End of JobKeeper payments: Can your business stay afloat?

End of JobKeeper payments: Can your business stay afloat?

The end of JobKeeper payments will be a measure of the Australian economy’s resilience and a prompt to business operators to check employment conditions, policies and procedures in the changed employment environment

The JobKeeper support scheme was a lifeline during the economic tsunami of 2020. It allowed businesses to maintain their workforces, giving employees some certainty and confidence. It also encouraged Australians to continue spending, creating a passage out of a potentially severe recession. But now, almost a year after its inception, we are facing the end of JobKeeper payments. Some commentators fear that this milestone will reveal the true extent of the economic damage caused by the pandemic.

When will JobKeeper payments end?

28 March 2021 is the forecast JobKeeper end date. It’s almost exactly one year after the Federal Government introduced the scheme.

At the time of its introduction, the Federal Government forecast that it would end in September 2020. However, the pandemic’s grip remained tight. It was clear that withdrawing the support would be catastrophic for thousands of businesses and workers, especially with a prolonged Victorian lockdown.

Why is there a risk of negative impact after JobKeeper payments end?

The end of JobKeeper support could have significant consequences for Australian workers and businesses. To understand why, let’s consider one of the workplace relations system’s basic functions.

Our workplace laws regulate employment relationships in considerable detail. You need only look at the Fair Work Act‘s sheer volume to get a sense of this. Rigorous employment protections are central to this legislation.

When businesses were forced to close at the beginning of the pandemic in Australia, many felt the squeeze. It was impossible to balance the preservation of employment conditions with the sudden loss of cash flow.

JobKeeper was designed to give employers and employees quick relief. With temporary provisions introduced under the Fair Work Act, the scheme gave employers the flexibility to manage their businesses with the ability to issue directions to employees, such as:

  • Working reduced hours
  • Stand down
  • Alternative duties
  • Changing the work location

Employers could use the JobKeeper wage subsidy to weather the storm: to continue paying their workforces (subject to certain conditions).

One year later, it appears that Australia has avoided economic catastrophe. People are spending. The unemployment rate has decreased, and thousands of businesses have resumed operations.

However, with JobKeeper’s end, standard employment terms and conditions will resume. For example, permanent employees – whose hours were reduced under JobKeeper – will automatically have the right to return to their pre-JobKeeper hours. As an employer, you must reinstate their working hours unless they agree to a reduction.

You can change your casual employees’ work hours. However, there may be some protections for casual employees engaged on a regular and systematic basis with a reasonable expectation of continuing employment.

What can I do if my business can’t afford to allow employees to revert to their pre-JobKeeper hours?

If you’re concerned about the impact of the end of JobKeeper payments on your business, you will need to think about possible options. For example:

  • Is it possible to agree to new work conditions with your employees (or at least some employees) for reduced hours?
  • Will your business be able to cope with employee’s reduced work hours?
  • Is it possible to redeploy some workers into other areas of the business?

For casual workers, now is the time to review work conditions to ensure they are correctly characterised as casual employees. If they’re regularly engaged with a reasonable expectation of ongoing employment, you may need legal advice. If incorrectly characterised, some employment conditions may be affected, including:

  • Rate of pay
  • Leave allowances
  • Loadings
  • Termination of employment rights

What are the legal risks to my business?

It’s crucial to remember that you can’t change a permanent worker’s employment conditions without their consent. They must consent without pressure or duress. For example, consent isn’t free if they fear losing their job if they don’t agree.

If consent is not freely given, the worker may later claim unfair dismissal (even for reduced work hours) because they felt they had no choice but to agree to the changed working conditions.

If you’re in this situation, seeking legal advice could limit any further risk to your business.

If you have a casual worker who should be characterised as a permanent worker, your business may be exposed to:

  • Underpayment of wages claims for leave entitlements and other benefits
  • Unfair dismissal claims if you’ve terminated employment or sought to change employment conditions without their free agreement

We recommend seeking legal advice when reviewing casual staff employment conditions to avoid or manage legal risk.

How can MDW help my business?

If your business continues to struggle with the impact of the pandemic, we can give you advice about your options to help its viability.

We can also:

  • Restructure employment agreements
  • Structure employee entitlements
  • Create performance management policies and procedures
  • Advise you about relevant modern awards and enterprise agreements
  • Advise you about managing legal risk if redundancies are necessary

The bottom line

The coming months will be a significant test for Australian businesses as they try to stay afloat without the JobKeeper lifejacket. While we’re lucky that infection rates are low and consumer confidence is buoyed, we’re yet to see what’s on the horizon. With such challenges, it’s critical to make business decisions supported by practical and sound legal advice.

Contact us to find out how we can help you navigate the end of JobKeeper payments.



DISCLAIMER: We accept no responsibility for any action taken after reading this article. It is intended as a guide only and is not a substitute for the expert legal advice you can receive from marshalls+dent+wilmoth and other relevant experts.