COVID-19 Update

Given the uncertain and challenging times we are facing, it is important for all businesses to plan and respond to these challenges effectively.

We have put together some resources and advice below that may help you formulate your own strategies.

PRACTICAL EMPLOYEE CONSIDERATIONS

  • Be clear on management roles and responsibilities
    • Identify and agree which key staff will lead your response efforts, each supported by an alternative/back-up.
    • Create a team or manager responsible for coordinating prevention efforts and communicating updates.
  • Agree your business priorities
    • Determine whether your employee’s safety and well-being is more important than servicing your customers.
    • Consider whether operating without typical resources would jeopardise quality and safety or create unintended consequences which are worse in the long term.
  • Provide clear communication to employees
    • Agree and communicate the business position on:
      • how staff are to communicate regarding their situation
      • whether quarantine is recommended or imposed in certain circumstances
      • whether ‘working from home’ will be considered
      • how parents are to plan their work commitments around children that may not be going to school
    • It is important that your business messaging is clear, consistent and current
  • Respond to employee fears of infection appropriately
    • Many employees may be scared to come to work or use public transportation during this time for fear of infection.
    • Its important to respond to your employee’s fears with empathy.
    • Employees are only entitled to refuse to come to work if they believe that they are in imminent danger.
  • Respond quickly if an employee appears sick or presents other identified risk factors
    • Do your research and understand the symptoms and guidelines recommended by health organisations.
    • If an employee has tested positive for coronavirus, or is suspected to have coronavirus, employers should require that all employees who have been in contact with that employee self-quarantine for a 14-day period.
    • Employers should inform fellow employees of their possible exposure to the coronavirus in the workplace but maintain confidentiality.
  • Perform routine environmental cleaning
    • Routinely clean all frequently touched surfaces in the workplace such as workstations, countertops and doorknobs
  • Prepare to implement a ‘working from home’ policy
    • According to health officials, one of the most effective ways to combat the spread of the coronavirus is to reduce the frequency, proximity and duration of contact between people.
    • Consider implementing a policy for employees to effectively “work from home” to minimise their risk of exposure from public transport, crowded situations and being exposed to people in offices.
    • This may involve providing employees with the technological resources to be able to perform their work from home including laptops, tablets, remove logins, cloud based software, secure logins etc.
    • If employees can or must use personal electronic devices, consider whether any additional measures should be taken to safeguard the business property and confidential information
  • Consider virtual team meetings or conference calls
    • Reduce face to face meetings where possible.
    • Utilise technology to keep your team connected and to enable your business to continue.
    • Technology resources such as Zoom, Skype, Google Hangouts, Office Teams, Asana, Slack etc. should be assessed and implemented as soon as possible.
  • Prepare for minimum staffing levels
    • Staff shortages may be the primary challenge to maintaining business operations during this period.
    • You should assess the minimum staffing levels required for each department to sustain necessary business functions and operations.
    • Identify employees who have been cross-trained, or can most easily be trained now, to fill in for those functions.
    • You may consider splitting employees into groups and have the groups rotate between working remotely and working in the office to reduce the number of employees that will be impacted.
  • Consider your business travel requirements
    • Assess whether your business should place a temporary ban on planned travel and the business consequences this may have.
    • Consider your business’s position and policy regarding employees that have recently travelled inter-state and international.
    • Ensure appropriate health checks or quarantine processes are implemented. Or of 15 March 2020, the Australian government has imposed a 14 day self-quarantine for all travellers.
  • Consider requiring employees to inform you of any travel for personal reasons
    • Request your employees to communicate their travel requirements
    • Employees that have recently returned or who are planning travel in the shot-term should be consulted so you are aware of where they have been and where they plan to travel.
  • Consider your employees that are on migrant visas
    • Review employee visa compliance and validity periods and speak to your employees that are required to leave the country in the short term.
  • Develop a HR action plan
    • Develop a policy around how employees can utilise their personal and annual leave entitlements should they chose or be required to stay home.
    • If employees can work from home, consider how to monitor their work hours and whether their work hours should be reduced.

