6one5 Retail Consulting Group CEO Bill Rooney discusses key survival tips for businesses.
For retailers other than the lucky ones like supermarkets, fresh food outlets, green grocers and essential services, dwindling store traffic and safety concerns for employees have meant a majority of retailers have or will have to shutter stores and stand down staff to survive.
This article details general practical advice based on discussions with two large retailers and reference to legalisation.
Each retailers’ circumstances will be different and you should seek out your own advice from employment lawyers or your industry association to support your decisions. Please see the end of the article for the various resources available.
Survival Steps
Cashflow
How long can your business survive based on: your current cash flow adjusted for lower sales, current and committed stock levels, negotiated rental and expense deferral and survival wages (normally for eCommerce teams, social media marketing and merchandising)?
This analysis gives you a realistic understanding of how long you can survive and the maximum wage bill and staff numbers you can employ.
Staff Numbers Reduction
The process and order of letting go of employees for most retailers will be based on minimising cash outlays and so the order is typically:
⦁ Casual staff first.
⦁ Part-time and full-time staff during their probationary period normally during the first six months of employment. You will be obliged to give proper notice and pay entitlements such as holiday pay accrued.
⦁ Part-time and full-time staff employed for less than 12 months. You will be obliged to give proper notice and pay entitlements such as holiday pay accrued. Redundancy payments accrue after 12 months employment.
⦁ Contractors: based on the contractor's written agreement you will normally be able to terminate the contract with due notice and no further liability.
⦁ Part-time and full-time staff employed for more than 12 months: You will be obliged to give proper notice and pay entitlements such as holiday pay, long service leave accrued. Redundancy payments normally accrue after 12 months employment.
For details see: https://www.fairwork.gov.au/ending-employment/redundancy/redundancy-pay-and-entitlements#2045-2049
Small business employers don’t have to pay redundancy pay under the Retail Award.
Standing Down Staff
Employers may be able to stand their employees down without pay during the coronavirus outbreak for a number of different reasons. These can include where:
⦁ The business has closed because of an enforceable government direction relating to non-essential services (which means there is no work at all for employees to do even from another location).
⦁ A large proportion of the workforce is in self-quarantine meaning the remaining employees can’t be usefully employed.
⦁ There’s a stoppage of work due to lack of supply for which the employer can’t be held responsible.
Importantly, employees can be stood down without pay under the Fair Work Act if they can’t be usefully employed because of a stoppage of work for any cause for which the employer can’t reasonably be held responsible.
Employers should exercise the option to stand down cautiously, because if they stand down their employees unlawfully, they will likely be able to recover unpaid wages.
Enterprise agreements and employment contracts can have different or extra rules about when an employer can stand down an employee without pay, for example, a requirement to notify or consult.
Employees that are stood down remain employed during the period of the stand down.
Summary
From the chart below you will see that employing staff in a retail environment is complicated. Letting them go or standing them down is no less complex.
Business survival will determine your strategy and is made more difficult because of retails unpredictable future.
