The Impact of Severe Weather Conditions on Business

Last week we experienced extreme weather conditions, the severity of such not seen since June 2007 (Pasha Bulka). The damage and carnage that this has caused is horrendous with the ultimate sadness, loss of life. Our thoughts are with all affected.

Whilst we cannot control the weather conditions, these events allow us to reflect on risk management within business, and what plans we have in place for such “disasters”. It has also raised some interesting questions in regard to what actions business owners may consider in these times.

We summarise below some of the key issues:

1. Employee wages

What happens when it is unsafe or unreasonable for an employee to work because of severe weather conditions?

For some industries there are Awards or enterprise agreements that may cover rules about stopping work and payments due to inclement weather. Many don’t. As a general rule an employer can send employees home if there is no useful work for them to do because of equipment breakdown or natural disaster. This is known as a “stand down” and can only happen if the circumstances were beyond the employer’s control.

An employee is not paid during a stand down period. However, employers may be flexible, and consider what options will allow an employee to be paid. The employer can consider letting employees take a period of paid leave (such as annual leave or a roster day). Alternatively, there may be options where the employee could work at a different location, such as from home or another worksite.

2. Business interruption insurance

For those businesses that have been forced to cease operations during these times, we recommend you investigate as to whether you have business interruption insurance. Effectively this insurance may allow coverage for the loss of gross profit to provide recovery of overhead expenditure. We recommend you consult your insurance broker in this respect.

3. Insurance claims

There will be many claims for damage to buildings and contents. There are technical matters that need to be considered in respect to insurance policies, and these may include such things as whether the damage was caused by storm or flood, and whether a natural disaster has been declared.

Again we recommend there should be consultation with your insurance broker to determine the coverage that you may have. We suggest you take photos of damage and retrieve receipts or evidence of expenditure incurred on damaged property and contents.

025664-storm.jpg4. Disaster recovery plan

This is an ideal time to consider the impact that this severe weather has had on your business and also consider what the worst case scenario could have been?

Consideration may be given as to whether the business technological equipment and hardware were protected? Was there a backup taken of information on the computer system? How are we storing our records that are required to be maintained in accordance with statutory limits, and were they safe?

We can assist further with the development of a Disaster Recovery Plan if you like.

If you wish to discuss any of these matters further, please be in direct contact with us.

Enter your Maxim Accounting and Business Advisors username.
Enter the password that accompanies your username.
To prevent automated spam submissions leave this field empty.