVID-19 disaster payment;
  • With many employees working from home and doing homeschooling at the same time, a reduction in work hours may help people feel more comfortable as they juggle the competing priorities;
  • If you do decide to reduce hours, consider scaling back by changing start and finish times. For example, you can reduce 8 hours in a week by having your employee start an hour later and finish an hour earlier on 4 days of the work week. Feedback from the Tenfold business coaches is that this is a good model for many business owners and their team members.

(Update: we have received questions about how reducing hours may impact eligibility for Jobs Victoria Fund – see the note below)

 

Melbourne Lockdown – tighter restrictions coming

We heard today that the lockdown in Melbourne Metro has been extended (see updated general restrictions). Melbourne’s infection rates aren’t going down (nor are they going up), but about a third to a half of the daily COVID infections reported have been out in the community before they were diagnosed. We’ve been told that we won’t come out of lockdown until we have sustained days without anyone being ‘infectious in the community’, so sadly I think this lockdown is going to roll on for many more weeks. I don’t say this to be negative, but we need to look at the reality of the situation, not hanging onto false hopes.

As a result of today’s expanded and extended lockdown in Melbourne, we’re seeing worker permits reintroduced and are expecting to see 25% (or up to 5 people) limits on construction sites. Our business coaching team understands is that the details of this are being mapped out as I write and that there will be a grace period to comply with these.

We’re expecting to hear about further business support from the Victorian government in the coming days. Based on announcements to date, our business coaches believe this could include more business categories than have been eligible up until now. Your Tenfold business coach will advise you when information is to hand.

 

NSW Lockdown

Sydney’s infection rates are doubling every 11 days and it is expected that their 7 day average will be over 1,000 by the end of the month. This has pushed the NSW government to impose a stricter lockdown in Sydney and now all of regional NSW.

 

Vaccination Levels

The positive news out of all of these lockdowns is that around 40% of Vic and NSW residents have now had an initial dose of the vaccination. Based on these rates, it is estimated that Australia will be 70% vaccinated by early Nov and 80% vaccinated by late Nov.

Every Tenfold business coach is keeping a close watch on the changes to restrictions in Melbourne, and we’ll let you know more as details become available. likely tomorrow.

Ash

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*Jobs Victoria Fund and reduced hours

Jobs Victoria Fund (JVF) provides Victorian employers with wage subsidies for selected new hires. I wrote about JVF in June – see my briefing of 8th June 2021 – Vic employment grants

Question: If a Victorian business has an employee on the Jobs Victoria Fund () and they need to reduce the employee’s hours due to lockdown, and the employee is eligible for COVID-disaster payment, will that impact Jobs Vic Fund eligibility/payment?

Answer: We contacted Jobs Victoria who provided the following advice:

  • If the hours required as a condition of Jobs Victoria Fund are not being met then the JVF payment may get pro rata-ed.
  • As part of the JVF scheme, the employer needs to report at each milestone that the JVF conditions have been met and include the employee’s pay slips. If the hours have been reduced because of lockdown (and therefore conditions haven’t met), the employer will need to email the JVF assessment team to explain the circumstances and request special consideration.
  • The JVF assessment team can only be contact directly by email, and businesses need to apply for consideration formally in writing.

Many Tenfold clients are making good use of the Jobs Victoria Fund to grow their business. Speak with your Tenfold coach for advice on how this could support your business growth.

 

Ash
Ashley Thomson B.Eng. (Hons), Grad. Dip. Mgmt, MEI
Managing Director
Tenfold Business Coaching

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