Special Notification – May 2020
As we all know, the shock onset of the COVID-19 pandemic and restrictions imposed under public health legislation is placing Australian businesses under significant duress. Government regulation of social movement and forced closure of “non-essential services” has forced many organisations to consider how to manage employees during the pandemic period.
Health care organisations are not precluded from considering these staff issues.
The duration of the Government public health directions and the pandemic itself remain uncertain. Organisations are undoubtedly hoping for the resumption of their pre-pandemic operations once restrictions are lifted and may, therefore, not find it suitable to offer redundancies to loyal and hard-working employees whose services may be required again once business-as-usual resumes. Adding to the complexity of employer decision making, the Commonwealth government’s “job-keeper” allowance serves to subsidise employee salary or wages during this difficult period.
Given the employment law considerations peculiar to the circumstances of the COVID-19 pandemic, we summarise in this article some of the options available to those many organisations in the health sector whose operations have been adversely impacted by COVID-19 and who need to take action to ensure the viability of their business.
Mutual agreement to reduce work hours
Rather than taking measures that will result in an employee losing all their income and perhaps never returning to work for the organisation, it may be mutually beneficial for employers and employees to agree to a reduction in the employee’s work hours. This approach is suitable to situations where the work available for an employee has reduced significantly, but not so much that the employee can no longer be usefully employed at all. Some employees will also have increased responsibilities at home due to the closure of schools and reduced working hours could assist those employees to be more available at home. This approach obviously relies on mutual cooperation and reaching agreement about an altered work schedule. Employers should ensure that the understanding is properly documented, including the period of the altered schedule and when it is expected to end.
Where an employer is not seeking to reduce an employee’s ordinary hours of work, but wishes for the employee to perform his/her duties during different hours or on different days of the week, employers who qualify for the Job Keeper scheme (discussed below) should also consider making a request for an eligible employee to enter into an agreement under new section 789GG of the Fair Work Act 2009 (Cth) (the Fair Work Act). Employees must not unreasonably refuse such a request.
Reducing employee work hours, however, does not assist employers who now have no work available for some or all of their employees. Employees may therefore choose to draw on their annual leave entitlements for income where there is no work available to them. Employees may also take annual leave at half pay with the agreement of their employer.
But what if employees do not agree to take leave? Employers generally do not have the power to direct employees to take leave due to work slow-down, however, some enterprise agreements and modern awards do permit employers to direct employees to take annual leave in limited circumstances: See, for example, clause 31.4 of the Health Professionals and Support Services Award 2010, which permits employers to direct employees covered by that award to take annual leave during “closure periods”.
Section 789GJ of the Fair Work Act has also recently come into operation, which allows employers eligible for the Job Keeper scheme (discussed below) to make a request for an employee in relation to whom the employer is entitled to Job Keeper payments to take annual leave. An employee cannot unreasonably refuse such a request, given complying with the request would not leave the employee with a balance of annual leave that is less than 2 weeks.
When paying employees for annual leave, employers should consider whether any annual leave loading requirements apply under the instrument applicable to the employee’s employment. To illustrate, clause 57.9 of the Nurses and Midwives (Victorian Public Sector) (Single Interest Employers) Enterprise Agreement 2016-2020 entitles employees to shift allowances, special rates for weekends, qualification allowances, etc. that the employee would have received had the employee not taken annual leave, in addition to their ordinary pay, or alternatively, a 17.5% annual leave loading.
Long Service Leave
Employees who are entitled may also take long service leave to cover periods during which their services are not required. The entitlement to long service leave arises after 7 years if the employee’s entitlement is governed by the Long Service Leave Act 2018 (Vic) (the LSL Act), however, note that the interaction of the LSL Act and industrial instruments is complex (we know this to be particularly true in the public health sector) and an employee’s entitlement may instead be preserved under a pre-modern award. Organisations that are unsure of the source of their employee’s rights to LSL should seek legal advice.
The LSL Act and most industrial instruments allow for long service leave to be taken at half pay. The LSL Act allows employers to direct employees to take LSL if the employer gives the employee more than 12 weeks’ notice. If an employee’s entitlement is preserved under a pre-modern award the rules governing employer directions to take LSL may be different.
Where an employee has no accumulated leave entitlements, employers may wish to consider employees taking a period of leave without pay. Periods of unpaid leave, if granted by the employer, have implications for the accumulation of employee entitlements, but will not affect their continuity of service under the Fair Work Act.
