Employment Law Update - April 2020
The JobKeeper payment: key amendments to the Fair Work Act 2009 (Cth)
Late in the evening on 8 April 2020, the Federal Parliament passed the Coronavirus Economic Response Package (Payments and Benefits) Bill 2020 and the Coronavirus Economic Response Package Omnibus (Measures No. 2) Bill 2020, with the aim of keeping Australians employed during the COVID-19 crisis. This is the detailed legislation creating the legal framework for all the policy announcements designed to save the economy from the effects of the COVID-19 pandemic.
One of the crucial aspects of the legislation is the amendments to the Fair Work Act, 2009 (Cth) (‘FW Act’) to create a new weapon for employers to deal with the economic downturn – the ability to issue a ‘JobKeeper Direction’.
It is important to note that these directions are in addition to any other measures that currently exist in the FW Act and industrial instruments including the existing stand provision (s 524) and the ability to reach an agreement with an employee on an individual basis. Furthermore, the scheme is initially designed to only operate until 28 September 2020 and a review must be conducted on or before 28 July 2020 as to whether the scheme will continue.
Eligibility to receive JobKeeper subsidy decided by the Treasurer and not Parliament
The first aspect of the stimulus scheme is that there is no detail on the criteria as to how an employer will qualify for the JobKeeper payment. The legislation makes it clear that these decisions will be made by the Treasurer by way of delegated legislation, that is, Rules. At this stage we are no wiser on the details of the eligibility criteria.
Based upon Treasury’s guidance to date, employers will be eligible for the subsidy if, at the time of applying:
their business has an annual turnover of less than $1 billion and they estimate their turnover has fallen or will likely fall by 30 per cent or more; or
their business has an annual turnover of $1 billion or more (or is part of a consolidated group for income tax purposes with turnover of $1 billion or more) and they estimate their turnover has fallen or will likely fall by 50 per cent or more; or
they are a charity registered with the Australian Charities and Not-For-Profit Commission (other than a school or university) and they estimate their turnover has or will likely fall by 15 per cent or more.
The ATO has indicated that the Commissioner, who will have ultimate discretion to determine which businesses are eligible, will exercise a large degree of discretion in determining the eligible businesses.
The scheme will operate on the basis of a payment of $1,500.00 per fortnight (which has been defined as 14 days commencing on a Monday). If the employee at the relevant time earns less than this amount, the employer must pass on to the employee $1,500.00 per fortnight. If the employee earns more than $1,500.00 per fortnight, then the employee will receive their normal earnings.
The payment is designed to cover full-time, part-time and casual employees who have been employed with the employer on a regular and systematic basis for at least 12 months as at 1 March 2020.
We however await the final detail of the scheme.
JobKeeper Directions
The amendments to the FW Act insert a new Part 6-4C which is titled ‘Coronavirus economic response’. It empowers the employer with a number of additional options to provide flexibility in the workplace in exchange for corresponding protections for employees. The threshold is that the employer must qualify for the JobKeeper payment.
Once an employer is eligible, it can then utilise a number of ‘JobKeeper Directions’ which include the following:
direct an employee to be partially stood down (for example, 2 days per week) rather than simply reducing an employee’s hours by agreement;
direct an employee to take annual leave (which can include at half pay);
direct an employee to perform alternative duties or perform duties at a different location including at the employee’s home;
direct an employee to perform duties on a different day or at different times.
Direction to stand down
Pursuant to section 524 of the FW Act, employers are able to stand down employees without pay where there is, inter alia, a stoppage of work for reasons outside the employer’s control. The new amendments provide much broader and more flexible power to employers who qualify for the JobKeeper payments.
An employer can issue a “JobKeeper enabling stand down direction” which includes being directed:
not to work on a day or days on which the employee would usually work; or
work for a lesser period than the period which the employee would ordinarily work on a particular day or days; or
work a reduced number of hours (compared with the employee’s ordinary hours of work).
