The words “redundancy” and “restructure” have always set an ominous tone in any workplace. Covid-19 clearly has not diminished that, but nor has it diminished the responsibilities of employers to their staff during a restructure.
Employment law still applies
A key consideration that has not changed, even in this time of uncertainty, is that employment laws in place before the lockdown remain. Fair processes and legal requirements have not been watered-down or suspended.
Employment obligations should not therefore be an afterthought when considering restructuring and redundancies. Even if the restructure is crucial for a business to survive, a fair process still must be followed.
Generally speaking, a proper restructure enables the employer to get meaningful feedback from employees, ensures the restructure will actually achieve its objective, and helps the employer make better business decisions based on all the information. Right now, likely more than ever, employers understand intimately the external financial pressures on their businesses. What employers should consider if contemplating restructuring, is endeavouring to be transparent (with clear limits) about that information.
Wage Subsidy Scheme and Redundancies
For detailed information on the wage subsidy scheme go here.
In general terms, the Government’s intention behind the wage subsidy scheme has been to keep workers in jobs and avoid redundancies. When businesses apply for the wage subsidy they complete a declaration and are subject to certain requirements (the specific requirements have changed and depend on when the subsidy was applied for). Generally, workers are to be retained for the duration of the wage subsidy scheme (12 weeks), particularly where the subsidy was applied for after 27 March 2020.
Due to the wage subsidy scheme, employers looking to make employees redundant should at least consider whether they qualify for the wage subsidy and can meet the obligations in the declaration, and if the redundancy would still be necessary if they received the subsidy. Where an employer qualifies for the wage subsidy and an employee’s wages can largely be covered by the wage subsidy, there may be little room for redundancy to be justified. However, there are some situations where restructuring may need to be considered despite the availability of the wage subsidy. This is most likely where employees’ wages are much higher than the $585.80 per week of the wage subsidy.
As we near the possible end of this current Level-4 period of lockdown, it still remains near impossible to forecast business conditions two weeks ahead, let alone eight weeks ahead. Critical decisions remain for most businesses through this period, including those who have received the wage subsidy. To a large extent, understanding the protections imposed under the wage subsidy scheme, and existing employment law, should feature within that decision-making.