Chilling economic ‘bloodbath’ looming
The coronavirus crisis has devastated countless livelihoods - but there's a new threat facing businesses and everyday workers alike that most of us haven't seen coming.
That's according to Aussie employment relations expert Natasha Hawker, who told news.com.au JobKeeper 2.0, which is now just days away, would leave employees and staff exposed to a redundancy "bloodbath".
The $1500-a-fortnight JobKeeper wage subsidy was first announced by the federal government back in April in a bid to keep businesses and households afloat during the COVID-19 pandemic.
But while it has been extended for an extra six months to March 28, 2021, the rate of payments will be scaled back from the end of the month, with full-time employees who work more than 20 hours on average a week getting their payment slashed to $1200 per fortnight.
Part-time employees who worked less than 20 hours a week will get $750 per fortnight.
The eligibility criteria is also being tightened, and with $30 billion earmarked for the new version of the scheme, compared with a far more generous $70 billion for the initial program, experts fear many more Aussies will miss out this time around.
When the extension was announced in July, Prime Minister Scott Morrison touted it as a win for workers and a tool in "delivering the support Australians need and the policies our economy requires to reopen, recover and create jobs".
Treasurer Josh Frydenberg also praised the extension, claiming it would "help keep businesses in business and Australians in jobs as our economy reopens."
But Ms Hawker said instead, the pared-back scheme would cause "a lot of pain" for bosses and staff, and that many businesses would be forced to cut costs as a result.
She predicted that would lead to a massive spike in redundancies - and with it, unfair dismissal claims.
"For many businesses, especially smaller businesses for whom cash flow is vital, JobKeeper has been like a ventilator for their business during COVID-19 - but the oxygen is about to be turned off, and some businesses won't survive without life support," she said.
Ms Hawker said there had been a 70 per cent increase in unfair dismissal claims during the last quarter alone, and that she expected that figure to rise after the nation reached the "September cliff" with JobKeeper, rent relief and loan deferrals beginning to wind up.
"The reality is most businesses will no longer qualify for JobKeeper and even if they do, they can't continue to accrue debt...when they have minimal or zero income coming in," she said.
She explained that it cost just $74.50 for sacked workers to file an unfair dismissal claim, and that someone earning an average Australian salary of $65,000 could score themselves a $32,000 payout on top of their redundancy.
And while a let-go worker had "nothing to lose" by filing, Ms Hawker said the process could be disastrous for business owners.
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She said there was a requirement for a redundancy to be "genuine" and that workers were protected from terminations that were deemed to be "harsh, unjust or unreasonable".
But she said many businesses came unstuck on technicalities after failing to follow the correct protocols, which include planning the redundancy process and timetable, preparing managers for the conversation, preparing documentation, calculating redundancy packages and consulting with the employee throughout the process.
"I believe it will get a lot worse before it gets better and I think we've only seen the tip of the iceberg," she told news.com.au.
"The reality is most businesses in my view have been blindsided by the pandemic and have little cash in reserve - owners are fighting for the survival of their business as well as their own family's financial survival.
"The harsh reality is that with JobKeeper ending, many will have to let staff go and if they find themselves defending multiple unfair dismissal claims, it could be ultimately brings them undone."
Ms Hawker said with so many business owners in distress, it was even easier to make potentially costly mistakes, citing a real-life example of a distribution company that recently dismissed a driver "on the spot" after three years of service without offering any severance pay.
Unsurprisingly, it ended up in an unfair dismissal complaint and a six-week payout was eventually negotiated - but Ms Hawker urged business owners to get the right advice from the get-go to avoid a similar disaster.
"Lots of business owners are thinking, 'I'm stuffed, I'm going broke, why would I pay you out?' and they take the risk when they're not thinking straight and are in panic mode … but rushing and making mistakes ends up hurting both sides," she said.
Ms Hawker called on the government to extend grants to small to medium business owners across the country to help them gain proper legal, accounting and HR advice during the pandemic and recession.
Originally published as Chilling economic 'bloodbath' looming