This resource has been updated on 9 April 2020 to include changes introduced by the Government in relation to the JobKeeper payment, as well as by the Fair Work Commission with respect to pandemic leave and taking twice the amount of annual leave on half pay.
Looking at all options to help protect your culture through this pandemic. Read on as we explore your immediate options during COVID-19.
Many Australians are watching the impact of Novel Coronavirus (COVID-19) unfold on all facets of our lives, and the devastating impact has been felt by employees and employers across the Nation. One of our company’s strongest values is to become part of the fabric of each business that we work with, and as a small business ourselves, we understand and appreciate the myriad of concerns that businesses are faced with as the situation evolves. With several industries affected by mandatory shutdowns by the Federal and State Government and potentially more to come, this presents the need to address the options available to employers with respect to their employees at this difficult time.
Broadly speaking, there are a number of highlighted options that employers can consider:
- A stand down of all or part of their workforce
- Redundancy of specific or all positions
- Pandemic leave if required to self-isolate
- Encouragement full-time and part-time employees to take paid leave
- Agreement with employees to vary or alter regular or rostered hours
- Agreed temporary reduction in wages
Stand down provisions are drawn from an applicable enterprise bargaining agreement, contract, or the Fair Work Act 2009 (Cth). Under section 524 of the Fair Work Act, a stand down can occur if the employee cannot be usefully employed due to any number of circumstances including:
- Industrial action (other than industrial action organised or engaged in by the employer);
- A breakdown of machinery or equipment, if the employer cannot reasonably be held responsible for the breakdown; or
- A stoppage of work for any cause for which the employer cannot reasonably be held responsible.
As the outbreak of COVID-19 has affected the day-to-day running of many businesses, an employer looking to engage in a stand down would look to establish that there has been a stoppage of work that is out of their control. For example, a business within an industry that has been required to cease trading by the Federal Government would have solid grounds to issue a stand down. In this case, the employer must be able to show that:
- There is a stoppage of work within the business;
- Their employees that are to be stood down cannot usefully be employed; and
- The cause of the stoppage is not something that the employer can be held reasonably responsible for.
During these unprecedented times, it is critical that businesses understand that Employment Law still applies and following the Fair Work Act and any modern award, enterprise bargaining agreement or contract is a must before taking any action. This includes considering whether all necessary steps have been taken to find other useful employment for affected employees within the business. Right now is the time to open discussions and be transparent with employees about what is possible across the organisation.
If a stand down can be legally implemented, then depending on any relevant industrial instrument, you do not have to pay employees for the period of the stand down. An employee may however choose to utilise their applicable leave (eg. Annual leave and Long Service leave).
The option of imposing a stand down should be exercised with caution and must be considered on its own merits. An employee contracting coronavirus is not a valid scenario in which a stand down can occur. If a stand down is deemed unlawful, then employees can recover any unpaid wages from the business and the business is exposed to potentially further risk. Employees can challenge the decision of a stand down by lodging a dispute with the Fair Work Commission so it is important to comply with all legal obligations before implementing a stand down, as there can be penalties involved for breaches of the Fair Work Act.
A redundancy may be the only option when a particular job is no longer required, and hopefully this is the last resort. It is important to remember that the usual requirements around consultation and consideration of redeployment still apply. Financial obligations also still arise under this option – you may have to pay an employee a redundancy payment, as well as any payment in lieu of notice, unpaid wages and unused leave entitlements.
It is also important to keep in mind the size of your business, as if you are a small business with less than 15 people you may not have to pay any redundancy payments.
The redundancy option is distinctly different to a stand down as by making an employee redundant results in termination of employment, whereas during a stand down an employee is still employed by the business. If at the end of a stand down, you identify a role is no longer required you would still need to follow due process.
PANDEMIC LEAVE IF REQUIRED TO SELF-ISOLATE
The Fair Work Commission has varied 99 modern awards to incorporate provisions allowing employees to take up to two weeks of unpaid pandemic leave. This can be used if an employee is directed by the Government, medical authorities or acting on the advice of a medical professional, to self-isolate, which subsequently hinders their ability to perform or attend work. This inclusion within selected modern awards operates from 8 April 2020 until 30 June 2020, and there are steps to follow so continuing to consult the modern award applicable to your business is critical. A period of leave under these provisions does not affect any other paid or unpaid leave entitlements and is considered ‘service’ for the purposes of the award and the National Employment Standards.
