Like any tool or opportunity, 3D HR Legal director Jo Alilovic said, law firms must consider whether or not JobKeeper payments will be useful for the business before deciding whether or not the business is eligible.

“Let’s be clear. If your staff are still working and being paid $1,500 (or close to) each fortnight, then it is likely going to be worthwhile, as the government is effectively subsidising a good portion of your wage bill,” she said.

“[But], if some of your staff aren’t working, or only a limited amount, then you need to weigh up the pros and cons.”

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Pros

The scheme can offer a financial and business boost, Ms Alilovic said.

“If your employees are working, then your wage bill is being subsidised by the government. Can you work out a way to make use of your employees’ abilities during this downturn? If so, you can set your business up for the future when things return more to normal,” she said.

“For example, can you ask your employees to create/procedure manuals, do social media or other marketing activities, etc? Ask them to do all of those tasks you’ve been putting off for ‘one day’, and the government will foot the bill,” she said.

It can help you maintain connection to staff, she continued.

“The Prime Minister has stated that the reason behind these payments is to enable employees to stay employed and connected to their employers. Others might say it’s just to ease the pressure on Centrelink,” Ms Alilovic noted.

“Whatever your belief – the fact is by keeping your employees employed, you will be ready to go as quickly as possible when work and life restrictions are lifted. You don't want to be caught out having to find, hire and train new staff when the economy gets moving again.”

Utilising the scheme could help breed goodwill and long-term culture within the firm, Ms Alilovic continued.

“Unlike the employees mentioned above who are feeling a bit entitled, there are many others who will be grateful that you have taken on the admin burden. There are definitely those who, if they don’t get JobKeeper payments, and their employment is terminated, won’t get anything at all – and they know it!” she said.

“Also – those who normally earn less than $1,500 a fortnight will get a financial boost under the JobKeeper payment scheme. Understanding this, these employees will feel grateful and more loyal to you.”

Finally, it could burnish your reputation, Ms Alilovic added.

“By doing everything you can as an employer to keep people employed, you can cement your reputation as an employer of choice. As most law firms know – this is always good marketing material for attracting new clients and staff,” she said.

Cons

On the other hand, she continued, there could be a big administrative burden, Ms Alilovic ceded.

“This scheme is not easy to get your head around. You can read the experts debating about different sections of rules and legislation daily on LinkedIn. There are forms to complete, records to keep, and the mental load of making sure you comply with all ATO requirements,” she explained.

“As lawyers we are particularly aware of the risks of non-compliance – back payment, potential penalties from the ATO or FWC, and business disruption.”

Ms Alilovic went on to say it could add to your financial pressures: “The scheme is a reimbursement scheme. Employers have to first pay an employee $1,500 in the relevant fortnight in order to claim it back in that fortnight. For 10 eligible employees (remembering they are all in) this amounts to $15,000 a fortnight.”

“How will your business do this if cash flow is poor? The government is suggesting you talk to your bank. Others have suggested the employee loan you the money. None of these options are without risk. So, add to that the costs of seeking professional advice to make sure you don’t run afoul of the scheme,” she submitted.

The accruing of employee leave entitlements is another consideration, Ms Alilovic said.

“One of the less than obvious costs to the scheme is the accrual of leave entitlements. If your permanent employees are ‘stood down’ or working a reduced number of hours under a JobKeeper direction, they are still entitled to accrue leave entitlements based on their usual ordinary hours of work,” she said.

“For example, if an employee usually works 38 hours per week and is now only working 20, they will be paid for 20, but accrue leave based on 38. For an employee who is eligible for the entirety of the scheme, the accrual would add up to 2 weeks of annual leave.”

Additionally, there must be consideration given to the impact on productivity, Ms Alilovic added.

“No doubt you’ve heard the rumours about employees who are refusing to work because their JobKeeper scheme payment is their ‘right’. Those rumours are true. Some employees who were stood down, or have been directed to work fewer hours than normal, or to perform different duties, may have a sense of entitlement to receive the $1,500 without working at all,” she said.

“They feel the money is theirs, not for the benefit of their employer. Those who do still work while feeling these sentiments, may have a poor attitude which may result in decreased productivity and negative impact on team culture.”

What is best moving forward?

Business owners in law must remember, Ms Alilovic noted, that if one “doesn’t like the sound” of JobKeeper, or if a determination has been made that it may not be quite right, there are other options available to help keep one’s firm afloat.

“We are already seeing many law firms negotiate cuts in hours of work and salaries to reduce expenses in the short term and prepare for cash flow issues in future. Other options include agreeing for employees to use up leave entitlements or take extended periods of unpaid leave. These are great alternatives to pursuing redundancies,” she said.

“However – survival is not all about cutting staff costs – even though they are often one of the biggest expenses in a law firm. Businesses should also be looking at their other expenses to see where savings can be made. For example, negotiating rent reductions, or cancelling car parking services no longer required while staff are working from home.”

Moreover, now is the time to innovate, Ms Alilovic argued.

“Get back to basics and think about how the firm can best serve its clients. Consider new services and products and methods of delivery. As we know great adversity can create great innovation,” she concluded.

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