JobKeeper 2.0: “The good, the bad and the ugly”

survive the end of jobkeeper

Employee Matters founders Natasha and Mark Hawker.

For many small business owners, the news that JobKeeper will now run until March 2021 has come as a welcome relief. The $1,500 a fortnight wage subsidy has supported around 3.5 million workers during the COVID-19 pandemic. 

Previously slated to end in September 2020, this extension comes with tougher new rules about who qualifies for the subsidy. Under the original scheme, a business had to prove a drop in turnover of between 30-50% to be eligible, or 15% for not-for-profits. 

Businesses will now have more frequent turnover-reporting requirements to prove ongoing financial distress, with the overhauled scheme also offering two payment tiers. 

Employee Matters founder and managing director Natasha Hawker says SME owners need to prepare now for the ‘September cliff’ when these stricter regulations take effect. 

“In my view there is a ‘bloodbath’ looming and many business owners don’t seem to be willing to face up to this,” Hawker tells SmartCompany

“Many truly believe that they will be able to get out of this mess. They are optimists by nature and necessity. 

For many though, the harsh reality is that they have minimal or zero income coming in… the question is how long can they hang on for — with debts mounting daily.” 

So how can businesses start proactively positioning themselves to survive the end of JobKeeper? Hawker has four best-practice tips to share. 

Your employees should be your greatest strength, but they could be your greatest risk. Learn how to outsource your HR with confidence.

1. Scenario planning  

Hawker says SME owners should work closely with their accountant or bookkeeper to plan for the future. 

“Project your cash flow across a number of different scenarios — the ‘good, the bad and the ugly’.” 

Businesses should avoid the temptation to optimistically prepare for “best case scenarios” only and instead be realistic about future revenue. 

“What will your cash flow look like if your sales dip 20 percent? What about if it is 40 per cent? What about if it is 60 per cent or more? 

Businesses are going to need to face this challenge head on and for many it is not going to be pretty.” 

2. Take stock 

Next, take stock of your current financial and workforce situation. Hawker advises assessing the needs of the business — what is needed to survive and thrive long-term — against the people, structure and resources you have at hand. 

Depending on this review, you may need to think innovatively and pivot to a different business model or restructure your workforce. 

3. Cut costs where necessary 

The review you’ve just undertaken will show whether you have a viable business in the long term, and whether you need to cut costs now in order to survive the end of JobKeeper.

“This may well be through reduction of your headcount. For an estimated 10% of businesses, it will mean closing the business,” Hawker says.  

Now is the time to make some tough decisions. To support your staff during this uncertain time, and to free yourself from legal issues down the track, transparent communication is key. 

“Most of all be open, transparent and honest — hiding the truth for people is worse than knowing brutal facts,” Hawker says.  

4. Develop a restructure and redundancy plan 

If you’ve made the tough decision to reduce headcount, you need to build a business case to defend your actions in legal proceedings if required. 

“Just because we are in the middle of a pandemic, does not mean your legal ER [employee relations] obligations are waived and the fines for getting this wrong are significant,” Hawker says. 

“Fair Work has seen a 70 per cent spike in claims for unfair dismissal in the last quarter alone.” 

Businesses planning a redundancy should: 

  • Plan the redundancy process and timetable
  • Prepare managers or yourself for the conversation
  • Prepare documentation
  • Calculate redundancy packages 
  • Consult with the employee throughout the process. 

Hawker encourages SME owners to seek advice from HR experts through this process — to ensure their staff are properly looked after, and to position their business to survive the end of JobKeeper.

“You need to treat your employees going through redundancy with respect and dignity, saving both yourself and your employees from additional mental health anguish and stress,” Hawker says. 

employee matters
Employee Matters

Employee Matters provides employee support to SMEs who want to maximise profitability through their employees, but struggle with hiring the best, understanding the legislation and firing non-performers.

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