An employment lawyer is urging business owners to keep staff redundancies as an absolute last resort, warning that the recovery from Covid-19 will be the hardest part of the economic fallout.
Wellington NZ hosted a webinar this morning for the region's hospitality and retail sector, with speakers tuning in via the Zoom application.
Mayor Andy Foster said businesses in the sector were among the worst hit as the city makes its final preparations to go into lockdown tonight.
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He said hospitality businesses were already hurting three weeks ago and now their revenue had completely dried up.
Employment lawyer Barbara Buckett has worked as a barrister and solicitor in New Zealand for more than 35 years.
She told the online seminar it was important to treat redundancy as a last resort and business owners should exhaust all other options before considering it.
"The key is, remain acting in good faith, do your utmost to avoid redundancy, although we know that's going to be unfortunately inevitable in some situations, but look to the Government support, it's there."
Buckett has seen her own business through a recession and the global Sars outbreak.
"The thing that I noticed was recovery was actually the hardest part, so what you need to think about in the long term here is you will buy loyalty if you support your staff."
Restaurant Association of NZ national president Mike Egan reminded those tuned into the seminar not to think of themselves as competitors, but as colleagues.
"One of the things about this crisis is we're all in it together. It's not like a competitor's open and they're going to be taking market share off us, or they can work and we can't work, it's not like there's an electricity cut or you're blocked off by road works."
Business owners should consider the redeployment of staff, Egan said.
For example, if a restaurant had a relationship with a winery, staff could be used to help with the harvesting season, he said.
Egan urged business owners to get in touch with banks with cashflow projections, if they hadn't already.
"I'm pretty sure the banks are understanding and they want customers when all of this is over as well."
Lease costs are usually the second biggest expense for hospitality businesses, after wages.
Egan said landlords should be flexible on rent during the pandemic but it was important for business owners to be open with them and have a plan.
"Landlords are in the same situation as us, they want good tenants when all this is over. There's no point in them dissolving your lease, I think. I'm pretty sure there's going to be no new businesses wanting to open up in the near future."
A fine-tooth comb should be run through the books to cut costs like rubbish collections, direct debits, and electricity to beverage fridges, Egan said.
Essential power, wages and rent should be the only things left, he said.
First Retail managing director Chris Wilkinson warned that after at least four weeks in lockdown, people's wants and needs would change.
He said businesses needed to become more consumer-centric to understand changing values so they could adapt when re-opening.
"It's going to be quite a different landscape when we reopen, it's not going to be like a tap that's turning on again."
Wilkinson suggested businesses use the four-week lockdown productively by working on a business plan, considering different scenarios and improving induction and staff training systems.
He said it was important to let staff settle into their home environments but business owners should keep lines of communication open and be upfront.