Step 1 Work out if you need to close your small business temporarily or permanently

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You need to ensure you apply the correct employee entitlements during the closure. Your employees may have rights under an agreement or an award. If there is no agreement or award, the Fair Work Act will apply.

The Fair Work Act enables you to stand down an employee without pay if:

1. The business has stopped trading or work because of something for which an employer cannot reasonably be held responsible such as a bushfire; and
2. The employee cannot be usefully employed during that time

Before standing down employees without pay you should consider other options, which could include:

• Asking employees if they wish to use their annual leave entitlements
• Flexible work arrangements, for example, working from home

If you are closing your business permanently, you need to ensure all your employees’ entitlements are paid.

You should get legal advice on your options.

See information from the Fair Work Ombudsman on Employment entitlements during natural disasters and emergencies.

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Step 2 You are still trading but cannot pay your staff

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If your business has been affected by the COVID-19 pandemic then you may be eligible to apply for the JobKeeper Payment of $1500 per fortnight to pay to eligible employees. The eligibility requirements to apply for JobKeeper are that on 1 March 2020 you carried on a business in Australia or were a not for profit organisation that pursued your objectives principally in Australia and:

• You employed at least eligible employee
• your eligible employees are currently employed by your business for the fortnights you claim (including those who are stood down or re-hired)
• Your business has faced a 30% fall in turnover or 15% fall in turnover (for ACNC registered charities other than universities and schools)
• Your business is not ineligible
• For full details and how to apply see JobKeeper Payment

If you are not eligible for the JobKeeper Payment you still have options to consider including:

• Reducing staff
• Negotiating for staff to take leave
• Financing the payroll

You need to be sure that the cash flow difficulties are temporary. Get advice from your accountant.

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Step 3 Keep you staff informed

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Maintaining your relationship with your staff is a critical part of running your business. Keeping them informed is important.

If there is a stand down, employees must be notified in writing whether they will be paid and how this will affect other employee entitlements.

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Step 4 Getting help

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The Fair Work Ombudsman has a range of information for small businesses on managing employees. The information covers information and template letters. It is available here.

There is also information available from employer associations. A list of employer associations can be found here.

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Step 5 Speak to one of our financial counsellors

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IIf your problem still hasn’t been solved, or you’re feeling overwhelmed, call us on 1800 413 828 to speak with one of our small business financial counsellors.

Warning: This is for information only. Do not rely on it as legal advice. It is recommended that you seek specific advice on your own situation.

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