Paid special leave – Victorian public health services
As detailed in the Department of Health and Human Services’ Guidance Note on COVID-19 and Employment-related Matters (as at 14 April 2020 – the Guidance Note), where an employee is required to self-isolate or otherwise not to attend work pursuant to the orders issued by the Chief Health Officer and the employee is unable to carry out their duties from home, public health services in Victoria should make paid special leave available to the employee for a period of up to 20 days. If the employee becomes sick with the virus during a period of self-isolation, their first option should be to utilise their available personal leave.
Likewise, paid special leave should be offered to employees who cannot work because they are required to look after their children on account of COVID-19-related school or childcare-centre closures; however this is not available where employees elect to keep children home from school. Victorian public health services may choose to make paid special leave available to employees in other limited or special circumstances and may allow leave to be taken at half pay.
For further details on paid special leave, please see the Guidance Note.
Standing down employees – section 524 of the Fair Work Act
Section 524(1) of the Fair Work Act provides a further alternative to employers in limited circumstances.
Section 524(1) enables an employer to stand down employees during a period in which the employee “cannot usefully be employed” in circumstances which relevantly include “a stoppage of work for any cause for which the employer cannot reasonably be held responsible”. Employers should carefully consider whether this power to stand down is available to them before taking action under section 524, as they could face financial penalties for breach of the Fair Work Act and/or be required to backpay employees for the period of the stand-down if they exercise the power in circumstances that fall outside the scope of section 524(1).
Where an employee is capable of performing their work from home (as for many corporate positions) or performing different work, not normally within the scope of their duties, it would not be lawful for an employer to exercise the power under section 524(1), as it could not be said that the employee “cannot usefully be employed”. Likewise, as intimated above, where there is no actual “stoppage” to an organisation’s operations, but rather a slow-down or reduced revenue (such as is likely to occur in connection with poor consumer sentiment in the face of economic slowdown and fear of catching the virus), then the power is likely not available. Employers are not required to make payments to employees during the period for which they are stood down and an employee may be stood down for the duration of the stoppage, assuming there is no work for them of any kind during that period.
Before exercising the power, employers should review the employee’s contract and applicable award or enterprise agreement to determine if they contain a clause dealing with directions to stand-down during a stoppage of work. An equivalent clause in any of these instruments will supplant section 524, meaning that if such a clause exists, the employer must follow the rules set out in the relevant instrument in standing-down employees during a stoppage of work. Employers should also consider any consultation requirements under the instrument, as discussed below in relation to redundancy.
New Job Keeper enabling directions
Employers who qualify for the Job Keeper scheme may also give Job Keeper enabling stand-down directions (Job Keeper Directions) to eligible employees. Eligible employers may make such directions to reduce employee work hours (including a direction to work 0 hours) where an employee cannot be usefully employed for their normal days or hours due to the COVID-19 pandemic or a government initiative to slow the spread of the virus (such as an enforceable government direction).
Notice of Job Keeper Directions must be given in writing to affected employees no less than 3 days prior to giving the direction, unless an employee genuinely agrees to a shorter period of notice and employees must be consulted prior to giving the direction.
Furthermore, employers that give Job Keeper Directions must ensure that affected employees are not paid less than their base rate of pay that they would have been paid, had the direction not been given. In keeping with this, employers must pay employees subject to a Job Keeper direction the greater of their base rate of pay under the reduced hours arrangement or $1,500 per fortnight (being the amount of the Job Keeper allowance).
Subject to various safeguards, Job Keeper enabling directions may also be made in relation to the type of work performed by an employee, or the location at which the employee carries out his/her duties, which, if exercised in accordance with the new laws, take effect despite a provision to the contrary in the Fair Work Act (other than certain specified provisions), an applicable industrial instrument or the employee’s contract of employment.
Employers should keep in mind that they must not unreasonably refuse the request of an affected employee to take on secondary employment, training or professional development while a direction is in place. Employers should also exercise great care when giving Job Keeper Directions, as employers who give such directions knowing that they are not authorised by the Fair Work Act may be subject to large financial penalties (see section 789GXA).
The laws enabling Job Keeper Directions commenced on 9 April 2020 and will remain in force until 28 September 2020. Job Keeper Directions remain in force until withdrawn or replaced by the employer or the expiry of the scheme, whichever occurs first.
Employers wanting to know whether they are eligible for the Job Keeper scheme and details of how Job Keeper Directions operate may refer to advice that is available on the Fair Work Ombudsman and ATO websites and should seek legal advice if still unsure of how the new laws apply to their operations.
