Its been a week like no other. We saw a big relief package announced by the Federal Government, announcements by the banks, state Governments and now further reforms coming through the Fair Work Commission on Award changes to hospitality Awards and the Clerks Award. With talk of a third relief package on its way, here is a wrap up for the end of the week.
We highlight the latest round of initiatives and legal issues below, with links to further references (starting with the most recent developments). Other states’ developments are listed at the end.
1. UPDATE: Employee Relations - Fair Work Ombudsman guidance and changes to Awards
The theme for a lot of clients has been managing their staff and teams. We have been speaking to many about utilising the Stand Down mechanism under section 524 of the Fair Work Act, implementation of redundancies and how we can look at other creative options in retaining staff and managing the payroll runway.
As a quick update:
The Clerks-Private Sector 2020 Award is due to be amended on 27 March 2020 introducing a new Schedule I - Award Flexibility during the COVID-19 Pandemic. Its aim is “preserving the ongoing viability of business and preserving jobs during VOVID-19...”. The DRAFT changes include employees performing all duties within skill and competency regardless of classification; adjusting the minimum shift down to 2 hours for part/time and casual employees working from home; adjusting Ordinary Hours of Work for employees working from home to spread between 6am and 11pm (weekdays) and 7am to 12.30pm (Saturday); agreed reduction in ordinary hours of work (at least 75% of F/T and P/T employees required; taking extra annual leave at reduced rates; reducing notice period an employer gives employees of annual leave for a close down to 1 week. The Fair Work Commission is hearing this application today.
The Hospitality Industry (General) Award 2010 was amended urgently by the Fair Work Commission (see decision here) on 25 March 2020 to introduce measures accommodating the restrictions to access of licensed premises issued by the Federal Government on 23 March.
NSW Parliament passed a bill (linked here) amending:
the Long Service Leave Act 1955 to permit employers and employees to agree to an employee taking long service leave before the the worker becomes entitled to the long service leave period in periods of less than one month and permits an employer to give less than one month’s notice of when LSL is to be given and taken. Explanatory note is here.
the Payroll Tax Act 2007 increasing the amount for payroll tax liability for the financial year commencing 1 July 2020 and subsequent years to $1million and providing that an employer is only required to pay 75% of the payroll tax on wages for the financial year commencing on 1 July 2019 if all Australian wages paid or payable are $10mil or less. An employer who is part of a group is not eligible for this discount if the Chief Commissioner has been given information re other employers in the group and the amount of taxable wages and interstate wages paid or payable.
Also in NSW, certain fees and charges for small businesses including bars, cafes, restaurants and tradies will be waived (yet to be specified).
The Fair Work Ombudsman is issuing regular updates and guidance on their dedicated webpage found here. The IR Minister Christian Porter has also announced an additional $24million in funding to the Fair Work Commission to improve resourcing during this time. For employers considering restructuring their teams, standing down employees and redundancies, consider this material carefully and take your time to ensure all options are considered. There is little room for error and it is important to get it right.
2. Government’s 2nd relief package announced 22 March 2020
(a) Relief for directors from personal liability for insolvent trading: Businesses are being strongly encouraged by the Government to trade through this crisis - for the next six months, directors are temporarily relieved of their duty to prevent insolvent trading when debts are incurred in the ordinary course of business. This means that during the relief period, directors can cause a company to incur debt in the normal course of its business (for example an increase in overdraft facilities to help with operating expenditure) to support trading even if solvency is compromised, without fear of personal liability for breach of directors’ duty. The debt still needs to be repaid in accordance with its terms and dishonest or fraudulent trading (including phoenix activities) will remain subject to existing penalties. It’s not a carte-blanch immunity but it is encouraging business to keep going. The immunity applies:
for a debt incurred in the ordinary course of the company’s business;
the debt is incurred for the six month period for the date the new law commences or as extended; and
the debt has been incurred before any appointment of an administrator or liquidator during the immunity period.
(b) Statutory demands: The threshold to issue a statutory demand against a company for an outstanding unpaid debt has been increased from $2,000 to $20,000 and the time for a company to respond has been extended from 21 days to 6 months. Statutory demands are the most common pathway to liquidation, and this relaxation of the statutory requirements is intended to give companies more time to manage solvency. Similar changes apply to personal solvency under the Bankruptcy Act 1966 where the threshold for bankruptcy proceedings will increase from $5,000 to $20,000. In both cases, this temporary relief will apply for six months. Refer to the Government’s fact sheet here.
You can still chase aged debtors and pursue recovery of outstanding debts through the courts, but your ability to enforce a debt beyond obtaining a judgment will, in the short term, be subject to the expanded statutory demand regime described above.
(c) Statutory flexibility: ASIC now has a new power to offer relief from certain Corporations Act requirements, or can agree to take “no action”, if a company makes a formal request to ASIC. While this will provide some relief from certain statutory obligations, be wary of potential exposure to other stakeholders, particularly creditors and shareholders. Talk to us if you would like more advice on utilising this option.
(d) AGMs: ASIC will allow companies with a 31 December balance date to defer their AGM for 2 months. This means that such companies which would otherwise need to hold an AGM by 31 May will have an additional 2 months in which to hold their AGM. ASIC will take “no action” for such deferred meetings. The relief is for a very short 2 month period subject to ongoing review. Further, ASIC has offered some support for the use of technology to allow virtual or hybrid (part virtual part in-person) meetings but it’s support is limited to ASIC taking “no action”. This means relief from ASIC regulatory action only. Companies still need to check their constitutions and consider their obligations and exposure to shareholders under the Corporations Act. Refer ASIC’s statement here . You might also consider proactively promoting voting by proxy (where constitutions permit) to reduce in-person attendance at AGMs and general meetings, also consider use of technology mechanisms within the company constitution.
