After the storm – looking after your employees when natural disasters stop your business
In Australia, natural disasters affect millions of us every year. While it shouldn’t be foremost in anyone’s mind in times of disaster (save that energy for safety and preservation of life as priority 1), it’s a fact – natural disasters impact businesses, and they impact the ability of businesses to support and pay the people who work in them.
Drought occurs about three out of every 10 years in Australia, while heatwaves kill more Australians than any other type of natural disaster. Flooding is historically the costliest disaster, with average losses in Australia estimated at $400 million a year. Natural disasters affect people indiscriminately, but business owners face the extra burden of determining how to manage their business when it can’t operate.
With severe floods recently impacting Northern Queensland, fires in Victoria and Tasmania, heatwaves, and severe sudden storms wreaking havoc, now is the time to understand your rights and obligations as an employer so you can act responsibly, reasonably and supportively to your employees.
Safety is highest priority
During a natural disaster, your first priority is the safety of yourself and your employees. Then look at protecting your business and assets as much as possible.
Your business should have an emergency plan, and that plan should include detail of what you will do in an emergency, and who will do it. Your emergency plan should include checking in with all of your employees and should provide clear instructions for how this is done, and by whom. Additionally, you should provide clear instructions for employees to contact you if they are impacted, including alternative contact information when your office is not accessible.
Keep up to date on what’s happening in your area, including local weather warnings. Check the Bureau of Meteorology, the local radio or television broadcasts. Social media is also a common way to access the latest information during large-scale emergency situations.
After a natural disaster
It can take weeks, months or years to recover from a natural disaster. In the case of the Townsville floods, there was over $124 million dollars’ worth of damage to home and businesses.
During a disaster the primary focus is survival and minimising damage, but after immediate danger has passed, you’ll need to focus on getting your business up and running and paying or standing down your staff.
Government Assistance for Employers
During natural disasters your obligations to the ATO and other government agencies may change also. For example, during the recent North Queensland floods the ATO provided concessions to impacted businesses by postcode (with the option to seek approach them directly if you are impacted outside the target postcodes).
ATO measures can include:
- Automatic fast-tracking of refunds
- Automatic deferral of all income tax, activity statements and FBT lodgements and payments due
- Automatic extensions to single touch payroll deferrals that are due to expire
- Deferral recovery and other actions for debts and overdue lodgements and payments
- The option to change your GST reporting cycle to monthly, to gain quicker access to net amount refunds
- PAYG instalment variations or credit options
For other disasters and ATO measure, check the ATO website.
Fringe Benefits Assistance for Employers
Some emergency assistance you provide to your employees can also be exempt from fringe benefits tax (FBT) during emergencies such as a natural disaster.
Normally, providing your employees or their associates with benefits such as accommodation or transport are considered fringe benefits. However, in emergency situations, providing immediate relief for victims (or potential victims), that you employ is exempt from FBT when the assistance is:
- first aid or other emergency health care
- emergency meals, food supplies, clothing, accommodation, transport or use of household goods
- temporary repairs
- any similar matter.
Emergencies don’t just include natural disasters; these exemptions also apply where your employee has been affected by an accident, serious illness, armed conflicts, civil disturbances or any similar event.
For further information about emergency FBT exemptions, check the ATO website here.
Standing Down Employees
If you are unable to provide your employees work because of a natural disaster, you will probably need to ‘stand down’ employees – send them home and potentially not pay them (although whether you pay your employees or not is at your discretion). You can only stand down an employee for reasons that are beyond your control, i.e. a natural disaster. Employees who have been stood down are able to apply for payment from Centrelink.
Where you are standing down employees, you will have to consult the relevant employment award for those employees (if they have one) – they may have entitlements under their award or agreement that are relevant when an they’re unable to attend work due to an emergency or natural disaster.
Where no award entitlement exists, you can stand down employees in accordance with the Fair Work Act. If you do stand down employees, it’s best practice to tell those employees in writing (where possible):
- the start date of the stand down
- whether the employees will or will not be paid
- the effect on other employment entitlements.
You should also try to update employees about when you believe the stand down will end, as updates are available.
Alternatives to Standing Down Employees
Additionally, you don’t need to stand down employees. Before you stand down employees without pay there are other options you can consider. These can include:
- Inviting employees to take a period of accrued paid leave (for example, annual leave).
- Requiring employees to take annual leave if their award or agreement allows it, or if the employee is award or agreement free.
- If there are multiple worksites and not all sites are affected, consider voluntary work sharing arrangements. For example, employees at non-affected sites may offer to take paid leave while their position is temporarily filled by someone from an affected site.
- Where appropriate, consider flexible arrangements, like working from home.
Any arrangements to alter an employee’s working patterns would need to be made in accordance with the Fair Work Act and any relevant award or agreement.
For more information about your pay rights and obligations during a natural disaster, check the Fair Work site here.