Sadly, many Australian businesses now have experience in standing down staff as a result of the COVID-19 pandemic. But stand down rules have changed over the course of the pandemic. We now find ourselves falling into one of three categories of employer:
- Businesses that never qualified for JobKeeper;
- Businesses that still qualify for JobKeeper; and
- Businesses that originally qualified for JobKeeper but are now ‘legacy employers’.
A snapshot of the different obligations applicable to each category appears below.
Non-JobKeeper businesses
Unfortunately, these businesses only have access to the traditional stand down provisions in the Fair Work Act. The inflexibility of these provisions were the reason behind the insertion of temporary Coronavirus Economic Response provisions into the Fair Work Act. Those more flexible provisions only apply to Job-Keeper eligible businesses, so non-JobKeeper businesses will be sending staff home:
- with a traditional stand down order; or
- by agreement.
Stand down is an employer’s right to suspend the usual rights and obligations that apply under a contract of employment for a period. This includes the obligation to make payments. An employer may stand down an employee under the Fair Work Act during a period that the following criteria are met:
- the employee cannot be usefully employed; and
- this is because of a stoppage of work for any cause for which the employer cannot reasonably be held responsible.
The SA Government’s Stay at Home Order clearly meets this criteria in circumstances where businesses cannot operate. However, a reduction in a business’ sales caused by the government’s directions about social distancing is less likely to meet the criteria.
If COVID-19 stops the employee from performing their usual duties (and they can’t otherwise be usefully employed) then they can lawfully be stood down. If the situation does not meet the criteria for stand down, the employee is entitled to be paid, or dismissed.
Business owners can agree with staff that they will take paid or unpaid leave. If this occurs, the employee will not be ‘stood down’ during those agreed periods of leave.
JobKeeper businesses
JobKeeper directions override other terms of the Fair Work Act, awards, enterprise agreements or contracts of employment, provided the JobKeeper directions meet the following criteria:
- JobKeeper stand down directions can be issued to reduce hours (including to nil) if the employee cannot usefully be employed for normal days or hours because of COVID-19 or the government’s COVID-19 restrictions; the direction can be implemented safely; and it complies with the wage condition, the minimum payment guarantee and the hourly rate of pay guarantee.
An employer must pass on the JobKeeper payment to an eligible employee in full each fortnight to meet the wage condition. The minimum payment guarantee requires eligible employers to pay the higher of the JobKeeper payment or a greater amount payable for work performed during the fortnight (in full). The hourly rate of pay guarantee ensures that an employee’s hourly base rate cannot be reduced as a result of a JobKeeper direction. So an employee earning $30 per hour who usually works 76 hours per fortnight who is directed to work 60 hours per fortnight cannot be paid less than $1,800 ($30 x 60).
- JobKeeper duty directions to perform any duties within the employee’s skill set and competency may be issued if the duties are safe, the employee is licensed and qualified and the duties are reasonably within the scope of the employer’s business operations.
- JobKeeper location directions to perform work at a different location may be issued if the location is suitable for the duties to be performed, not an unreasonable distance away, safe and the direction is reasonably within the scope of the employer’s business operations.
- JobKeeper agreements to vary days and time of work or take annual leave, including at half pay are authorised if they are safe and do not reduce the employee’s hours of work (use the stand down direction for that). Employees must not unreasonably refuse these requests and the Fair Work Commission can arbitrate disputes.
Restrictions apply to the issuing of JobKeeper directions:
- They are ineffective if unreasonable in all the circumstances (which include the employee’s caring responsibilities);
- Employers making directions to change duties or location must have information that supports their reasonable belief the direction is necessary to continue the employment of one or more employees;
- Three days’ written notice must be provided (or waived by genuine agreement), the employee or their representative must be consulted and a record of the consultation must be kept;
- These directions are only valid if the JobKeeper payment is ultimately paid by the ATO to the employer.
With JobKeeper directions, the usual Fair Work regulations regarding payment of wages and access to the unfair dismissal jurisdiction continue to apply, but the giving of a JobKeeper direction does not result in a redundancy.
Legacy businesses
JobKeeper businesses that do not meet the new JobKeeper Payment eligibility criteria post-28 September will retain some (but not all) powers to alter their employees’ normal working conditions until 21 March 2021 – provided they exercise that power with a ‘10% decline in turnover certificate’ in hand.
These partially recovered employers will be able to reduce an employee’s normal hours (as at 1 March 2020) as much as 60% and direct them to perform alternative duties. They can request agreement about changes to days and times of work, but they cannot ask staff to take annual leave (other than as per normal award or enterprise agreement regulations).
Limits to this power include: you can’t reduce hours if an employee can be usefully employed, the duties must be safe, provide a minimum two hours of work per occasion and provide seven days’ notice of these directions (or waived by genuine agreement).
What if that doesn’t help?
Temporary flexibilities regarding unpaid pandemic leave and taking annual leave at half pay have been inserted into many modern awards. These are available to employers (regarding those employees who are covered by these awards) regardless of whether the employers are eligible to receive JobKeeper Payments. These awards can be accessed at fwc.gov.au.
In the case of a state-wide lockdown, traditional stand down laws may suit employers better than the Job Keeper provisions. These remain available to all employers to use.
What not to do
Don’t use the right powers in the wrong way: pay attention to the fine print about notice obligations and limits to these powers. Unless you meet these criteria, unilateral changes to employees’ terms of employment can expose employers to the risk of compensation claims and penalties.
Don’t apply these extraordinary powers in a ‘one size fits all’ manner: take into account the circumstances of individual staff members and whether the directions would have a disproportionate or unfair impact on them.
Don’t use these powers in a ‘just in case’ manner: issuing multiple, adaptive directions is better than fewer disproportionate directions.
Don’t forget to keep records: particularly of agreements reached with staff, or of rights waived.
Don’t underestimate the power of consultation: now is a great time for South Australians to work together to find mutually agreeable ways of working throughout the pandemic.
For further information or advice contact Thea Birss at tbirss@vardons.com.au or on 0422 203 184.