cosboa: Council OF SMALL BUSINESS ORGANISATIONS OF AUSTRALIA
7 April 2020 - Media Release
Australia faces an historic day – we must succeed
COSBOA sees Wednesday 8 April 2020 as a day that must go down in history as the moment we stood together to stop the COVID-19 virus from destroying workplaces and adding more stress to people’s lives and the economy – the moment must not be soured by petty political point scoring in the process.
Peter Strong, CEO of COSBOA, stated today “the Federal Parliament will hold an emergency sitting of both houses on Wednesday 8 April 2020 – tomorrow - to debate and then pass the latest stimulus package proposed by the government. Failure to pass this JobKeeper legislation in a fit for purpose format will be a catastrophe for the economy, for families and for society.”
The legislation must include changes for the Fair Work Act. These changes are necessary to enable employers to respond quickly to the crisis to provide services for consumers as well as provide the right health protection for consumers and employees. The legislation must also ensure that an employer cannot take advantage of the situation by asking employees to undertake unreasonable activities. The legislation must ensure that a vexatious employee, a greedy industrial lawyer or a bullying union cannot act against an employer for reasonable employment actions taken during the JobKeeper period.
Mr Strong added “we held a round table of members and stakeholders last Friday and concern was expressed that the Fair Work Act imposed significant limitations on businesses who may participate in the JobKeeper Program, stopping them from amending the working hours and work tasks of their employees and limiting their ability to introduce innovations needed to protect their customers and their staff. It has been reported that some, perhaps many, employees of small and medium businesses were unlikely to agree to reasonable changes in work operations. In that case the employer would elect to not access JobKeeper support and would instead close the business, payout employee entitlements and send their employees to Centrelink for Jobseeker support – effectively defeating the central purpose of JobKeeper of keeping employers and employees connected. Concern was also expressed about the business risk associated with the use of the current Stand Down Provision in the Fair Work Act.”
COSBOA notes with concern the ACTU’s continuing need to target and attack employers. COSBOA congratulates Minister Porter for the work he has done in the face of obvious impediments placed by the union. The fact is that the Minister, the Secretary of the ACTU and many other people have spent a month talking about workplace relations when they should have been focused on health and the economy. This is four weeks where small businesses people would have preferred there was a focus on mental health for their employees and families as they face months at home. One way of maintaining health is through access to on-line training, preferably vocational training that benefits the employee, the employer and the economy. But any skills development or activity that would keep a person and a family occupied in a constructive and useful way is essential.
Mr Strong also added “the ACTU has stated they would expect any employer who focuses on training for those on JobKeeper to pay full wages not the JobKeeper wage. Such a suggestion demonstrates a disconnection with the reality will all face as a result of this crisis and is a blatant disregard for the mental health and well-being of employees and workers. Mental health must come ahead of industrial ideology.”
A copy of the Communique from the COSBOA round table is copied into this release:
7 April 2020
COSBOA Communique
Keeping employers and employees connected
BACKGROUND
The recent announcement of the Australian Government’s $130B JobKeeper package is warmly welcomed by COSBOA, noting that the objective of this package is principally to keep employees connected to their employer during the course of the COVID-19 Crisis.
COSBOA notes that the announcement made by the Prime Minister and the Treasurer is effectively a statement of intent, with the detail to be worked out prior to the legislation being presented to the Australian Parliament on Wednesday 8 April 2020.
The issues on the operation of this measure are significant and were the focus of national roundtable of COSBOA Members (and other stakeholders) held on Friday, 3 April 2020. The round table was addressed by the Federal Small Business Minister and Training, the Hon. Senator Michaelia Cash, who provided information on the government’s approach to workforce training during the crisis and responded to questions about the JobKeeper announcement.
Four key themes were discussed by roundtable participants as outlined below.
Key Themes
- Managing the cash gap. Participants noted that the JobKeeper package requires businesses to pay employees in advance. Given there is a natural uncertainty about making payments before JobKeeper becomes law, stakeholders highlighted challenges for small and medium businesses on managing the cash gap between payment of April wages and receipt of the JobKeeper subsidy in the first week of May 2020.
Another key issue included the increase in the total wages bill for employers. Even though the JobKeeper payments will be reimbursed by the ATO it will have unintended cost impacts. Many businesses with casuals will see their payroll bill increase as the casual employee will often receive a much higher wage under JobSeeker than they would normally be paid. This may, and will, increase the liability for payroll tax and workers compensation premiums. The Australian Retail Association, for example, reported that the large number of casuals employed in retail is estimated to increase fortnightly payroll by 40% during April compared with pre-March 2020 fortnightly payroll, and similar figures were reported for fuel retail.
