On 8 April 2020, the Coronavirus Economic Response Package Omnibus (Measures No. 2) Bill 2020 (the “Bill”) was passed by both houses of Federal Parliament. The Bill was given Royal Assent on 9 April 2020 and amends provisions of the Fair Work Act 2009 (the “Fair Work Act”) effective from this date.
We urge employers to consider the new provisions, particularly if looking to vary an employee's employment conditions or terminate their employment as you could find yourself the subject of a workplace claim and be liable for hefty penalties.
What does the new Part 6-4C of the Fair Work Act do?
These new provisions of the Fair Work Act temporarily allow employers who qualify for the JobKeeper scheme and who are entitled to receive JobKeeper payments for employees, to give various “JobKeeper enabling directions” to those employees, including:
a JobKeeper enabling stand down direction to an employee (which may involve reducing hours of work).
a direction to an employee about:
the duties to be performed by the employee; or
the location of the employee’s work.
Employers will also be able to make an agreement with employees in relation to:
the days or times when the employee is to perform work; and
the employee taking annual leave.
What is a JobKeeper Stand Down Direction?
The Fair Work Act already contains a provision (section 524) allowing employers to stand down employees in certain circumstances. Whilst some businesses have utilised this provision in context of Covid-19, there was a degree of uncertainty regarding how an employer could make use of the provision. The new section 789GDC of the Fair Work Act sets out circumstances enabling an employer to give a JobKeeper enabling stand down direction.
A JobKeeper enabling stand down is authorised by the Fair Work Act when all the following conditions are satisfied:
1. the employer gave an employee a direction after 9 April 2020 to an employee to:
a) not work on a day or days on which the employee would usually work; or
b) work for a lesser period than the period which the employee would ordinarily work on a particular day or 7 days; or
c) work a reduced number of hours (which may be nil); and
2. the employer must have qualified for the JobKeeper scheme; and
3. the employer is entitled to one or more JobKeeper payments for the employee for a period that consists of or includes the JobKeeper enabling stand down period; and
4. the employee cannot be usefully employed for the employee’s normal days or hours during the JobKeeper enabling stand down period because of changes to business attributable to COVID-19 or government initiatives to slow the transmission of COVID-19; and
5. an employer of an employee gave the employee a direction (the JobKeeper enabling stand down direction).
Employees subject to a JobKeeper enabling stand down direction accrue or remain entitled to the following, as if the JobKeeper enabling stand down direction had not been made:
a. annual leave;
b. redundancy pay; and
c. payment in lieu of notice.
Employees affected by a JobKeeper enabling stand down direction may make a request to their employer:
a. to engage in reasonable secondary employment;
b. for training;
c. for professional development.
The employer must consider such a request and must not unreasonably refuse such a request. No further explanation is provided in the Bill or Explanatory Memorandum regarding when training or personal development might apply and what this means in practice, though it seems unlikely it would impose an obligation on the employer to have to provide paid training or professional development, rather than allow an employee to undertake such paid training or professional development themselves. Depending on the employer’s business and size, it may, however, be reasonable to allow an employee to access internal training programs (if still operational).
What is the Minimum Payment Guarantee?
If a JobKeeper payment is payable to an employer for an employee for a fortnight, the employer must ensure that the total amount payable to the employee is not less than the greater of:
the amount of JobKeeper payment payable to the employer for the employee for the fortnight; or
the amounts payable to the employee in relation to their performance of work during the fortnight. This includes any incentive-based payments and bonuses, loadings, monetary allowances, overtime or penalty rates and/or leave payments to employees.
This is referred to as the Minimum Payment Guarantee.
This means that if an employee has performed work during the fortnight for which they would be remunerated in excess of the JobKeeper payment, they are to be paid in accordance with the work they have performed.
Provided an employer is able to receive a JobKeeper payment for an employee, the Minimum Payment Guarantee applies even in circumstances where an employee might not work (an might never have worked) hours that would result in a $1,500 gross payment to the employee fortnightly. For example, if an employee ordinarily works two days per fortnight (and receives less than $1,500 gross fortnightly for that work), and the employer is able to receive a JobKeeper payment for that employee, the employee will be entitled to receive payment of the $1,500 JobKeeper payment (less any applicable taxes).
Breach of the Minimum Payment Guarantee may attract a maximum penalty of $12,600 for an individual and $63,000 for a corporation.
What is the Hourly Rate of Pay Guarantee?
A JobKeeper enabling stand down direction cannot reduce an employee’s hourly base rate of pay, and an employee’s hourly rate cannot be reduced as a result of a JobKeeper enabling direction (referred to as the “Hourly Rate of Pay Guarantee”).
If a JobKeeper enabling stand down direction has been made, such that the employee is directed to work reduced hours, the employer must ensure that the employee’s base rate of pay on an hourly basis is not less than it would have been if the JobKeeper enabling stand down direction had not been given.
