Elizabeth Devine, Founder of Devine Law at Work, provides an in-depth overview of the changes to the FWA and Awards as a result of recent events in Australia surrounding the COVID-19 pandemic.
Disclaimer: the purpose of this article is to provide you with information and ideas. It is not intended to provide you with comprehensive information about COVID-19 or relevant employment laws or to provide you with independent legal advice specific to your circumstances. Please contact us if you require independent legal advice.
In the weeks since the COVID-19 pandemic was declared on 11 March 2020, Australian employers and their advisers have been confronted by the fact that our employment laws were not prepared for a pandemic. In response, the Federal and State Governments, the Opposition, unions and employer associations and others have been working hard to make
changes to the law, in an effort to save jobs and ensure workers are protected from exploitation.
In late March 2020 a number of Awards were varied in response to the pandemic on application from employer associations and unions. On 1 April 2020 the Fair Work Commission (‘FWC’), on its own initiative, announced that it proposed to change a further 103 Awards. Submissions in relation to those changes were subsequently made and they largely supported what the FWC proposed. On 8 April 2020 the FWC issued a decision amending the majority of Awards to introduce unpaid pandemic leave (applicable to 30 June 2020) and the ability to take annual leave for twice as long on half-pay.
On 8 April 2020 the Australian Parliament passed the Coronavirus Economic Response Package Omnibus (Measures No 2) Act 2020 which introduced changes to the Fair Work Act 2009 (‘FWA’) which will apply until the start of 28 September 2020. These changes introduce an wage condition, a minimum payment guarantee, an hourly rate of pay
guarantee, jobkeeper enabling stand-down directions and the right for an employer to request that an employer enter into an agreement to work on different days or at different times or to take paid annual leave, a request which an employee may not unreasonably refuse. A number of protections for workers are also included.
On 8 April 2020, the Australian Parliament also passed the Coronavirus Economic Response Package (Payments and Benefits) Bill 2020. This legislation deals with overpayments to entities of various economic response payments (including the JobKeeper Payment), including employers who are either not entitled to the payment at all or who are paid more
than the correct payment.
The abovementioned Bills will take effect once they receive Royal Assent. It is expected that this assent will be received on either 9 April 2020 or shortly thereafter.
In this article, a summary of the JobKeeper Payment and the temporary changes to the FWA and Awards is provided. A more detailed account of the changes is available by contacting Elizabeth Devine at elizabeth@devinelaw.com.au. This information will be provided on a
complimentary basis.
JobKeeper Payment
The JobKeeper Payment (‘JKP’) is a wage subsidy of $1500 (less applicable tax) per fortnight for a period of up to six months. The payment is made by the ATO to eligible employers a month in arrears. The first payments will be made in early May 2020 and backdated.
Employers (including the self-employed) will be eligible to receive the subsidy if they have an annual turnover of less than $1 billion and they estimate that their turnover will fall, or is likely to fall, by 30% or more in the relevant month or quarter relative to turnover in the corresponding period a year earlier (or 15 per cent in the case of charities registered with
the Australian Charities and Not-for-Profit Commission). If turnover is more than $1 billion, the relevant expected fall in turnover is 30% or more.
Employers are eligible to receive the JKP if they are employed by an eligible employer, were employed on a full-time, part-time or long-term casual basis (12 months or more of systematic and regular employment) as at 1 March 2020, they are an Australian citizen, a resident or they hold either a permanent visa or a Special Category (subclass 444) visa as
at 1 March 2020; they are on parental leave (unless they are in receipt of Parental Leave Pay from Services Australia).
Wage condition
The FWA has been amended to introduce a wage condition (until 28 September 2020) which applies if an employer qualifies for the jobkeeper scheme and an employee is entitled to a JKP. In these circumstances, the employer must ensure that the wage condition is satisfied by the end of the fortnight for which the JKP is paid. Failure to comply with this condition is
a breach of the FWA and means that the employer may be penalised up to $126,000 (serious contravention) or $12,600 (otherwise).