 

FINANCIAL CONSIDERATIONS

  • Cash is king       
    • Cash will be the most valuable resource because a widespread economic downturn is imminent, access to debt will be limited and contingency plans will need to be implemented swiftly.
    • Consider your cash resources and how many weeks your business may survive on those cash resources.
    • Consider how much cash you need to reserve to pay out your employee termination payments and leave entitlements should you need to reduce your workforce.
    • If you have investments in term deposits, speak to your financial institution to see whether you can access the cash early with minimal penalties.
    • Update your cashflow forecast immediately and consider worse case scenarios.
  • Understand your supply chain
    • Consider your supply chain and procurement constraints and how they may have an impact on your ability to continue operating.
    • Look at alternative supply chain options.
  • Update your business financial projections
    • Consider your break-even point (the point at which you start to loose money by staying open).
    • Consider how quickly you may run out of cash and what resources you have available (i.e. assets to sell).
    • If you have investments in stocks, bonds or funds, consider how a drop in values, dividends and other returns will have on your business projections.
  • Have timely financial reporting
    • Ensure you know how your business is performing in real time so you can make timely decisions.
    • Understand your margins and if you are trading at a loss, know when to halt or stop operating.
  • Review your accounts receivable
    • Assess which customers are at risk of failing to pay.
    • Reach out to your customers and offer discounts for early payment or payment plans.
  • Review your accounts payable
    • Review your accounts payable and assess which payments you can defer.
    • Prioritise your accounts payable immediately.
    • Engage in discussion with your suppliers to push out payments or renegotiate payment terms.
  • Determine your employee termination and leave entitlements
    • Tabulate all employee entitlements and the monetary values so you know how much cash you will need to reduce your workforce.
    • Termination entitlements will depend on your State or Federal employment regulations, how long the employee has been employed and their age.
    • Review your HR system to determine exactly how many hours of sick leave and annual leave each employee has available.
    • Annual leave entitlements are payable upon an employee’s termination so ensure you know how much will be payable.
    • Long service leave entitlements may also be owing to employees especially if they have been working for more than 7 continuous years.
  • Review your fixed costs and slash overheads
    • Your business will have regular fixed costs that you will need to pay regardless of whether your business is trading.
    • For example: rent, utilities, insurance, software subscriptions, interest etc.
    • Make a list of all your fixed costs and make a plan to try and reduce them as soon as possible. This may involve engaging in negotiations with your landlord, bank, financier, insurer etc.
    • Remove all discretionary spend and communicate this to your employees.
  • Review your contracts
    • If you have long term contracts in place, review them for termination and break clauses.
    • If you believe you will struggle to meet your contractual obligations, engage in discussions immediately to mitigate the consequences.
  • Sell dormant and economically unviable assets
    • Don’t hold onto assets that are not generating income or do not add any value to your business.
    • Sell assets as soon as possible to recover cash that can be used to sustain your business in such times of need.
  • Review your insurance coverage
    • Does your business insurance cover you for loss of profits. Refer to your insurance policies so you are clear on what you can and can’t claim.
    • Reduce your coverage is possible to reduce your premiums.
  • Communicate with all key stakeholders
    • If coronavirus is affecting or threatens to affect the goods or services you deliver to customers, it is important to let them know as soon as possible about potential delays and manage their expectations.
    • Renegotiate payment terms or enter into payment plans.
  • Be aware of fraud
    • When your attention is elsewhere, it is easy to become susceptible to fraudulent activity. Remind and educate your staff about fraudulent activity and scams.
  • Prepare a strategic impact assessment plan
    • Consider the following broad areas of concern, the impact, stakeholders, action plan and accountability:
      • People and community: staff, customers, suppliers
      • Reputational damage: internal, product, staff
      • Financial loss: customers, insurance, finance
      • Legal and compliance: compliance, litigation, mandatory reporting
      • Operations and strategy: operations, customers, supply chain, viability

 

ECONOMIC STIMULUS PACKAGE

Please refer below for a breakdown of the Australian economic stimulus package announced this week:

  • Instant Asset Write-off increased from $30k to $150k
    • You can claim the cost of assets costing up to $150,000 for new or second-hand assets first used, or installed ready for use between 12 March 2020 and 30 June 2020.
    • The threshold will revert to $1,000 for small businesses (turnover less than $10 million) from 1 July 2020, however businesses not entitled to the instant asset write off from 1 July 2020 may be entitled to the 50% investment incentive as below.
    • Do not purchase assets unless your business critically needs them to operate.
  • Business investment incentive 
    • Businesses will be able to deduct 50% of the cost of an eligible asset upon installation, provided it was acquired after 12 March 2020 and first used or installed by 30 June 2021.
    • There is no asset value threshold for this 50% investment incentive.
    • Existing depreciation rules applying to the balance of the asset’s cost.                                                     
  • 50% of PAYGW credit/refund up to $25k
    • Businesses that employ staff can claim up to $25k back on their activity statements for 50% of the Pay As You Go Withheld from wages between 1 January 2020 to 30 June 2020.
    • The amount will be credited to the business’s ATO integrated account and where the business is in a refund position, the ATO will refund the amount within 14 days.
    • Quarterly lodgers will be able to claim the amount for the quarters ending March 2020 and June 2020
    • Monthly lodgers will be able to claim the amount for the lodgement months of March to June 2020 inclusive.
  • Supporting apprentices and trainees
    • Eligible small business employers will be able to apply for a wage subsidy of 50% of the apprentice’s or trainee’s (in training as at 1 March 2020) wage for up to 9 months from 1 January to 30 September 2020, up to $21,000 per apprentice. Employers can register for the subsidy from early April 2020 with final claims for payment due by 31 December 2020.
  • Stimulus payments
    • A one-off $750 payment will be available from 31 March 2020 to social security, veteran and other income support recipients and eligible concession cardholders including pensioners. There will be one payment per eligible recipient.
  • Assistance for severely affected regions
    • The Government has set aside $1 billion to support those regions and communities that have been disproportionately affected by the economic impacts of COVID-19, including those heavily reliant on industries such as tourism, agriculture and education.
  • 4 month ATO payment deferral
    • Business may defer by up to 4 months, the payment of tax amounts due through the BAS (including PAYG instalments), income tax assessments, FBT assessments and excise.
  • Monthly GST reporting
    • The ATO may allow affected businesses on a quarterly reporting cycle to opt into monthly GST reporting to get quicker access to any GST refunds.
  • Vary PAYG instalments to nil
    • Affected business may vary PAYG instalment amounts to nil for the April 2020 quarter.
    • Businesses that vary their PAYG instalments to nil can also claim a refund for any instalments made for the September 2019 and December 2019 quarters.
  • Remission of interest and penalties
    • The ATO may remit any interest and penalties incurred on or after 23 January 2020 that have been applied to tax liabilities.
  • Low-interest payment plans
    • The ATO may also allow affected businesses to enter into low-interest payment plans for their existing and ongoing tax liabilities.

 

Some things to note regarding the above economic stimulus package:

  • The ATO assistance is not automatic, taxpayers must first contact the ATO to request assistance, and if eligible, the ATO will ‘tailor the assistance package for the relevant taxpayer.
  • Legislation to give effect to the measures will need to be passed through parliament and parliament will resume on 23 March 2020.

 

RESOURCES

CCIWA 

We’ve launched our COVID-19 response micro-site to help, giving you the tools you need to manage your staff and reinforce your business against uncertainty.

CCIWA is supplying resources and useful documents like:

 
The SBDC and the Federal Government have released some valuable information for small businesses and employer obligations, 
SBDC
Business.Gov.Au
 

Department of Health - https://www.health.gov.au/health-topics/novel-coronavirus-2019-ncov

https://www.health.gov.au/resources/publications/coronavirus-covid-19-information-for-employers

 

Safe Work Australia - https://www.safeworkaustralia.gov.au/doc/coronavirus-covid-19-advice-pcbus

 

WorkSafe WA - http://www.commerce.wa.gov.au/WorkSafe/

 

Smart Traveller - https://www.smartraveller.gov.au/news-and-updates/coronavirus-covid-19

 

Coronavirus and Australian workplace laws - https://www.fairwork.gov.au/about-us/news-and-media-releases/website-news/coronavirus-and-australian-workplace-laws

 

ATO - https://www.ato.gov.au/Individuals/Dealing-with-disasters/In-detail/Specific-disasters/COVID-19/

https://www.ato.gov.au/General/New-legislation/The-Australian-Government-s-Economic-Response-to-Coronavirus/

 

Small Business Development Corp - https://www.smallbusiness.wa.gov.au/blog/preparing-your-business-against-coronavirus

 

Please remember that we are here to help and please reach out if you have any questions or concerns. We may not have all the answers but we can provide you with guidance and resources to assist you to navigate these challenging times.