The conditions for a stand down direction are as follows:
at least 3 days before the direction is given (unless the employee genuinely agrees to a lesser period), the employer must give the employee a written notice of its intention to give the direction;
the employer must consult the employee about the direction;
at the time the direction is given, the employer must have qualified for the JobKeeper scheme and is entitled to the payments during the period of the direction;
the employee who is the subject of the direction cannot be usefully employed during the employer’s normal days or hours because of changes attributable to the COVID-19 pandemic or Government initiatives to slow its transmission;
the implementation of the direction is safe;
the direction must not be unreasonable in the circumstances; and
the employer must reasonably believe that the direction is necessary to continue the employment of one or more employees.
The most important protection for employees is that where a JobKeeper enabling stand down direction is made the pay guarantee applies. That is, the employer must pay the employee the same rate of pay for ordinary hours as if the direction had not been issued. So, the same hourly rate of pay applies. There cannot be a reduction in the rate of pay at the same time as a reduction in the number of hours.
Direction to take annual leave
The amendments to the FW Act in relation to annual leave do not exactly equate to a direction but do provide an employer with some flexibility.
The employer can request employees who are eligible for JobKeeper payments to take annual leave and the employee must consider and not unreasonably refuse the request. However, the request must not result in the eligible employee having a balance of accrued annual leave of fewer than 2 weeks.
Another amendment is that the employer and employee can agree in writing for the employee to take twice as much paid annual leave at half of the employee’s rate of pay (that is, at half pay). If there is an agreement for the annual leave to be taken at half pay then it must be reduced to writing.
Note: a JobKeeper enabling stand down direction does not apply while an employee is already on paid or unpaid leave authorised by the eligible employer.
Direction to change location and duties
An employer can direct an employee who is entitled to JobKeeper payments to perform alternative duties if the duties are within the eligible employee’s skill and competency, the duties are safe having regard to the nature and spread of COVID-19, the employee has the appropriate licence or qualification (if applicable) and the duties are reasonably within the scope of the eligible employee’s business operations.
An employer can also direct that the employee work at a different location if:
the place is suitable for the employee’s duties; and
the place does not require the employee to travel a distance that is unreasonable in all the circumstances; and
the performance of the employee’s duties at the place is safe in relation to spread and nature of COVID-19; and
it is reasonably within the scope of the employer’s business operations, which can include at the employee’s home.
Again, the pay guarantee applies for the length of the direction.
Direction to perform duties at a different time or days
The employer can request an employee to work at different times and/or days to their ordinary days and the employee must not unreasonably refuse the request. The request must ensure that the performance of the duties are safe having regard to the spread of COVID-19 and reasonably within the scope of the employer’s business operations. The agreement to work differing days/times cannot reduce the total number of hours worked.
Once an agreement has been reached it must be reduced to writing.
Leave Accruals
It is important to note that during any of the JobKeeper Directions all leave entitlements will accrue on the basis that the direction had not been issued. That is, if a full-time employee is directed to work 2 days per week they will continue to accrue leave on the basis of 5 days per week during the direction.
Penalty for breaching the JobKeeper scheme
The amendments also make it clear that any breaches will be viewed as ‘serious contraventions’ of the civil penalty provisions which significantly increases the maximum penalty.
Conclusion
The new amendments to deal with the COVID-19 pandemic will provide more flexibility within the workplace and are designed to supplement the existing options available to employers to navigate these uncertain waters. It is important that employers comply with all the steps to enact any of the JobKeeper Directions so as to avoid any breaches, especially ensuring that the directions are reflected in written agreements. It is also important that the decision making process is recorded in writing should there be a dispute in the future. We anticipate that in time the Fair Work Ombudsman will be placing huge resources towards ensuring enforcement of the employer’s obligations under the new Part 6-4C.
If you require any assistance, please do not hesitate to contact Hilliard & Berry Solicitors.
Milly Khan & Simon Berry
If you require any further information, please do not hesitate to contact the Hilliard & Berry Solicitors’ office on (02) 8324 7500 asking for the Workplace Relations Team.