- Redressing IR Uncertainty. Participants noted with concern that the current operation of the Fair Work Act (2009) imposed significant limitations on the ability of businesses participating in the JobKeeper Programme to amend the working hours and work tasks of their employees to meet business and consumer needs, as well as the essential need of maintaining a healthy work environment. Numerous Association representatives reported that their member businesses had received feedback that some employees were unlikely to agree to reasonable changes in these areas. Concern was also expressed about the business risk associated with the use of the current Stand Down Provision in the Fair Work Act (2009). The meeting noted that:
- Recent experiences with changing Awards via the Fair Work Commission (3 Awards in 3 weeks) suggests that the process of making necessary changes to all 122 Modern Awards would likely take a further 2.3 years – to say nothing of the time required to also change more than 11,000 EBA’s.
- Consequently, there is a need for temporary changes to the Fair Work Act to allow employers – whether operating a business that has temporarily closed or is operating at reduced capacity – to reasonably direct staff to reduce working hours and undertake new duties needed to support near term business survival and longer term business vitality (e.g. web marketing, workforce training, stock control).
- There is a need for absolute clarity in respect of the use of the Stand Down Provisions (Section 524) of the Fair Work Act (2009) and this need is demonstrated by the action taken by the Qantas Alliance of Engineering Unions against Qantas for non-payment of sick leave following use of Stand-down provisions last month.
- Failure to address both aspects as part of the JobKeeper package – that is, work flexibility and certainty of stand-down provisions – would create a level of business risk that will likely lead to sub-optimal use of the JobKeeper subsidy.
- The round table participants highlighted that such provisions should provide safeguards against exploitation of employees by unscrupulous employers and exploitation of workplace relations and unfair dismissal processes against employers by vexatious employees.
- Any changes should have end dates linked to the JobKeeper payment.
- Workforce development opportunity. There is a significant opportunity to utilise the national vocational education system to provide employees, operating on reduced hours or on no hours, with new or upgraded skills that will assist both the business and the employees. The roundtable noted advice from the Minister that a meeting of State/Territory Skills meetings was focused on this as a matter of urgency. Outcomes could be achieved through the development of ‘micro credentials’ as well as utilisation of the Australian Industry Skills Committee (AISC) Framework. The roundtable applauded this work and resolved that:
- This work should seek to utilise the existing Vocational Skills Framework by re-tasking SSO’s under the direction of the AISC, and leverage the Industry Reference Committee structures that exist for industry communication
- This work should seek to engage and support private training enterprises, public training bodies (e.g. TAFE’s), and Enterprise Training Organisations
- That consideration be given to a training “voucher system” to employers to encourage their employees into training programs relevant to their occupation.
- Supporting employers supporting employees. During the period of the crisis, many small businesses will become training environments in their efforts to keep their employees meaningfully engaged. It is therefore essential that business owners are supported in these efforts (in a Train the Trainer manner) and are assisted in managing the emotional well-being of their people. This is best achieved through industry associations and the ASBFEO and other agencies.
1 April 2020
Managing through partial or full business closure
BACKGROUND
The rapid decline of economic activity associated with Australia’s management of the COVID-19 health risk has created significant issues for all Australian businesses – big and small alike. These issues principally relate to how best to financially respond to the rapid downturn or put their business into a ‘hibernation’ state with a view to resuming normal business operations as far as possible - once it is safe to do so.
Given the rapid rate of economic downturn, the Economic Assistance measures announced by the Federal Government and all Australian State/Territory Governments, while welcome, were fast proving inadequate for business survival – as opposed to economic stimulus.
It is clear, however, that the Australian Government’s announcement of the Job Keeper measure fills one of the last remaining gaps in a business survival plan – with business rents still to be resolved.
The Job Keeper announcement means that Australia’s small business owners now have all the tools that they need to put their business into hibernation during the downturn, stay connected with their staff through the crisis, and develop a plan for how to recommence their operations once the health crisis is over.
KEY MESSAGES
COSBOA held a roundtable meeting with its members on 27 March 2020 to discuss the impact of COVID-19 on Australian small business. The meeting received an opening address from the Federal Small Business Minister, the Hon. Michaelia Cash. The key points arising from this meeting, coupled with subsequent COSBOA member comment on the newly released Job Keeper package, were as follows:
- COSBOA applauds the economic stimulus measures and concessional tax assistance that has been provided by all Australian Governments to small business in recent weeks.
- The speed of the economic decline, while positive in terms of reducing community activity and minimising contagion risk, has occurred at a much faster rate than anyone had anticipated. Within this context, the response of the National Cabinet is to be commended in terms of their agility to addressing unforeseen issues with measures that have been announced.