Minimum payment guarantee
The FWA has been amended to introduce a minimum payment guarantee (until 28 September 2020). Employers who receive the subsidy must pay each eligible employee an amount which is not less than the greater of the following:
- the amount of the subsidy (less applicable tax);
- the amounts payable to the employee (less applicable tax) in relation to performance of work for the fortnight – inclusive of incentive-based payments and bonuses, loadings, monetary allowances, overtime or penalty rates and leave payments.
This means that:
- an employee who would normally be paid less than $1500 per fortnight (less applicable tax) will receive $1500; and
- an employee who would normally be paid more than $1500 per fortnight (less applicable tax) will receive their usual pay for the hours they work (see discussion below about the ability to reduce hours).
An employer who does not comply with the abovementioned requirement will be in breach of the FWA 2009 and may be penalised up to $12,600.
Hourly rate of pay guarantee
The FWA has been amended to introduce a right for an employer to give directions to employers in relation to stand-down and duties of work in certain circumstances (discussed below). In these circumstances, the employer must comply with an hourly rate of pay
guarantee.
Stand down direction
If an employer gives an employee a jobkeeper enabling stand-down direction, the employer must ensure that the base rate of pay (on an hourly basis) is not less than the base rate of pay (on an hourly basis) which would have been applicable if the direction had not been given.
Duties of work direction
If an employer gives an employee a jobkeeper enabling direction in relation to duties of work, the employer must ensure that the base rate of pay (on an hourly basis) paid to the employee is not less than the greater of the following:
- the base rate of pay (on an hourly basis) that would have been applicable if the direction had not been given;
- the base rate of pay (on an hourly basis) that is applicable to the duties the employee is performing.
An employer who does not comply with the hourly rate of pay guarantee will be in breach of the FWA 2009 and may be penalised up to $12,600.
Jobkeeper enabling stand-down direction
The FWA has been amended to give employers the right to give jobkeeper enabling standdown directions to an employee to: not work on a day or days on which the employee would usually work; to work for a lesser period than the period which the employee would ordinarily work on a particular day or days; or, to work a reduced number of hours (compared with their usual ordinary hours of work) – the reduced number of hours may be nil.
Such a direction may only be given if: the employer is eligible to receive the JKP; the employee cannot be usefully employed for their normal days or hours during the stand down period because of changes to the business attributable to the COVID-19 pandemic or government initiatives; the implementation of the direction is safe; the employer becomes entitled to one or more JKP’s for the period of the stand down; the direction is reasonable in all the circumstances; the direction is given in circumstances in which the employer reasonably believes the direction is necessary to continue the employment of one or more employees. The employer must also give written notice of the intention to give the direction (of at least 3 days, or lesser period where the employee agrees to it), consulted
with the employee or their representative and kept a written record of the consultation. If these conditions are satisfied, the employee must comply with the direction.
The period the subject of the direction counts as service. Leave entitlements accrue during the period of stand-down. The giving of the direction does not amount to a redundancy.
The direction continues in effect until either 28 September 2020, until it is withdrawn or revoked or replaced by the employer or until an order is made by the FWC.
A jobkeeper enabling stand-down direction does not apply during a period in which an employee is taking paid or unpaid leave that is authorised by the employer or is otherwise authorised to be absent from employment.
An employee the subject of a jobkeeper enabling stand-down direction may request to engage in reasonable secondary employment, training and/or professional development. The employer must consider the request and must not unreasonably refuse it. An employer who does not comply with this requirement will be in breach of the FWA 2009 and may be penalised up to $12,600 otherwise.
Direction in relation to duties of work
The FWA has been amended to give employers the right to give an employee a direction to perform any duties during a period that are within the employee’s skills and competence. Such a direction may only be given if the employer qualifies for the jobkeeper scheme, the duties are safe and reasonably within the scope of the employer’s business operations,
relevant licences and qualifications are held by the employee, the employer is entitled to one or more JKP’s, the direction is reasonable in the circumstances and is given in circumstances where the employer reasonably believes that the direction is necessary to continue the employment of one or more employees.