This means, if employers are only able to pay employees the fortnightly JobKeeper payment ($1,500 gross) the employee must only work hours that align with this payment. Additional hours worked will require the employer to make additional payments to the employee on at their base rate of pay (or any overtime and/or penalty rates which may apply).
As a result, if an employer wants to give a JobKeeper enabling stand down direction requiring an employee to work reduced hours, they cannot also negotiate to pay the employee a reduced hourly rate.
Breach of the Hourly Rate of Pay Guarantee may attract a maximum penalty of $12,600 for an individual and $63,000 for a corporation.
Are there any other JobKeeper enabling directions that can be made?
Employers who qualify for the JobKeeper scheme and who are entitled to one or more JobKeeper payments for an employee may, from 9 April 2020:
Direct an employee to perform duties at a different location (including the employee’s home) provided that the place is suitable, and does not require the employee to travel an unreasonable distance in the circumstances;
Direct an employee to perform duties within the employees skill and competency (but may not otherwise be the employees ordinary duties) provided that they hold any necessary licences or qualifications, the duties are reasonably within the scope of the business and the duties are safe.
If an employer gives a JobKeeper enabling direction to an employee to vary their duties, the employer must ensure that the employee’s base rate of pay (worked out on an hourly basis) is not less than the greater of:
a. Their ordinary base rate of pay (had no direction been given); or
b. The hourly base rate of pay applicable to the duties the employee is performing,
Are there any circumstances where a JobKeeper enabling direction might be considered unreasonable?
Yes. A JobKeeper enabling direction given to an employee does not apply to the employee if the direction is unreasonable in all the circumstances. The amendments specifically contemplate that a direction may be unreasonable depending on the impact of the direction on any caring responsibilities the employee may have. While no further details were provided by the Bill or its Explanatory Memorandum regarding what would be unreasonable in all of the circumstances, employers should consider relevant State lockdowns, including school closures, and the affect that these may have on whether a direction is unreasonable.
Employers are may also enter into agreements with employees to vary the days and time of an employees’ work, provided that the performance of the work is safe and reasonably within the scope of the employer’s operations. This arrangement must not reduce the hours of work (if this is required, employers should consider a JobKeeper enabling stand down direction), and employees must consider such requests, and not unreasonably refuse such a request.
Does the Employer have to give notice and consult the Employee first?
Yes. A JobKeeper enabling direction (which would include a compliant stand down direction, direction to vary an employee’s duties and/or the location of their work) does not apply to the employee unless (with limited exceptions):
a. The employer provided written notice of their intention to give the direction 3 days before it was given (or less, if the employee genuinely agreed to lesser notice); and
b. Before giving the direction, the employer consulted the employee about the direction.
Written records of consultations must be kept. At this stage, unless an earlier date is specified, a JobKeeper enabling direction ceases to have effect at the start of 28 September 2020.
The Fair Work Commission will also be given powers to deal with a dispute under the new provisions and may make orders to give effect, set aside or substitute a JobKeeper enabling direction.
Can an Employee be asked to use their Annual Leave?
The new provisions provide that, where an employer qualifies for the JobKeeper scheme, and are entitled to JobKeeper payments for an employee:
an employer may request an employee take paid annual leave, which the employee must consider and not unreasonably refuse, so long as the employee retains a balance of 2 weeks’ annual leave;
an employer and employee may agree to an employee taking twice as much paid annual leave, at half pay.
Employees taking paid annual leave at half-pay:
a. accrue annual leave entitlements as if the agreement had not been made;
b. are entitled to redundancy pay and payment in lieu of notice as if the agreement had not been made.
Can an Employee bring a General Protection Claim?
It depends. Employers should be aware that particular matters are defined as ‘workplace rights’ in the new provisions and are therefore covered by the General Protections provisions of the Fair Work Act. This means employers must not engage in adverse action (which includes dismissing an employee, injuring or altering their employment to their prejudice, or discriminating between the employee and other employees) against employees:
for agreeing (or not agreeing) to perform duties on different days or on different times;
for agreeing (or not agreeing) to take paid annual leave;
for making a request for secondary employment, retraining or professional development;
because of a benefit that the employee has because of an obligation of the employer to satisfy the wage condition.
Employers must be careful not to take adverse action against employees (such as terminating their employment) because of one of the above reasons as this can open employers up to a General Protections claim.
Terri Bell & Co can provide assistance to employers and employees in navigating the new amendments to the Fair Work Act, and answer any questions you may have regarding how the new provisions may assist your business during the Covid-19 pandemic. If you have any questions, please contact Terri Bell or Ellie Wolfenden on email@example.com or 9191 9856.
IMPORTANT NOTICE - The information contained in this article is not intended to be comprehensive. It is general in nature and is not intended to be used as a substitute for legal, financial or other professional advice. You must seek specific professional advice tailored to your personal circumstances before taking any action based on this article.
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