(e) Cashflow relief: Short term ATO changes enabling small and medium sized businesses to immediately write off certain assets will raise from $30,000 to $150,000. This will apply to business with up to $500m turnover and will reduce tax liability for eligible businesses and encourage spending. The increased threshold applies on a per asset basis for new or second hand assets first used or installed during the short period from 22 March 2020 and 30 June 2020. For more information contact your tax adviser and refer to the Government’s fact sheet here.
(f) Employer cashflow support: As widely reported in the media, the Government has further enhanced it’s cash payments for small and medium sized businesses and not for profits with substantial cash payments available to support employee wages. The changes and processes for obtaining such payments are set out in the attached fact sheet here.
(g) Supporting Apprentices and trainees: The Government has also announced wage relief of up to $7,000 per quarter per trainee/apprentice to help businesses retain apprentices and trainees from 1 January 2020 to 30 September 2020. Refer page 5 of the fact sheet above.
Keep a watch on the Government’s new Coronavirus Business Liaison Unit website which is at: https://treasury.gov.au/policy-topics/business-and-industry/coronavirus-business-liaison-unit.
3. What the other states are doing?
Australian Capital Territory
Six-month waiver of payroll tax for the hospitality, creative arts and entertainment industries, from March to August 2020.
Businesses with wages of up to $10 million can defer their 2020/21 payroll tax until 1 July 2022 (interest-free).
Twelve-month waiver for licensed venues of food business registration and on-licence liquor licensing fees from 1 April 2020. There will also be a waiver of outdoor dining fees for 2020/21.
Owners of small businesses with annual electricity usage below 100 megawatts will receive a rebate of $750.
See ACT Treasury link for more information https://apps.treasury.act.gov.au/budget/covid-19-economic-survival-package/local-business-and-industry (Australian Capital Territory Treasury).
Queensland
Businesses with annual payrolls of up to $6.5 million will be eligible for a two-month refund of payroll tax, a three-month payroll tax holiday, and for the rest of 2020, deferral of all payroll tax payments.
Businesses with annual payrolls over $6.5 million, if directly or indirectly affected by COVID-19, will be eligible for a two-month refund of payroll tax, and for the rest of 2020, deferral of all payroll tax payments.
A loan facility of at least $500 million will be instituted to support impacted businesses to retain employees and maintain operations. The loan facility will comprise low interest loans of up to $250,000, with an initial twelve-month interest free period.
An automatic $500 electricity bill rebate for all small and medium sized businesses that consume less then 100,000 kilowatt hours.
Waiver of liquor licensing fees for businesses affected by enforced closures.
See the following links for further information:
https://www.business.qld.gov.au/__data/assets/pdf_file/0024/290715/coronavirus-covid-19-business-support.pdf (Queensland Government - ‘Business Queensland’).
https://www.treasury.qld.gov.au/programs-and-policies/covid19-package/ (Queensland Treasury).
South Australia
Public servants with a family member who has lost their job and moved onto Commonwealth benefits can receive any accrued leave, to a limit of two retained weeks.
Six-month waiver of payroll tax for businesses with an annual payroll of up to $4 million.
Employers with an annual payroll over $4 million will be able to defer payroll tax payments for six months if significant impacts on cash flow can be demonstrated.
Waiver of 2020/21 liquor licensing fees for hotels, restaurants, cafes and clubs forced to close.
Further details see link: https://www.premier.sa.gov.au/news/media-releases/news/$1-billion-stimulus-package-to-save-sa-jobs,-businesses (Premier of South Australia).
Tasmania
$20 million in loans will be made available to businesses in the hospitality, tourism, seafood production and export industries with an annual turnover of less than $5 million (small businesses).
Loans will be offered interest-free for a period of three years.
A waiver of payroll tax liabilities will be available to small businesses in the hospitality, tourism and seafood industries, for the rest of the 2019/20 financial year.
Small businesses in other industries can also apply for a payroll tax waiver. Eligibility will depend on how significantly business has been impacted.
A new grants program for small businesses in the tourism, hospitality, construction and manufacturing industries will offer up to $5,000 for the hire an apprentice or trainee.
See further information at Page 3 of http://www.premier.tas.gov.au/documents/FACT_SHEETS_-_STIMULUS_PACKAGES_Final-V2.0.pdf (Tasmanian Government).
Victoria
Full refund of any payroll tax already paid for the 2019/20 financial year for businesses with a payroll of less than $3 million. These payments were set to begin this week.
Small and medium businesses may defer payroll tax payments for the first three months of the 2020/21 financial year. Payment will be due in January 2021.
Rent relief for commercial tenants of government buildings.
Waiver of liquor licensing fees for 2020.
Source: https://www.business.vic.gov.au/__data/assets/pdf_file/0005/1888997/Economic-Survival-Program-Fact-Sheet.pdf (Victorian Government – ‘Business Victoria’).
Western Australia
Any small business (one with a payroll between $1 million and $4 million) that pays payroll tax will receive a one-off grant of $17,500. Grants will be automatic and are expected be distributed from July 2020.
Businesses that pay less than $7.5 million in taxable wages each year may defer their payroll tax payment to 21 July 2020.
A planned change to the payroll tax exemption threshold has been brought forward. The increase to the threshold from $950,000 to $1 million, originally scheduled for January 2021, will now take effect on 1 July 2020.
Refer to WA Govt site for further details: https://www.mediastatements.wa.gov.au/Pages/McGowan/2020/03/COVID-19-economic-response-Relief-for-businesses-and-households.aspx (Government of Western Australia).
We will provide updates to this page as best we can and as developments arise. Will also open up comments on the blog below and will do our best to answer questions.
Best regards and stay safe
Amy Carr and the team at Inside Eagles