Is Your Staffing Sustainable After The Government Wage Subsidy Ends?
COVID-19 has significantly impacted the way we live and work. The impacts on business operations has been prolific and it feels, some days as if work will never be the same!
Very few businesses have prospered during this unforeseen time. In fact, many have suffered significant losses and had to make some difficult decisions about the future viability of their business and/or structure.
The government wage subsidy scheme was a lifeline for many businesses., allowing you to retain your staff and continue to pay them a wage. But, the initial 12 week period of the government wage subsidy is coming to an end. Aside from considering if you are able to apply for the extension, your thoughts might be turning to your current staffing levels and if they are sustainable for your business right now, in this “new world”.
In order to mitigate some of the loss and continue operating as a feasible business, you may also be exploring the idea of restructuring.
You are certainly able to restructure if you need to however, the most important thing to remember is that COVID-19 has not removed any of your obligations in regards to employment legislation.
So, how can you handle the process of a potential restructure?
Let’s look into it now.
Is Your Staffing Sustainable After The Government Wage Subsidy Ends?
What Happens Now?
Knowing that the COVID-19 pandemic and the subsequent restrictions placed on New Zealanders was going to have a large impact on most businesses, the government introduced the wage subsidy scheme.
The government wage subsidy was primarily put in place so that businesses could avoid the need for restructuring and redundancy during such a difficult time. However, with the 12-week wage subsidy period finishing, it is clear that “business as usual” has not resumed for many workplaces.
Most businesses will not be returning to an abundance of work straight away. In fact, the entire world has consequently slowed down.
You may find yourself in a position where you need to take actions now to mitigate risks and preserve your business and, indeed enable it to continue operating. This may mean that restructuring and evaluating your staffing cost is the path you need to take.
Should You Restructure?
Now is the time to do some investigation into the health and viability of your business.
Unfortunately, you cannot rely on pre-lockdown performance as an indication of your business’ recovery. We have entered a brave new world of business. Many aspects are different and the way we operate has changed with it and will most probably continue to do so for quite some time.
You will have to take a long, hard look at how your business needs to operate, how you can drive sales and if you need to reduce your overheads. The great news is that there are many ways that you can minimise your costs before having to restructure your business.
Look at ways you can cut spending - reduce unnecessary subscriptions and ongoing costs, explore the idea of your team continuing to work remotely (if viable), explore new production options or processes, modernise your marketing with a digital strategy, and embrace virtual technology.
You can also look at relocating team members to other roles in the company to prevent the need for redundancy.
If, after your examination, you find that restructuring is your only option, then you want to make sure you handle it in the right way.
How To Approach Restructure
When considering restructuring, you have to make sure you handle things correctly and adhere to relevant employment legislation. Once you have decided what your business structure will look like, you need to begin a process of consultation with those staff that will be impacted.
The normal process for restructuring would include open and honest communication by way of a consultation process. You want to keep your team in the loop of what is happening so that no one is ambushed with the news. Feeling “ambushed” leads to other negative feelings which may make the process extremely difficult and upsetting for those involved.
This is how you can handle it:
Seek advice from an HR professional. With years of expertise and experience, we would be able to take an impartial assessment of your business and guide you through the process of restructuring if it needed to take place.
Invite all employees to a meeting and explain how the restructure proposal and the timeframes involved.
Make the proposed changes clear, what your reasons are for making the proposed changes and who will be impacted.
Invite your team to give feedback and suggestions, then take that on board before making any concrete decisions as to if you will proceed with the changes you had proposed.
Once a decision has been made on the final course of action, share that news with your team, confirming the final structure of the business or organisation in writing.
It is very important to remember that any restructure you put forward to impacted employees is only a proposal until you have consulted with the employees. They deserve (and are entitled to) an opportunity to comment on the proposal before any decision is made!
COVID-19 Related Restructures
While some businesses will have no option other than restructuring due to the impact of COVID-19, others will have options.
Do not be fooled into thinking you can use COVID-19 as a convenient excuse to restructure your business. All proposals and sunsequent consultation must be undertaken in good faith, and failure to do so may result in legal proceedings.
As an employer, you must show the business would continue more efficiently without an employee, and/or that you will be making significant cost savings by restructuring. You will need to be able to disclose some financial details as to savings you will make and evidence that you have attempted to exhaust other avenues prior to proposing the restructure. You also have to make sure you have no intention of hiring another person into a role that has been made redundant.
Restructures and redundancies are a complex area of employment, so if you are unsure of any aspect, please do not hesitate to contact the team here at Core HR. If the process is not completed correctly, you can open yourself up to the risk of a personal grievance or worse.
Remember that this is a difficult time as both an employer and an employee. Care and consideration must be shown accordingly and part of that is following a fair and just process.
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