The Fair Work Act 2009 (Cth) (Fair Work Act) was amended on 8 April 2020 to enable greater flexibility in Australian workplaces dealing with the impacts of the coronavirus. This update explains the changes and how your business can use the new laws (and some existing modern award amendments) to get through the challenging economic climate.

Snapshot of the changes

Employers who are eligible for the JobKeeper scheme (see below) can issue JobKeeper enabling directions. Subject to various safeguards, the directions enable an employer to stand down employees without pay, either entirely or in part (i.e. by reducing their hours of work); change employees' duties; change their days and times of work; and change their location of work. The changes also permit employers and employees to make agreements in relation to the days or times of work, and taking paid annual leave, including at half pay.

These changes can be made even if the resulting arrangements would conflict with provisions of a modern award, enterprise agreement or contract of employment. However, there are strict consultation requirements and other conditions which employers must meet, for JobKeeper enabling directions to be lawful.

Under the Fair Work Act (and in our view, at common law) an employee must comply with a JobKeeper enabling direction an employer has lawfully given.

Any directions given or agreements made cease to have effect on 28 September 2020, unless the legislation is extended.

Employees have significant protections under the new laws and it is unlawful for employers to contravene these protections. Contravention exposes an employer to significant pecuniary penalties, amongst other things. Further, employees are protected from adverse action under the general protections provisions of the Fair Work Act in relation to exercising/not exercising rights and or having benefits under the new laws.

Side note: relevant award changes

Employers covered by the Restaurant Industry Award 2010, Hospitality Industry (General) Award 2010 and Clerks-Private Sector Award 2010 should also review the flexibility provisions inserted in new Schedules to those awards, to deal with impacts of the pandemic. Many organisations have employees in occupations covered by the Clerks-Private Sector Award 2010, for example payroll/administrative employees, so you should check the award to see if you have employees in such occupations.

Separately, on 8 April 2020, the Fair Work Commission (FWC) varied 103 modern awards to provide the ability for employees to take annual leave at half pay. Employees can also take two weeks of unpaid pandemic leave (for example, if they need to self-isolate). Most construction awards have not been varied. You should check the award covering your industry or covering employees in occupations within your organisation, to see if the award has been varied.

Do the Fair Work Act changes apply to my organisation?

These changes apply to all 'national system employers' to whom the Fair Work Act applies, irrespective of size. This includes all public companies and proprietary companies. You should seek advice if unsure about whether your organisation is a 'national system employer'.

However, only employers eligible for the JobKeeper subsidy can use the new flexibility provisions. This applies to your organisation if:

  • your organisation has a turnover of less than $1 billion and your turnover has fallen by more than 30 per cent (of at least a month); or
  • your organisation has a turnover of $1 billion or more and your turnover has fallen by more than 50 per cent (of at least a month); and
  • your business is not subject to the Major Bank Levy.

My organisation is covered by a modern award / enterprise agreement; can it use these new powers? What about if the employees are on contracts of employment?

The new laws override any provision of a modern award, enterprise agreement or contract of employment, to the extent of any inconsistency.

For example, even if a modern award or enterprise agreement or employment contract sets minimum hours of work, a JobKeeper enabling direction entitles an eligible employer to direct an eligible employee to work fewer hours than the award/agreement/contract minimum. As another example, an employer could direct employees to work different days and times or locations to those specified in the employee's contract of employment.

The new laws also override relevant provisions of the Fair Work Act (e.g. relevant parts of the National Employment Standards), to the extent of any inconsistency (for example, about the taking of annual leave). However, the new laws do not affect unfair dismissal laws, the general protections provisions of the Fair Work Act, OHS/WHS laws, and Commonwealth/State anti-discrimination laws. This means employers must still comply with these laws even when using the new JobKeeper enabling provisions.

An employee's other terms and conditions of employment will not be affected, save as within the scope of a JobKeeper enabling direction or agreement.

My organisation needs to give a stand down direction, direct an employee to do different duties, or work from a different location; what do we have to do?

There are three main considerations:

  • First, you must consult with the employee (or a representative of the employee) before giving any of these directions. We explain this below under the heading 'Consultation'. Be sure to check it out.
  • Second, your directions must not be unreasonable in all of the circumstances.
  • Third, if giving directions in relation to duties to be performed by an employee or their location of work, you must have a reasonable belief this is necessary for the continued employment of one or more of your employees (not necessarily the employee in question, though).

You need to think about these matters in each case before giving a direction. It would be sensible to document your reasons and discuss these considerations when consultung with employees.