The employer must also give written notice of the intention to give the direction (of at least 3 days, or lesser period where the employee agrees to it), consulted with the employee or their representative and kept a written record of the consultation. If these conditions are satisfied, the employee must comply with the direction.
The period the subject of the direction counts as service. The giving of the direction does not amount to a redundancy.
The direction continues in effect until either 28 September 2020, until it is withdrawn or revoked or replaced by the employer or until an order is made by the FWC.
Direction in relation to location of work
The FWA has been amended to give employers the right to give an employee a direction to perform duties during a period at a place that is different from the employee’s normal place of work, including the employee’s home. This direction may only be given if the employer
qualifies for the jobkeeper scheme, the place is suitable for the employee’s duties, safe and reasonably within the scope of the employer’s business operations, if the place is not the employee’s home that it does not require the employee to travel an unreasonable distance, the employer is entitled to one or more JKP’s, the direction is reasonable and is given in
circumstances in which the employer reasonably believes it is necessary to continue the employment of one or more employees.
The employer must also give written notice of the intention to give the direction (of at least 3 days, or lesser period where the employee agrees to it), consulted with the employee or their representative and kept a written record of the consultation. If these conditions are satisfied, the employee must comply with the direction. If the abovementioned conditions
are satisfied, the employee must comply with the direction.
The period the subject of the direction counts as service. The giving of such a direction does not amount to a redundancy.
The direction continues in effect until either 28 September 2020, until it is withdrawn or revoked or replaced by the employer or until an order is made by the FWC.
Agreement to work on different days or at different times
The FWA has been amended to give employers the right to request that an employee make an agreement with them to perform duties on different days or at different times compared with their ordinary days or times of work. If such a request is made, the employee must consider the request and must not unreasonably refuse the request.
An employer can make such a request if they qualify for the jobkeeper scheme and they are entitled to receive one or more jobkeeper payments for the employee.
An agreement of this type may be entered into if: the employer has qualified for the jobkeeper scheme; the performance of the duties on those days or at those times is safe and reasonably within the scope of the employer’s business operations; it does not have the effect of reducing the employee’s number of hours of work (compared with their usual ordinary hours of work); and, the employer becomes entitled to one or more JKP’s.
Agreement to take paid annual leave (full pay or half pay)
The FWA has been amended to give employers the right to request that an employee make an agreement with them to take paid annual leave – either at full pay, or for twice the period of accrued leave at half pay. If such a request is made, the employee must consider the request and must not unreasonably refuse the request unless complying with the request would result in a balance of less than 2 weeks paid annual leave.
An employer can make such a request if they qualify for the jobkeeper scheme and they are entitled to receive one or more JKP’s for the employee.
An agreement of this type may be entered into if the employer has qualified for the jobkeeper scheme and the employer is entitled to receive one or more JKP’s for the employee.
If an employee takes paid annual leave, the employee accrues leave as if the agreement had not been made. In the event that their employment is terminated, redundancy pay and payment in lieu of notice is to be calculated as if the agreement had not been made.
Disputes
If there is a dispute about any of the matters referred to above, an application may be made (by an employee, employer, or employee/employer organisation) to the FWC. The matter may be dealt with by mediation, conciliation, arbitration or by the making of a recommendation or expression of an opinion. In dealing with a dispute, the FWC must take into account fairness between the parties concerned.
The FWC may make an order that it considers is desirable to give effect to, setting aside or substituting a jobkeeper enabling direction or any other order it considers appropriate. Any order made by the FWC will cease to have effect at the start of 28 September 2020.
An order made by the FWC may not be contravened. Contravention of an order will be a breach of the FWA and may result in a penalty of up to $12,600.
