From pay cuts to job losses: How the industry can, and should, respond to a pandemic

All across the media, marketing and advertising industry, steps are being taken to protect businesses' bottom lines as the COVID-19 crisis rolls on. But what are the legal implications? What do companies owe employees, and what do employees have to say 'yes' to? Mumbrella's Brittney Rigby examines what companies can do, have done, and should be doing to protect both their businesses and teams.

Pay cuts. Reduced hours. Forced leave, paid or unpaid. Standing people down. Redundancies. These are among the measures companies across the industry are implementing, or at the very least looking to implement, as they attempt to weather the severe revenue impacts of the coronavirus pandemic. 

And beyond the bottom line, the broader repercussions of COVID-19 are visually arresting: The charts showing the infection curve shooting steeply uphill should we fail to flatten it. The climbing numbers of those who are sick, those who have died, and those whose incomes have been hit. And the stretching, tightly-packed queues outside Centrelink offices; people cannot afford to worry about social distancing in a clotted line for social security.

Inevitably, employers are turning to legal mechanisms to reduce costs, and salaries are a big, if not the biggest, chunk to shrink. But people are working from home, isolated from colleagues and support networks, which means a lost job or reduced hours will be even more difficult to recover from.

Danny King

As Danny King, leader of the team at employment law firm Danny King Legal, explains, “This is a scary time for everyone, and just because the law says you can do certain things, doesn’t mean you should do them without at least talking to your people.”

Media owners and agencies should be genuinely consulting with their employees, she says, because “you can get a sense from them first about what they are willing to do by agreement”. 

“You can agree to almost anything in the current climate,” King says, assuming that minimum legal obligations under an award or agreement are met. 

“Your staff may well have better ideas than you do – so give them the opportunity to show you what solutions they think may be the key to getting you through the crisis.”

Pay cuts

This morning, WPP AUNZ announced to the ASX it is asking board directors, the CEO and the senior leadership team to voluntarily accept a cut in base salaries, in addition to reducing freelance budgets, limiting new hires, and restricting salary increases.

Radio business Southern Cross Austereo has already introduced pay cuts of 10% for staff who earn above $68,000, if that salary is not award-based.

News Corp executives have also had their salaries slashed in an attempt to weather eroding advertising revenue, despite subscriptions growing by 21%  and its audience almost doubling (up 48%) in the week commencing 16 March.

Mumbrella understands Buzzfeed Australia staff are also facing pay cuts. The direction comes from the company’s US head office and does not involve a set percentage (like, for example, SCA’s 10%), but a scale of percentage cuts based on salary. 

Buzzfeed Australia staff are also facing pay cuts

The industry’s union, the Media Entertainment and Arts Alliance (MEAA), stresses that executives should cut their own salaries before those of junior team members.

“It goes without saying that whenever media proprietors seek to make changes that require some sacrifice from our members, we would expect that executives also make a similar sacrifice to their own salaries before looking to make cost savings at the expense of often overworked and under-resourced newsrooms,” a MEAA spokesperson says.

Taking leave and reducing hours

Many employers are looking to direct employees to use up their paid leave entitlements, including annual leave and long-service leave. Businesses must pay out these entitlements if roles are made redundant, so lowering this liability can be the first port of call. 

Some companies are also exploring the option of reducing employees’ hours, such as converting full-time workers to part-time arrangements, or moving to four-day weeks or nine-day fortnights. 

An agreement to take unpaid leave is similar to a reduction in hours, but more ad hoc.

Ooh Media has asked most staff, including CEO Brendon Cook and other key executives, to take annual leave over Easter after entering into a trading halt earlier this month.

“No-one is being forced to take unpaid leave, and if some people slip into negative leave, they will still be paid. There are no salary cuts either,” an Ooh spokesperson said at the time of the announcement.

WPP has asked staff to voluntarily opt into a nine-day fortnight and four-day week program, and use up their leave balances.

News Corp has also asked staff to move to nine-day fortnights for the rest of the financial year. The 10th day will be taken as annual leave or long service leave, or, if the employee does not have either, unpaid leave.

In King’s view, “there is no such thing as a forced pay cut, or being forced to take leave”, beyond an existing right for a company to ask an employee to take annual leave if there is an “excessive accrual”. 

“Even if, after the cut, the employee will earn more than the minimum applicable under the award or National Minimum Wage Order, to do so will almost certainly be an act of repudiation – which is a breach of contract,” King explains.