Standing down employees without pay: what can we do?

The following only applies if your organisation is eligible for the JobKeeper subsidy and for an employee who is entitled to a JobKeeper payment (an eligible employee).

Subject to the requirements below, your organisation can use a JobKeeper enabling stand down direction to require an eligible employee to:

  • not work on a day or days on which the employee would usually work; or
  • work for a lesser period on a particular day or days 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); or
  • work no hours,

during a period of time (which in our view, may be 'until further notice').

However, at the time you give the direction, you need to be able to prove:

  • the employee cannot be usefully employed for his/her normal days or hours during the period of time because of changes to business attributable to:
    1. the COVID 19 pandemic; or
    2. government initiatives to slow the transmission of COVID 19; and
  • the implementation of the JobKeeper enabling stand down direction is safe, having regard to (without limitation) the nature and spread of COVID 19 (and of course, OHS/WHS requirements); and
  • your organisation is entitled to JobKeeper payments for the employee during the stand down period.

You do not need to pay employees for hours of work they do not perform as a consequence of a stand down direction. However, you must still pass on the JobKeeper payments. Further, you must pay employees the minimum payments to which they are entitled for all hours of work, if they are working some hours and would be entitled to payments above the JobKeeper amounts. You cannot pay them less than their entitlements for their hours of work. See below under the heading 'Employee protections' for further details.

An employee who is subject to a JobKeeper enabling stand down direction is entitled under the new laws to ask you for permission to engage in reasonable secondary employment, training or professional development. An employer must consider and not unreasonably refuse such requests. In our view, it could be reasonable to refuse a request for secondary employment if, for example, the secondary employment would be with a competitor of the employer.

An employee who is on paid or unpaid leave (for example, annual leave) is not considered to be under a stand down direction while they are on leave. This means they must still be paid their leave entitlements as usual, for example.

An employee does not have to comply with a JobKeeper enabling stand down direction if it is unreasonable in all the circumstances.

Can we change an employee's duties of work, so we can usefully employ them?

You can direct an employee to perform any duties during a period (the relevant period) that are within the employee's skill and competency, as long as:

  • when the direction was given, your organisation qualified for the JobKeeper scheme;
  • those duties are safe, having regard to (without limitation) the nature and spread of COVID 19 and OHS/WHS considerations;
  • the employee has any licence or qualification required in order to perform those duties;
  • those duties are reasonably within the scope of your business operations (for example, a retail shop owner cannot require an employee to go to work at the owner's other business, a restaurant); and
  • your organisation is entitled to JobKeeper payments for the employee during the relevant period.

An employee does not have to comply with a JobKeeper change in duties direction if it is unreasonable in all the circumstances. Further, you must have information to establish a reasonable belief the direction is necessary to continue the employment of one or more employees (it is immaterial that you could have given a similar direction to another employee).

Example: An example of a direction to change duties would be a winery business which has to close its cellar door and restaurant (meaning it has no work in those areas for employees who usually work there). However, the winery has available work picking grapes, for which it would usually engage seasonal or casual labour. Subject to the considerations above, it could be reasonable for the winery to direct its cellar door and winery employees to undertake grape picking and associated duties. However, such employees would be entitled to their usual hourly rate of pay / base rate of pay, even if this is more than a grape picker would usually be paid.

Can we change an employee's location of work?

Yes, you can change an employee's work location. You can direct an employee to perform duties during a period (the relevant period) at a place that is different from the employee's normal place of work, including the employee's home, if:

  • when the direction was given, your organisation qualified for the JobKeeper scheme;
  • the place is suitable for the employee's duties;
  • if the place is not the employee's home—the place does not require the employee to travel a distance that is unreasonable in all the circumstances, including the circumstances surrounding the COVID 19 pandemic (or for example, their family responsibilities);
  • the performance of the employee's duties at the place is:
    1. safe, having regard to (without limitation) the nature and spread of COVID 19, such as ensuring appropriate social distancing; and
    2. reasonably within the scope of your business operations (for example, a retail shop owner cannot require an employee to go to work at the owner's other business, a restaurant); and
  • your organisation is entitled to JobKeeper payments for the employee during the relevant period.

An employee does not have to comply with a JobKeeper change in location direction if it is unreasonable in all the circumstances.

Further, you must have information to support a reasonable belief the direction is necessary to continue the employment of one or more employees (it is immaterial that you could have given a similar direction to another employee).

Example: Using the winery example given above, subject to the conditions above, it could be reasonable for a winery to direct its cellar door and restaurant employees to attend work (to pick grapes) at vineyards at locations away from the cellar door/restaurant.