- The Job Keeper announcement represents the second last piece of the jigsaw puzzle (i.e. wage cost relief) with the issue of rental relief still to be practically resolved by State and Territory Governments. Nonetheless, business owners now have the tools they need to scale down their business to lower demand, put their business into hibernation, journey through the crisis with their employees and reopen as soon as it is safe to do so.
- COSBOA notes that the $130B Job Keeper package (together with the expanded Job Seeker package)- will effectively mean that household capital will be restocked behind the proverbial dam wall, with a view to these funds being released into the economy once the COVID-19 crisis is over – much like opening the floodgates of a dam.
- The Job-Keeper package effectively resolves the issue of stand-down for small business as it provides the foundation for a future defence of inappropriate use of Section 524(1)(c) of the Fair Work Act (2009) while also minimising the economic quantum of any future successful action targeting recovery of lost wages from a business owner who has closed their business (whether it be forced by government or a voluntary decision by the business owner in the face of a vulnerable trading position.
- COSBOA’s Member Associations will now work with their industries and relevant Australian Government agencies to support their members in either scaling down their operations or putting their businesses into hibernation. This work will include promotion of measures that keep staff and customers safe.
- All Business owners should avail themselves of the Job Keeper package as it is important that all Australian households have money to spend in the economy once the crisis is over – quite apart from the moral obligation to their staff.
- For reasons of mental well-being, employers should work cooperatively with their employees on activities that utilise the spare time created by the partial or full closure of their business. These activities might include staff training, business development activities, website and eMarketing, staff personal development activities and business recommencement planning. Full wages should only be paid if employees are being asked to work normal hours in a normal fashion – and the business has the capacity to do so.
31 March 2020
Time to start planning for business resumption
BACKGROUND
The rapid decline of economic activity associated with Australia’s management of the COVID-19 health risk has created significant issues for all Australian businesses – big and small alike. These issues principally relate to how best to financially respond to the rapid downturn, manage a business hibernation state and then resume normal business operations as far as possible, once it is safe to do so.
Given the rapid rate of economic downturn, the Economic Assistance measures announced by the Federal Government and all Australian State/Territory Governments, while welcome, were fast proving inadequate for business survival – as opposed to economic stimulus.
It is clear, however, that the Australian Government’s announcement of the Job Keeper measure fills the last remaining gap.
The Job Keeper announcement means that Australia’s small business owners now have all the tools that they need to put their business into hibernation during the downturn, stay connected with their staff through the crisis, and develop a plan for how to recommence their operations once the health crisis is over.
KEY MESSAGES
The key points arising from this meeting are as follows:
- COSBOA applauds the economic stimulus measures and concessional tax assistance that has been provided by all Australian Governments to small business in recent weeks.
- COSBOA notes that the rate of economic decline, while positive in terms of reducing community activity and minimising contagion risk, has occurred at a much faster rate than anyone had anticipated. Within this context, the response of the National Cabinet is to be commended in terms of their agility to addressing unforeseen issues with measures that have been announced.
- The Job Seeker announcement represents the last piece of the jigsaw puzzle. It provides business owners with all the tools needed to put their business into hibernation, journey through the crisis with their employees and reopen as soon as it is safe to do so.
- COSBOA notes that the $130B Job Keeper package will effectively mean that household capital will be restocked behind the proverbial dam wall, with a view to these funds being released into the economy once the COVID-19 crisis is over – much like opening the floodgates of a dam.
- The job-keeper package effectively resolves the issue of stand-down for small business as it provides the foundation for a future defence of inappropriate use of Section 524(1)(c) of the Fair Work Act (2009) while also minimising the economic quantum of any future successful action targeting recovery of lost wages from a business owner who has shutdown their business (whether it be forced by government or a voluntary decision by the business owner in the face of a vulnerable trading position.
- COSBOA’s Member Associations will now work with their industries and government to support their members in putting their businesses into hibernation and commencing work on business resumption plans so that they are ready to open their business as soon as it is safe to do so
There must be a focus on allowing employers and employees to work together on training, personal development activities and preparing a business for reopening by developing new processes or products - without creating a need to once again pay full wages. Full wages should only be paid if an employee is asked to do work beyond training and development. To not do so places employees and employers mental health at risk as they cannot spend the next 3 or 4 months stuck at home achieving nothing constructive
25 March 2020
Principles for COVID-19 Business Shutdown
BACKGROUND
On Sunday 22 March 2020, various Australian governments made a series of statements about an imminent shutdown. These statements were made in advance of a scheduled meeting of the National Cabinet later that day and reflected a lack of consistency in the approaches of individual states/territories to what is essentially a uniform – health threat to the Australian population.