This means staff can “say in essence ‘No thanks, I’ll stick with what I’ve already got’, forcing the employer to stick with the original salary, or accept the repudiation bringing the contract to an end in breach of its terms”. 

However, many employees will be willing to agree to measures like pay cuts or requests to take leave in an effort to preserve some level of job security.

Standing employees down

“Where there is no agreement, or things are too dire to keep people on, then the more rigid options of stand down, restructure and redundancy are needed,” King says.

Usually, stand down provisions are “very difficult to apply in standard, non-pandemic contexts”.

“You have to be impacted by forces beyond your control to such a degree that the employee in question has lost their ability to be usefully engaged in the same way,” King explains. 

“Stand downs are ‘all or nothing’. You can’t have a two day a week stand down, and continue standard working arrangements on the remaining three days. It is an entire exclusion from the workplace until conditions improve enough to reinstate that worker into their pre-stand down situation.

“It is heartbreaking, as the employer, to be making the decision to stand down staff.”

Employees who have been stood down are essentially on unpaid leave. They are still employed by the business, and King says employers should take an active role in looking after stood down staff. 

In the context of COVID-19, this could include paying a stipend, negotiating with staff members’ mortgage provider or landlord, providing uninterrupted access to mental health support services like an existing employee assistance program (EAP), releasing employees from contractual restraints of trade, helping them find new work during the stand down, and checking in regularly.

MEAA adds that measures like stand downs should be a last resort, and only come after union consultation.

“MEAA understands the financial pressures that media companies have come under and urge[s] proprietors to talk to the union about ways of managing through this crisis before taking drastic steps, such as standing down staff or shutting down mastheads,” a spokesperson says.

“In many cases, MEAA has enterprise agreements with media companies which include a legal requirement for them to consult with the union before making any major decisions such as stand downs, redundancies, forced leave or cuts to hours or pay. These types of actions should only be the last resort in extreme circumstances.”

In response to the government’s $130bn ‘Jobkeeper’ scheme, which involves eligible businesses receiving a fortnightly wage subsidy of $1,500 per employee, the union is urging companies to re-hire stood down workers.


King “cannot recommend strongly enough that employers follow every step to the letter” when it comes to making roles redundant.

“Now is not the time to cut corners,” she says. 

“The risk of unfair dismissal if you do is enormous, and frankly there is enough going on these days without needing to work through a matter in the [Fair Work] Commission at the same time.”

News Corp has said that job losses are “inevitable”, while CHE Proximity has already made its managing director roles redundant to “protect the jobs of the wider agency as we best manage the changes in our client businesses”.

Business as (un)unusual

Other companies haven’t announced their approaches yet, and were therefore reluctant to comment. Seven, Publicis Groupe, Omnicom Media Group, JC Decaux and QMS declined to comment. Ten and Nova did not respond to a request for comment.

Mumbrella understands The Sydney Morning Herald has stood down some casual workers from its digital desk, with a Nine spokesperson saying the company is “working to both manage our costs and also reduce the impact on our people”.

The ABC and SBS have not experienced changes so far. Additional discretionary leave is being provided to staff required to self-isolate, and all cancelled casual shifts because of self-isolations are being paid.

The Guardian’s casual and contributor budgets have been cut to some extent, while AAP continues to attempt to lock in a buyer and is making ex-gratia payments to redundant employees with less than 12 months of service (meaning they would not otherwise qualify for a redundancy pay-out).

Media companies including AAP, Nine and News Corp have agreed to engage in regular consultation meetings with their teams.

For Australian Radio Network (ARN) CEO Ciaran Davis, the focus is on protecting jobs.

“Although ARN is in a strong position, like all media businesses, our advertising revenue has been significantly impacted so we’ve put in place a number of measures to reduce costs in order to protect jobs,” he explains.

ARN’s chief marketing officer, Anthony Xydis, however, is departing the business by mutual agreement.

ARN’s Davis

IPG Mediabrands is “considering options at present, with the guiding principle being to look after our people”. And Dentsu Aegis Network explains it is “taking things one day at a time” to make “the right decisions for our people and our clients to support the sustainability of our business”.

Ultimately, life feels rickety right now. Carefully-laid projects and business plans and career paths have been hoisted so hard and fast up into the air that it’s impossible to know how far away from their starting positions they will land, should they land at all. 

As King says, empathy is what teams need, regardless of what businesses can legally do.

“It is a scary time for employers as the competing priorities of solvency and employment are forcing a lot of urgent and significant decisions to be made in a state of panic,” she says.

“Focus on the humans, and then apply the law, and you will come out of this as best as is possible in the circumstances.”


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