Agreeing with employees to change days or times of work

You can ask an employee to agree to work on different days and or at different times. An employee must consider – and must not unreasonably refuse – your request for agreement to the change in arrangements. If the employee refuses to consent, you can ask the FWC to settle a dispute by arbitration.

However, the change in days or times must still be safe and reasonably within the scope of your business operations. Further, the agreement must not reduce the employee's total number of hours of work. If you want to reduce their hours, you have to give a stand down direction (see above).

Example: An example of a reasonable change in hours could be where an employee usually works a late shift but economic reasons mean the business is no longer able to trade late hours. In those circumstances, it would usually be reasonable to request the employee to work ordinary business hours. However, an employee's family/carer responsibilities would also be relevant to whether the request is reasonable.

Agreements to take paid annual leave at half pay

If your organisation qualifies for the JobKeeper payment scheme for an employee, you can request they consider a request to take paid annual leave and or to agree to take it at half pay.

An employee must not unreasonably refuse your request, as long as the arrangement would not leave them with a leave balance of less than two weeks. If the employee refuses to consent, you can ask the FWC to settle a dispute by arbitration.

Consultation requirements

For any of the above directions, you must:

  • give the employee at least three days written notice of the intention to give a direction (or lesser period by genuine agreement). You do not have to do this if you had previously given the employee notice of the direction and considered any views they presented in response
  • consult the employee (or the employee's representative, if they have one), and
  • keep a written record of the consultation.

The direction must be in writing, which can include by electronic means, such as an email – text messages should not be used.

Employee protections

The new legislation protects employee entitlements to JobKeeper payments, minimum payments and hourly rates of pay. Specifically:

  • Wage condition: an employer who is entitled to a JobKeeper payment for an individual for a fortnight must pay the individual equal to or more than $1,500 gross in the fortnight. The employer is only obliged to pay more than this amount if the employee is working hours which would entitle them to more than $1,500 gross in a fortnight.
  • Minimum payment guarantee: an employer qualifying for JobKeeper scheme and which would be entitled to a JobKeeper payment for a particular employee by satisfying the wage condition, must ensure the total amount payable to a particular employee in respect of a fortnight is either:
    1. the amount of the JobKeeper payment for the employee; or
    2. if a greater amount is payable to the employee for the performance of work during the fortnight, that amount (in full).

This means if the employee would be entitled to more than the JobKeeper payment for working their hours under the JobKeeper enabling direction, an employer must pay the employee's earnings above the amount of the JobKeeper payment, to their usual amount.

  • Hourly rate of pay guarantee: An employee's hourly rate cannot be reduced as a result of a JobKeeper enabling direction, whether this is a stand down direction or a direction to perform different duties.
    1. whilst an employee may earn less overall than they would if they were working their usual hours, their hourly rate of pay must stay the same; and
    2. an employer directing an employee to perform different duties must pay the employee their usual hourly rate / base rate of pay, even if employees performing those duties would usually be paid a lesser rate of pay. Put another way, if the pay rate for the changed duties would be higher than the employee's usual rate, the higher amount must be paid.

For employees paid otherwise than on an hourly basis/hourly rate of pay, for example on an annualised salary arrangement, the employee's base rate of pay is the amount specified in an applicable award or enterprise agreement. In our view this also applies to salaries applicable under an employment agreement.

Contravening the law

It is unlawful for employers to contravene the above wage condition/rate of pay protections. Contravention exposes an employer to significant pecuniary penalties, amongst other court orders. The current maximum pecuniary penalty is $12 600 per contravention for an individual and $63 000 per contravention for companies.

Further, the Fair Work Act prohibits an employer from purporting to give a JobKeeper enabling direction if the direction is not authorised by the legislation and the employer knows that the direction is not authorised. This is a civil remedy provision enforceable under the Fair Work Act and carries a maximum penalty of up to $126 000 per contravention for an individual and $630 000 per contravention for companies.

Additionally, under the general protections provisions of the Fair Work Act, employees are protected from adverse action in relation to exercising/not exercising rights and or having benefits under the new laws. For example, employees cannot be treated adversely for agreeing/not agreeing to perform duties on different days or at different times, or agreeing/not agreeing to take paid annual leave/at half pay, or asking for secondary employment or training during a stand down period.

Conclusion

As stated above, we recommend you seek legal advice before implementing any of the changes described in this article. However, we understand that many businesses are doing it tough due to COVID-19. For this reason, we are offering reduced rates (including for existing clients) for any new inquiries relating to COVID-19.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.