Steps for the Week

I think Finance Minister Grant Robertson must have had the heads up on my Friday Newsfeed on Director duties. He announced the same afternoon that there will be a law change to allow directors of companies with liquidity problems because of Covid-19 to take advantage of a ‘safe harbour’ from insolvency duties. The change to the law will be retrospective to last Friday. I won’t make any comment until we have seen the actual wording, other than to say getting into further debt just because you won’t be fined for it or go to jail still doesn’t necessarily make it a good idea. There are further details on the proposal below.

Over the weekend I tried not getting wound up, and keep not only my actions kind, but my thoughts too. It was hard work. There is no particular order to this list of annoyances: that some people think this is a free 4 week holiday paid for by their employer and are shocked when they are asked to take a reduction in pay or actually do some work; the notion that employers have bottomless pockets of money and are greedy profiteers; lockdown breakers that don’t get they are part of the reason we could be locked down for longer; that people forget business owners in non-essential services still don’t have time to spring clean the pantry as they are spending all their time trying to save their business and the jobs of their employees; Council of Trade Union president Richard Wagstaff saying “From our point of view people shouldn’t be made to be unemployed right now… They should be talking with their employers and working out how they can maintain their employment using the business support package… We shouldn’t really be seeing a massive growth in unemployment. We should see massive growth on the business support package.” Okay, that last one was the one that really got my goat. It resulted in me hammering in waratahs for a path edge really aggressively on Sunday afternoon, so on the up side I managed to power through that job.

This week most businesses are moving into a new phase. In the last 10 days we did the ‘what the hell, what does this mean, what do I have to do immediately?’. To recap, hopefully you have done most of these things: Completed a cashflow forecast, identified critical decision points, consulted with your staff about hours of work and pay, followed up with the paperwork to get their consent, applied for the wage subsidy (if that works for you), spoken to your business advisor/bank, had a glass of wine, talked to trusted friends, had another wine. Don’t beat yourself up if the only thing on that list you have accomplished is drinking the wine. A normal reaction to stress and anxiety is for our brain to shut down – to go into hibernation. So, if you have been looking at that page of numbers for hours but nothing is going through your brain, or you can’t remember anything that Consultant at Chapman ER said to you the other day, do try to remember that this is normal. We are very happy for you to call us again and for you to repeat whatever questions you have. No embarrassment or apology needed.

As we reach the end of week 2 of the lockdown, we are into the next phase of communication with your employees and some more difficult decisions will need to be made. Most of the changes to hours and pay so far have focused on the first four weeks of lockdown as that was the only ‘known fact’.  In the next few days we are likely to get a strong indication, if not a decision, of whether the lockdown will be extended.

Working on the basis it will be extended: Keep acclimatizing your team to the possibility of a longer lockdown and what that may mean for the business and their jobs. Keep up regular communication. Your employees are not on holiday (unless they are making up their pay by using annual leave). So you can require them to be communicative, engage in virtual meetings, teleconferences and the like. If there is a longer lockdown announced, don’t wait for the end of the 4 weeks before advising employees of what will happen. You will need to consult and get their agreement for any further changes to their hours and pay. Employees are becoming more informed about their right to not agree. If you find yourself in that scenario, there needs to be sufficient time to conduct a redundancy process (proposal, consultation, decision, notice period) if that is a possible outcome of there being no agreement reached.

Alternatively the lockdown is lifted: What does this mean for your business? Will you need all of the staff you currently have? Could there be reduced hours as you expect customer demand to be reduced? Would you want people to do tasks they normally don’t do? Again, if there are changes to an employee’s Employment Agreement they have to be agreed, and if there is no agreement, what are the alternatives.

Just one step at a time.