EMPLOYERS: variation of employment terms under the JobKeeper Scheme
Due to the unprecedented situation involving COVID-19 and its far reaching impacts on many businesses, the Coronavirus Economic Response Package Omnibus (Measures No. 2) Bill 2020 was passed on 8 April 2020. Among other things, the Bill amends the Fair Work Act 2009 (Act) in accommodate and support the implementation and operation of the JobKeeper Scheme.
For those employers and employees who qualify for, and enrol in, the JobKeeper Scheme the new provisions of the Act will apply to them. Under these new provisions, employers will have the right to provide a direction (Direction) to, and enter into agreements with, employees on various issues (Agreement) which will have the effect of temporarily varying the terms of an employment agreement.
DIRECTIONS
Reasonableness
Any Direction given to an employee is subject to consultation obligations and an overarching principle that the Direction must be reasonable (and responsive to the change of an employer’s business because of the Covid-19 pandemic). Any Direction that is considered unreasonable in all of the circumstances will not apply to an employee. An example provided by the Fair Work Commission of an unreasonable Direction is one that may impact upon an employee’s caring responsibilities.
Consultation obligations
An employer is required to give the employee written notice of its intention to give a Direction at least 3 days’ prior to formally giving the Direction (noting a lesser period of time is permissible if genuinely agreed with by the employee in question) and within that period of time consult with the employee about the Direction. The employer must then keep a written record of this consultation.
In some circumstances, prior consultations with an employee in relation to a previous Direction may satisfy the consultation obligations in relation to a proposed new Direction, however it is unclear what details/information are required to be provided in the prior Direction consultation to satisfy the consultation obligation in respect of any new Direction.
Direction Types
Employers can make Directions (which remain in effect until revoked or replaced by an Employer, or until 28 September 2020 - whichever is later), in relation to:
1. Reducing an employee’s work hours/days or stand down an employee - if the employee can't be usefully employed for their normal days or hours because of changes to the business attributable to Covid-19, or government initiatives to slow the transmission of the coronavirus (for example, the government bans imposed), and the Direction can be implemented safely.
2. Changing an employee’s usual duties – provided: a) the duties are reasonably within the scope of the employer’s business operations; b) the employee holds the requisite licence or qualification to perform such duties; and c) the duties can be implemented safely.
3. Changing an employee’s location of work – provided the place is suitable for the employee’s duties, the performance of the duties at the nominated place is safe and reasonably within the scope of the business operations. Employers should ensure that they continue to comply with occupational health and safety obligations (including the obligations to ensure breaks are taken and to monitor employees’ health).
Once a Direction meets the relevant requirements under the new provisions, is reasonable and consultation obligations are met, a Direction must then be complied with by the employee.
AGREEMENTS
It is also open for an employer and employee to negotiate and come to agreements on the following:
1. Reducing an employee’s work hours/days – an employer may request an agreement by an employee to perform work during different days/times if it is safe to do so, and importantly, the agreement does not reduce the employee’s number of hours of work. Should a reduction of hours be required, a Direction should be given.
2. Taking paid annual leave - an agreement to take annual at leave at half the ordinary rate of pay, provided it will not result in a balance of less than 2 weeks’ of paid annual leave for any employee.
Where an employer makes a request to reach an agreement on either of the above, an employee must consider the agreement and cannot unreasonably refuse such request. An employee should provide reasons for refusal if they do not agree to an employer’s request.
DISPUTES
In the event of a dispute between an employer and employee regarding a Direction or failing to reach an Agreement (for example in relation to a reduction of work hours/days or paid annual leave), either party may apply to Fair Work Commission for an order, having regard to the ‘fairness between the parties’.
It remains to be seen how the Fair Work Commission will assess the “fairness level” of any employer Direction, particularly when seeking to balance the interest of an employer and employee in these unique and unprecedented times.
It should be noted that Directions relating to duties of work and location of work are effective only to the extent that an Employer has information leading to a reasonable belief that the Direction is necessary to continue the employment of one or more employees.
Accordingly, from the employer’s perspective, all employers should ensure there is sufficient information available to satisfy this requirement in the event of any challenge by an employee.
Equally, employees should recognize that the giving of, and implementation of, a Direction seeks to protect the interests of both parties and is a better alternative to an Employer having to let staff go.
CONCLUSION
The above outlines the main requirements (and our general observations only) in relation to the giving of Directions and reaching of Agreements.
We note any Direction given and/or Agreement reached remains subject to an Employer’s payment obligations under the JobKeeper Scheme, including the requirement to ensure it passes on the minimum JobKeeper amount of $1,500 per fortnight to its employees. Direction and Agreements should also take in to consideration any other relevant government initiatives, and of course, the individual circumstances of any matter.
This summary is not intended to cover all the amendments to the Act, including the implications of the Bill on employee entitlements and any applicable Award.
If you have any specific queries regarding the Bill generally, or in relation to the use of Directions and Agreements, please do not hesitate to contact Mae Vue and David Lurie on 03 8602 4000.