JobKeeper’s coming to an end, are you prepared?
On 28 March 2021, the Federal Government’s JobKeeper scheme is coming to a close – are you ready for it?
To keep things short, sharp and precise, here’s a checklist of what you need to do to prepare.
- Mark your diary for 28 March 2021: the end of JobKeeper
- Make a cash flow forecast for (at least) the next quarter
- Identify any areas where you can make spending adjustments
- Speak to each of your staff members individually about any changes to their employment
- Send out a company-wide announcement to your staff about your end-of-JobKeeper management strategy
- Keep an ongoing record of incoming and outgoing costs against your forecast
I own a small business, how do I prepare for the end of JobKeeper?
- Forecast your cash flow for the next quarter 80% of businesses fall into rocky territory due to cashflow problems. If you’ve been relying on JobKeeper payments, this will be the biggest risk to your business over the next few months. With as much detail as you can, put together a forecast for the next few months. Roll out the spreadsheets and take note of the following;
- From an incoming perspective:
- Sales figures (based on both last year and other – more normal – years, plus recent activity)
- Any investment in the business
- Any incoming grants
- Any royalties, franchise fees or license fees ›
- Any tax refunds From an outgoing perspective:
- Office space rental costs
- Product and operational costs
- Any loan repayments
- From an incoming perspective:
Balancing these should give you a positive or negative flow figure. Work with your Accountant if necessary. Once you have a clear understanding of how the next few months will look financially, you can realistically consider necessary adjustments.
During and after the adjustment period of JobKeeper ending, make sure you keep your forecast up-to-date and update costs as necessary. Keep records of all outgoing purchases, plus spending and staffing decisions. Cut away any extras through the adjustment and if any areas have come up in your cash flow forecast in which you could potentially tighten the business belt, consider doing that while you adjust to losing the subsidy.
Continue to negotiate with your vendors to save on things from office supplies to telecommunications, reschedule any major events or training sessions for later in the year and make sure you undertake consultation with your staff on this so they know.
Talk to your staff prior to the end of JobKeeper.
You already have March 28 in your diary, we would recommend you start planning now. You should audit your headcount costs and see if you need to reduce any employee working hours to meet a reduced budget.
At midnight on March 28 your employee’s hours and salaries will revert back to their pre-COVID rates.
You’ll need to get their consent to change these rates. Remember, honesty is the best policy at this stage and it’s important to be transparent with your team. The earlier you can do this audit, and possibly having some tough conversations with your staff, the more time you give your team to consider arrangements they may need to make to deal with this situation. Be conscious that you may have to deliver redundancy pay, notice (or pay in lieu of notice) and/or leave entitlements if you let any of your workers go. Feel free to check with us about what you need in this area.
Before making any final decisions about dismissal, we recommend you seek some advice from your dedicated HR Business Partner to make sure you are aware of the risks that come along with terminating employment. The last thing you need is a former employee making a claim against the business which will come with a time, financial and emotional cost. It’s never an easy decision to make, but a temporary period of reduced pay for employees may be a preferable option to redundancies. If your employees consent to this arrangement, you’ll need a paper trail, we can help you with that.
Alternatives to terminations are you’ll well be aware probably implemented when COVID19 hit were:
- asking employees to take any outstanding leave;
- Reducing their hours of work
During COVID and work from home periods, your Managers would have dialled up the communication with your staff. It’s important that this continue – your employees will need to be consulted, engaged and collaborated with to ensure that the smooth transition to post JobKeeper days are smooth, hassle free and measured.
Harvard research shows that over 69% of managers are uncomfortable with communicating with employees. Don’t make the mistake of going quiet as an employer during this time, as this can have a negative impact on your long term employee engagement.
Not all support is being taken away for business by the Federal Government. There’s a new scheme in place called JobMaker Hiring Credit Scheme (“JobMaker”).
Through the scheme, eligible employers may receive payments of up to:
- $200 per week for each eligible additional employee aged 16–29 years old inclusive
- $100 per week for each eligible additional employee aged 30–35 years old inclusive
Eligible employers will have access to the JobMaker Hiring Credit for each new job they create over the 12 months from 7 October 2020, for a maximum claim period of 12 months from their employment start date. Employers must register with the ATO and make claims quarterly, with claims commencing in February 2021. The JobMaker scheme is yet to be legislated, therefore subject to the approval of Parliament. We will advise you if and when this scheme is approved, hopefully in the next two sitting weeks commencing 15 March 2021.
Keep this link handy to register for JobMaker Scheme
The information provided in these blog articles is general in nature and is not intended to substitute for professional advice. If you are unsure about how this information applies to your specific situation, we recommend you contact us for specific adviceJobKeeper