Consideration of section 524 in the context of the Chief Health Officers direction in relation to non-essential services and mass gatherings
It will not be news to anyone that Chief Health Officers across Australia have now made directions under public health legislation, banning, for example, all non-essential services from remaining open and enforcing social distancing measures. It is uncontroversial that businesses that have had to shut their doors to comply with CHO directions may invoke the section 524 power to stand down employees who can no longer be usefully employed. Advice released by the Fair Work Ombudsman on COVID-19 suggests that another reason to validly exercise the power could be a stoppage resulting from supply chain disruptions directly caused by COVID-19 or associated government regulation. Qantas, for example, has now exercised the power to stand-down employees in response to restrictions imposed on international and interstate travel.
The impact on the healthcare industry is significant and varied depending-on the type of organisation in question. In Victoria, for example, the Restricted Activities Direction permits retail premises that are not “restricted retail premises” to remain open, subject to density, signage and cleaning requirements. At the time of writing, the Victorian government website clarifies specifically that there is no requirement for allied health services such as physiotherapy and podiatry to close. The pandemic has, and will likely continue, to influence the demand for services such as physiotherapy, psychology, childcare and disability services. The issue is that slowdown in business as a result of social-distancing, increased unemployment and poor economic outlook do not trigger the operation of section 524. Employers who have not been forced to shut-down totally or to a large extent may therefore have to rely on other measures discussed in this article to remain viable.
Employee entitlements while stood down
Employees may choose to draw on their annual leave entitlements for income for all or part of the period during which they would otherwise be stood-down under section 524. Importantly, employees that take leave are not taken to be stood-down for the purposes of the Fair Work Act. Employers should note that they may only refuse a request to take leave where it is reasonable to do so. Employee entitlements under the National Employment Standards, continue to accumulate while an employee is stood-down without pay.
Employers may wish to consider redundancies as a last resort where changes to their operations in connection with the COVID-19 related restrictions are likely to be enduring and the employer does not require anyone to perform the employee’s role for the foreseeable future. This may be the only option available to employers where the stand-down power is not available. Despite the present unique circumstances, employers must ensure that any redundancy is “genuine”. Redundancies that are not genuine, are subject to the risk that an employee will bring unfair dismissal proceedings under section 394 of the Fair Work Act.
A redundancy is genuine in the following circumstances:
- the employer no longer requires anyone to perform the employee’s role as a consequence of changes to the organisation’s operations; and
- the employer has complied with any obligation under the enterprise agreement or modern award applicable to the employee’s employment, to consult in relation to the redundancy.
To illustrate the second requirement, employers who employ health professionals subject to the Victorian Community Health Sector (Audiologists, Dieticians, Pharmacists and Psychologists) Enterprise Agreement 2018-2021, should consider clause 13.1, which sets out the process for consultation that an employer covered by the agreement must follow before introducing a “major workplace change”, such as that which is likely to result in employee redundancies. Failure to consult an employee subject to the agreement in accordance with that clause prior to any redundancy will likely result in a finding that the redundancy is not genuine and could result in financial penalties for breach of the agreement.
Employers should also consider if the employee can be redeployed within their enterprise or be given different work. If an employer fails to offer an employee the opportunity to redeploy where it is reasonable in all the circumstances to do so, the organisation opens itself up to the risk that the redundancy will be found not to be genuine.
The minimum entitlements to redundancy pay are set out under section 119 of the Fair Work Act based on length of service, however, an employee’s applicable enterprise agreement or award may provide for superior entitlements to redundancy pay. Enterprise Agreements across the Victorian public health sector stipulate that redundancy entitlements for employees covered by the agreement are to be paid in accordance with the Victorian government’s Public Sector Workplace Relations Policies 2015, as updated from time to time. The Policy also sets out procedures and considerations to be taken into account in relation to redundancy.
In the end, businesses will have to be creative in these challenging times to achieve positive outcomes that benefit all parties. Qantas, for example, have sought to arrange for Qantas staff with no work to be employed by Woolworths to assist with the acute levels of demand Woolworths are experiencing at their supermarkets. In the healthcare industry, in particular, there are likely to be a range of opportunities for temporary redeployment within the employer’s enterprise or the State government, as demand increases for persons to assist in the fight against the pandemic. See for example the Victorian government’s $500 million Working for Victoria fund, which offers paid work for persons with Australian working rights to contribute to the Victorian government’s pandemic response.
The difficult operating conditions at present mean that many employers are contemplating measures that they never expected to have to implement. It will be important for employers to carefully consider their decisions in relation to their employees and the legislative environment that regulates their relationship with the employee. There are multiple options available in the case of slowdown in work and different alternatives may be suitable for different employees depending on their individual circumstances. Employers should keep in mind that the power under section 524(1) is limited and should be exercised with caution.
If you have any questions arising out of this article, please contact Benjamin Schwarer on (03) 9865 1337, or email firstname.lastname@example.org.
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