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The Smart Alternative to Layoffs

Written by: Marijo McCarthy

Article Overview: The slowing economy has sent many of my clients back to the drawing board to take a sharp pencil to next year's budget. Small businesses run lean and mean most of the time, so there aren't many significant line items available for reduction… until you get to payroll.

The Smart Alternative to Layoffs

The slowing economy has sent many of my clients back to the drawing board to take a sharp pencil to next year's budget. Small businesses run lean and mean most of the time, so there aren't many significant line items available for reduction… until you get to payroll.

Payroll cuts and staff layoffs are never easy, but they're particularly painful for small business owners, most of whom are quite well acquainted with the members of their workforce. Unfortunately, that's often where the cost savings lie.

When this type of action becomes necessary - and in this economic environment, it seems more likely each day - you need to get over whatever hesitation you may have of taking advantage of government programs. Remember, you have paid for these programs with your success over the years and when times get tight you are entitled to use them!

Last month (http://www.widettandmccarthy.com/newsletter/08_10_basics.html), I pointed you in the direction of workforce training money, available to those who have sufficient cash flow to use the slowdown in business to update the skills of their staff.

This month, for those of you who might be forced to consider reducing staff in the coming months, I call your attention to another, even better, benefit. And one which, like workforce training, you have already paid for with your tax dollars.

Its official name is the "Commonwealth of Massachusetts Worksharing Program," (http://tinyurl.com/32f29x) however I call it "The Smart Alternative to Layoffs."

As the state's web site explains:

"WorkSharing allows workers in an entire company, a company department, or even a small unit within the company to share reduced work hours while also collecting unemployment insurance benefits to supplement their reduced wages."

More specifically:

You get to keep your current, trained workforce in place, on the job … for fewer hours.

You get to avoid losing valuable employees in the lean times, ensuring that they are ready and able to go back into full-time work when the economy (inevitably) improves.

You get to implement a plan for your staff which cuts their hours (thereby reducing their pay), but supplements part of your payroll with unemployment and worksharing benefits, an investment you have been making for years and from which you and your employees will now benefit.

Most important, you get to temper the "bad news" with some "good news" when you meet with your employees to report the effects of the recession on your business.

Here's an example of how it works, excerpted from the Worksharing Program section:

- Worker A regularly works 40 hours a week. Her employer is reducing her hours 20 percent. Her average weekly wage was $500.00

- Unemployment insurance (UI) benefit rate: $250 a week

- WorkSharing benefits (20 percent of the UI benefit rate): $50 a week

- Worker A receives 80 percent of her regular wages plus $50 a week in WorkSharing benefits.

- Employee net is $450.00

The application (http://www.mass.gov/Elwd/docs/dua/business/1624_accfill_508.pdf) is simple to fill out.

Remember, if employee layoffs are a possibility at your business, check out this benefit first. There may never be a better time than right now to reap the rewards of your years of tax investment!

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Article Tags: budget, economy, layoffs, payroll, small businesses



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