Many of these statements were broadcast in mainstream media and lit up social media. Small business owners across the country made urgent calls to their industry associations, who were equally caught by surprise and unable to answer their questions about what it meant for them and their employees.
In subsequent days, COSBOA member associations reported that this confusion resulted in businesses closing prematurely and/or suffering avoidable economic loss. These events also prompted a national discussion about which businesses could reasonably be considered “essential services” – for the purposes of being excluded from future economic shutdowns – and which are deemed “non-essential”.
The fallout from these events prompted an emergency meeting of the COSBOA Board which sought to better understand the issues and suggest principles for the future advancement of progressive shutdown measures by the National Cabinet.
Since that meeting, the PM announced a series of additional lockdowns last night (24 March) which appeared to reflect a changed language but have unfortunately created additional confusion about specific businesses impacted by new directions on business closure.
KEY MESSAGES
The key points arising from this meeting are as follows:
- Recent uncoordinated political statements foreshadowing compulsory closure of “non- essential” businesses created extreme concern in the small business community – and caused economic damage and job destruction that could reasonably have been avoided.
- The discussion about whether a business is “essential” or “non-essential” is both confusing and unhelpful. Decisions on business closures should be solely grounded on assessment of contagion risk. Supermarkets, for example, with large numbers of people congregating in their premises constitute a far bigger contagion risk than small businesses which typically have relatively low customer numbers in their workplace at a given point in time.
- Directions requiring closure of specific business types do not appear to have taken due account of the potential knock-on effects for other businesses within relevant supply chains.
- While recognising the independence afforded by Australia’s federation model, state and territory governments have an absolute obligation to ensure that their approach to business closures are nationally consistent in order to minimise differential financial impacts on businesses operating in identical national markets.
- Decisions on exclusion of businesses from closure directions must take due account of competition considerations, particularly in markets like Fast Moving Consumer Goods (FMCG) where business closure decisions will potentially cede additional market power to the large supermarkets – to the detriment of all smaller market participants.
SUGGESTED PRINCIPLES FOR ECONOMIC SHUTDOWN
COSBOA believes that the process of progressive business closures should be advanced in accordance with the following key principles:
- Principle 1: CLEAR COMMUNICATION AND NATIONAL CONSISTENCY: COSBOA notes that the health risk to the population is uniform across the country – it does not vary across state and territory borders. It therefore follows that measures advanced to reduce contagion must be nationally consistent and clearly communicated in terms of the specific scope of businesses impacted, their timing and their nature.
- Principle 2: MEASURES REMAIN PROPORTIONAL TO CONTAGION RISK: Directions on business and workplace closures should be solely based on contagion risk, as opposed to any other measure (e.g. type of business). Ideally, the government should set key Workplace Health Performance Measures (WHPMs) such as social distancing requirements, maximum group size and minimum hygiene practices that are proportional to the contagion risk presented by the business (i.e. customer facing vs non-customer facing and big workplace vs small workplace).
- Principle 3: MINIMISATION OF ADVERSE COMPETITION IMPACTS Any measures that force business closures must take account of the potential short-term and longer-term impacts on market competition (e.g. requiring a suburban bottle shop to close while continuing to allow a supermarket to sell alcohol distorts competition). Similarly, measures aimed at increasing community access to groceries in the face of surge demand from supermarkets must not result in the cannibalisation of supply for non- supermarket outlets (e.g. mixed businesses, newsagents and convenience stores).
- Principle 4: ACCOMMODATE INNOVATIVE BUSINESS RESPONSES: Where businesses can alter their operations to conform with required Workplace Health Protection Measures (as per Principle 2), they should be permitted to continue their operations (e.g. restaurant moving to valet meal pick-up or a pub selling convenience products). Enforcement of compliance with these measures could be managed via the operation of existing workplace safety regulators.
- Principle 5: EMPLOYMENT LAWS MUST PROVIDE FOR BUSINESS HIBERNATION: Australian Employment Law effectively forces SMEs to make staff redundant in the face of the economic downturn caused by COVID -19. This means that businesses that are specifically directed by government to close or cannot reasonably conform with the required Workplace Health Protection Measures must close their doors and sever employment contracts. A better solution would be that businesses facing this situation would be automatically considered eligible for shutdown under the shutdown provisions of the Fair Work Act (2009) which allow employment contracts to be “put on ice” – with staff entitled to the COVID-19 assistance in the meantime – so that their jobs remain in place when Australia emerges from the COVID-19 crisis.