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ASX giants say cutting staff hours will save jobs

Life saver

A body representing the biggest public companies in Australia has welcomed changes to JobKeeper that will allow employers to cut staff working hours.

In normal circumstances, employers are not allowed to reduce hours for full- and part-time employees.

But the COVID-19 relief legislation currently passing through parliament that extends JobKeeper to March would allow this practice.

And even companies that are not struggling enough to receive JobKeeper would be eligible to take such action.

The Business Council of Australia is a lobby group that represents the largest companies in the nation, including ASX-listed Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB), Australia and New Zealand Banking GrpLtd (ASX: ANZ), and Macquarie Group Ltd (ASX: MQG), AGL Energy Limited (ASX: AGL), BHP Group Ltd (ASX: BHP), Coca-Cola Amatil Ltd (ASX: CCL), Coles Group Ltd (ASX: COL), Wesfarmers Ltd (ASX: WES), Telstra Corporation Ltd (ASX: TLS), Scentre Group (ASX: SCG), Qantas Airways Limited (ASX: QAN), and even ASX Ltd (ASX: ASX) itself.

Its chief executive Jennifer Westacott endorsed the “flexibility measures” in the bill.

“This package will save tens of thousands of jobs by giving still struggling businesses who are not eligible for payments room to move, adapt and ramp up quickly,” she said Wednesday.

“Extending temporary flexibility measures will give businesses floored by COVID-19 but not receiving JobKeeper payments a welcome alternative to closing their doors, lay-offs and redundancies.”

How the hours reduction would work

The new rules would allow employees to have their hours cut to a minimum of 60% of what their work hours were before March.

The Coalition government did make one concession to ensure Labor support. Originally any business would’ve been allowed to reduce hours, but now they have to have lost 10% turnover.

The criteria for JobKeeper is a 30% drop in turnover.

The government was forced to backtrack when the current reporting season saw some ASX-listed companies posting profits while receiving JobKeeper welfare.

Premier Investments Limited (ASX: PMV) was one example that had the unions fired up, forecasting earlier this month its full-year EBIT to be up 11% on the previous year.

The company put up the strong numbers after receiving millions of dollars in JobKeeper payments plus refusing to pay rent after the COVID-19 pandemic hit.

The Motley Fool has contacted Australian Council of Trade Unions for comment.

Westacott said the ability to reduce worker hours would help the economy, especially in Victoria.

“The worst form of insecurity is unemployment, so as we emerge we have to pull out all stops to keep people working and create new jobs,” she said.

“Co-operation between unions and employers has saved tens of thousands of jobs, if we move too quickly to return to inflexibility we run the risk that tens of thousands will be lost.”

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Motley Fool contributor Tony Yoo owns shares of Macquarie Group Limited. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited, Premier Investments Limited, and Telstra Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Wesfarmers Limited. The Motley Fool Australia has recommended Scentre Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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