27 Mar HR LAW CORONAVIRUS (COVID-19) FAQs

HR Law have put together a collection of some of the most frequently asked questions we have received from businesses about what measures they can take to help their business survive the detrimental effects of the Coronavirus (COVID-19).

QUESTION: Can my employees be stood down without pay?

ANSWER: Under the Fair Work Act 2009 (Cth) (“FW Act”), an employee can only be stood down without pay if they cannot be usefully employed because of “…a stoppage of work for any cause for which the employer cannot reasonably be held responsible” (section 524(1)(c)).

Whether you can stand down employees in circumstances relating to Coronavirus is very fact dependent and businesses need to be cautious to only exercise the option in the correct circumstances, otherwise they could be liable to pay their employees’ wages for the stand down period if the stand down is unlawful.

One of the most common questions we are asked is whether a downturn in work qualifies as a stoppage of work for the purposes of section 524(c) of the FW Act. The answer to this question is that employers cannot generally stand down employees simply because of a deterioration of business conditions or because an employee has Coronavirus.

The Fair Work Ombudsman has clarified its stance on what circumstances the Coronavirus would definitively be an event that would allow businesses to stand down their workforce. Specific examples provided by the Fair Work Ombudsman of when employers may be able to stand down employees include:

1. if there was an enforceable Government direction requiring the business to close (which means there is no work at all for the employees to do, even from another location);

2. if a large proportion of the workforce was required to self-quarantine with the result that the remaining employees/workforce cannot usefully be employed; or

3. if there was a stoppage of work due to lack of supply for which the employer could not be held responsible.

Keep in mind that enterprise agreements and employment contracts can have different or additional rules about when an employer can stand down an employee without pay. Employers need to consider whether their obligations are impacted by any applicable enterprise agreement, modern award, employment contracts and/or policies.

QUESTION: If my employees are stood down, do they still accrue leave entitlements?

ANSWER: During the period of a stand down, an employee is still employed.

While employers are not required to make payments to employees for the period of a stand down, employees still accrue leave as normal for the duration of the stand down.

QUESTION: If I am experiencing a downturn in work but do not qualify to stand down my employees, what other options do I have?

There are some creative options employers can consider instead of standing down employees. These include:

1. seeking agreement from employees to take paid (or unpaid) leave for a period of time or if you are letting them go then this will trigger a redundancy situation;

2. taking annual leave at half pay;

3. taking alternate weeks as unpaid or annual leave;

4. a 20% pay cut (or some other variance) (provided this does not violate any minimum pay requirements at law);

5. an incentive payment for the employees if they come back to you after the downturn is over i.e. they are terminated now but get an incentive if they come back to you at a later date;

6. in limited circumstances, directing employees to take paid annual leave; or

7. in limited circumstances, negotiating with employees to change regular rosters or hours of work.

QUESTION: When can I direct employees to take annual or unpaid leave?

ANSWER: An employer can only direct an employee to take leave in some situations. For example, an employer may direct an employee to take annual leave accrued when the business is closed during the Christmas and New Year period or an employee has accumulated excess annual leave. Certain notice periods are required in these circumstances. You need to consult your relevant Modern Award/the FW Act regarding the rules regarding directing employees to take leave.

If you are not permitted to direct an employee to take leave, then you cannot unilaterally make them take leave. You would need to seek their agreement to do so.

You can also not unreasonably refuse an employees’ request to take annual leave. Noting that some employers may find it difficult at this time due to cash flow, to accept an employee’s request, the consensus based on:

(a) the stand down provision in the FW Act; and

(b) the expanded eligibility for JobSeeker and Youth Allowance payments, meaning an employee may be eligible if they are a permanent employee who has been stood down,

is that there is a strong argument which can be made that an employer will be considered to have acted reasonably in refusing an employee’s request to take annual leave in circumstances where the businesses cash flow is reduced due to forced shut downs and as a result does not have the ability to make payment of those entitlements as a result.

QUESTION: Can my employee access carer’s leave if they are required to keep their child home from school?

ANSWER: Paid carer’s leave can be accessed by permanent employees who are required to look after a family member or a member of their household who requires care or support because of a personal illness or unexpected emergency affecting the member.

An unexpected emergency has been considered by the Fair Work Ombudsman to include a school or childcare centre closing on short notice and for a short period due to concerns about Coronavirus (for example, because someone at the school has tested positive) or where there is otherwise an enforceable Government direction to keep children at home.

If you have any other questions you would like addressed, please get in touch with us!