ENCOURAGEMENT TO TAKE LEAVE
To help manage unusually low workloads, financial constraints, and to ultimately help keep team members connected to the business, an amendment by the Fair Work Commission to nearly 100 modern awards now allows employees to take the twice the amount of annual leave on half pay. Any agreement to utilise these provisions must be reduced to writing and kept as an employee record. For example, you may agree to an employee taking two weeks of annual leave on half pay, whereby the payment received is what they would normally get for one week whilst on leave (including any applicable leave loading). In this scenario, only one week is deducted from the employee’s annual leave accrual balance.
In addition to an agreement to take annual leave, there may also be provisions contained in an applicable modern award, enterprise bargaining agreement or contract to allow you to direct an employee to take annual leave – there are usually notice requirements around this so continuing to consult source documents remains key. Where individuals have high levels of annual leave or long service leave applicable to them, they may be more agreeable to utilise leave in these uncertain times.
AGREEMENT TO ALTER OR VARY REGULAR OR ROSTERED HOURS
If the COVID-19 situation has resulted in some economic downturn for your business, but you still require certain jobs to be done, you can consider altering the regular or rostered hours of full-time or part-time employees, subject to their agreement. As hours of work are agreed upon within an employment agreement, you cannot simply vary these without consultation and agreement. You may determine that implementing a 9-day fortnight or reducing all employees by 1 day per week is a viable option. There are different factors to consider for each business, and for each employee, there is no one size fits all approach during these times.
It is possible that an arrangement could include an employee utilising their applicable leave entitlements in lieu of agreeing to a temporary reduction in hours if this suits both parties.
AGREEMENT TO TEMPORARILY REDUCE WAGES
A business may choose to consider a temporary reduction in wages rather than looking at more permanent measures resulting in a total loss of employment. This option does require consultation with the broader group. Changes to an employee’s terms and conditions, regardless of timeframes, must be agreed in writing, as you are not able to unilaterally make changes to someone’s employment conditions. An employment agreement is a legal document and requires care and consideration. Any reduction in wages cannot fall below the applicable modern award or a valid enterprise bargaining agreement.
INCOME SUPPORT FOR INDIVIDUALS
Employees made redundant or that are stood down could be directed to Services Australia (Centrelink) to assess their eligibility for income support. The Jobseeker payment and Youth Allowance Jobseeker payment has been extended (for six months) to be accessible to full-time, part-time, casual, self-employed, sole traders and contract workers who are stood down or lose their employment as a result of declining economic circumstances caused by COVID-19 (this may be subject to the income test in some circumstances). If an employee is being stood down and currently accessing any paid leave, they may not be eligible to receive income support.
JOBKEEPER PAYMENT PROGRAM
The Government has now passed legislation that effectively allows eligible businesses and each of their qualifying employees to receive a $1500 wage subsidy per fortnight, that is received by the employer and then paid to the employee. This scheme will last for a maximum of six months and commenced on 30 March 2020, so you may have to take immediate action to ensure eligibility.
For more information on this program, you should seek professional financial advice for your business.
WE CAN HELP YOU
As a final reminder, whilst we are in unprecedented times, Employment Law applies and at the end of this, when we come out the other end, what people will remember is how they were treated by you as an employer.
These are sensitive matters which require an appropriate process to be followed.
If you find yourself as a business owner not knowing what your options are, just remember we are a small business that is here to help other small businesses. If you are impacted by COVID-19 and would like to understand your options, please call our friendly team on 1300 1 OUR HR (1300 168 747) or make an enquiry by visiting: https://ourhrteam.com.au/contact-us/.
DISCLAIMER: This is not intended as legal advice but rather general information to assist employers with COVID-19. Each business and employee is different and needs to be assessed on their individual circumstances.