Strategies and advice for businesses to stay in control through COVID-19 and get ahead of the pack

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COVID-19 Business Continuity – 17th July

I’m here with the COVID-19 continuity update for Australian businesses on Friday 17th July.

In today’s briefing:
1. Right-sizing your business to protect your business’ future
2. Employee Termination Payments and JobKeeper
3. Complexities with commercial rent relief

1. Right-sizing your business to protect your business’ future

Many small businesses operate within or support industries that have been significantly impacted by the downturn due to the COVID pandemic. Through no fault of their own, those businesses have seen a decrease in sales volumes and unpredictable demand forecast.

This has created an employment conundrum that may be familiar to many of you: your business doesn’t have enough work at the moment for your full workforce so you have retained your staff at scaled back days.

The logic of this model is that your business will be able to readily scale back up to full capacity when client demand picks up again.

However, the risk of this model is that your top performing A-class employees may be enticed away by a competitor offering full time employment rather than the part time employment you currently have in place for them. This would mean you’d be left with your average/B & C-class employees, which could have a detrimental impact on your business.

For those businesses that aren’t likely to see a snap-back to pre-COVID sales volumes, right-sizing your workforce now might be a sensible consideration. While it might be attractive to continue getting the JobKeeper payments, one reason for considering this now instead of deferring it to September is the need to preserve those A-class team members who may be highly sought after in the job market.

If your projections show that you won’t need your full pre-COVID-19 workforce in October, then consider right-sizing your business now. It would be better to make the changes sooner and get the remainder of your workforce back up to >80% and therefore likely retain the best operators in your team.

Your business mentor will assist you with the financial modelling and planning for post-JobKeeper business models, and review your plans to right-size your business. Where required, we can point you in the right direction for any professional industrial relations advice you might need.

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2. Employee Termination Payments and JobKeeper

If you do need to let staff go, they may be entitled to redundancy pay and payment in lieu of their termination period. The ATO has stated that employment termination payments (ETPs) cannot be included as part of the $1,500 an employer needs to pay to eligible employees to access JobKeeper payments.

ETPs are generally defined as severance pay and genuine redundancy payments above the tax-free limit, unused rostered days off, payment in lieu of leave, and, where relevant, unused sick leave. ETPs generally do not include accrued leave such as unused annual or long service leave. Check your appropriate award.

In short, you can’t claim JobKeeper subsidy for redundancy payouts.

This applies to ETPs from 8th June onwards until the end of the scheme. (For JobKeeper subsidies for ETPs prior to 7th June, the ATO has stated that it will not seek to recover an overpayment).

If you need assistance to understand the implications for your business, speak to your business coach.  I’ve also provided relevant linke below.

To see the ATO’s advice on ETP and JobKeeper, click here.

For information on ETPs, click here to visit the ATO website on ETPs. 

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3. Complexities with commercial rent relief

Some businesses have been approached by their landlord with the intention to revise or revisit the rent relief arrangements for the July-September period. The legislation for rent relief has several complexities that people may not be aware of. Getting your arrangements right can save you money, getting it wrong could cost you money and time.

Every Tenfold business coach is being kept informed about the advice from the Victorian Small Business Commission on commercial rent relief, so I encourage you to speak to your business mentor about your arrangements and ensure that you are maximising the value of this support mechanism.

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As we close out this week, I want to commend you all for the resilience you continue to show. Remember, the implications of this virus impact different businesses in different ways. Please remember if your business is suffering as a result, it isn’t your fault.

Ash

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

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