Posted on: Mar 23, 2020

With COVID-19 changing the entire landscape for the global and local economy, it is not just the health impacts but the potential for damage to businesses and their ability to weather the storm that comes into sharp focus.

When faced with the severe and unprecedented conditions – some businesses have lost over 85% of their revenue – in the short and medium-term, many businesses are considering their options just to survive.

Businesses have to consider what variable or fixed costs are critical to the business’ survival and, inevitably, there is always a focus on matching labour costs to the demand for products or services. There are a number of different options for businesses to consider:

  • Reducing the hours of work for employees
  • Removing any discretionary benefits
  • Freezing or reconsidering any wage or salary increases
  • Relocation to reduce rent overhead
  • Requiring employees to take annual leave (if not agreed after consulting and giving 14 days’ notice)
  • Agreeing to periods of unpaid leave or sabbaticals
  • Reducing employee numbers through headcount reductions

All of these options can have a significant impact on employees. The need to treat your people with respect and dignity becomes even more critically important in these challenging times.

Which options make sense for you and how you achieve these outcomes will vary for each business, taking into account your employment agreements, legislative and good faith requirements, dealing with unions or employee representatives, health and safety considerations and the level of financial challenge your business is facing.

If you are facing these tough decisions and are looking for advice on managing these delicate situations while maintaining constructive relationships and minimising your risk, please contact us for a free confidential initial discussion on how we can help.

 

Written by Adrian Tocker, Senior Associate



Disclaimer

This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.