Protections
An employer must not purport to give a jobkeeper enabling direction (to stand-down, change hours or location of work or duties) if the direction is not authorised by the FWA and the employer knows that the direction is not authorised. Breach of this prohibition will mean that the employer is in breach of the FWA and that they will be penalised up to $126,000.
Each of the following are considered a ‘workplace right’ for the purposes of Part 3-1 of the FWA (general protections): the benefit an employee receives because of the employer’s obligation to satisfy the wage condition; agreeing or not agreeing to perform duties on different days or at different times; agreeing or not agreeing to take paid annual leave at full or half pay; making a request for secondary employment, training or professional development.
Relationship with other laws
The abovementioned amendments to the FWA operate subject to other provisions in the FWA, anti-discrimination legislation, workers compensation legislation and work health and safety legislation.
Overpayments
The Coronavirus Economic Response Package (Payments and Benefits) Act 2020 provides that where the Commissioner of Taxation (‘Commissioner’) has made a Coronavirus economic response payment (e.g. a JKP) to an entity and that entity either was not entitled to it or the amount paid was more than the correct amount, the entity is liable to repay the amount which it was not entitled to – the amount is due and payable on the day on which the amount was paid to the entity. If the entity does not pay by the due date, a general interest charge is payable.
Changes to Awards
On 8 April 2020 the FWC issued a decision introducing changes to the majority of modern awards, introducing unpaid pandemic leave (to 30 June 2020) and annual leave at half pay.
Unpaid pandemic leave
An employee whose employment is covered by a varied Award (see above), will be entitled to elect to take two weeks unpaid pandemic leave if the employee is required (by government or medical authorities, or acting on medical advice) to self-isolate; or, if they are otherwise prevented from working by measures taken by government or medical authorities and the employee provides their employer with notice of taking the leave
(including the reason) as soon as practicable (which may be after the leave has started) and, if requested to do so, the employee provides the employer with supporting evidence.
This unpaid pandemic leave will be available in full immediately, will only be available until 30 June 2020 (unless extended by further variation), is available to full-time, part-time and casual employees and is not pro-rated, counts as service, does not affect any other paid or unpaid leave entitlement of the employee, is a workplace right within the meaning of section 341 of the FWA meaning that an employee who exercises this right or proposes to
exercise it is protected from adverse action taken, or the threat of such action, because of that workplace right, does not require an employee to exhaust other forms of leave before it can be accessed; does not operate on a per occasion basis – it is only available once; is not an entitlement of person’s caring for other people who are required to self-isolate.
Neither an employer nor an employee nor any other person can coerce another to exercise, or not exercise, or propose to exercise or not exercise a workplace right.
Pandemic leave is only an entitlement of award employees whose employment is covered by one of the awards which have been varied. Other award employees and award free employees are not entitled to pandemic leave. However, it is something which an employer could grant to an employee as a matter of agreement between them.
Annual leave at half pay
An employer and employee may now agree to the employee taking twice as much leave on half pay. The agreement must be recorded in writing and retained as an employee record.
The ability to take annual leave at half pay is a workplace right within the meaning of section 341 of the FWA 2009. This means that an employee who makes use of this right, or proposes to do so, is protected from adverse action taken because of it.
Neither an employer nor an employee nor any other person can coerce another to exercise, or not exercise, or propose to exercise or not exercise a workplace right.
Annual leave at half pay is only an entitlement of award employees whose employment is covered by one of the awards which have been varied. It is not an entitlement of other award employees or award free employees. However, it is something which award free employees can negotiate with their employer.
Varied awards
For a list of the awards which have been varied, go to the FWC’s website www.fwc.gov.au
The FWC considered making other changes but decided against doing so at this point in time. However, this the changes which have been made do not preclude other variation applications being made to modern awards to provide for additional measures during the pandemic. To stay up to date with developments, go to www.fwc.gov.au
CONCLUSION
The changes to the FWA and Awards discussed in this summary are a positive development and provide both employers and employees with greater flexibility in meeting the challenges we are all facing in these challenging times. With greater flexibility comes a high level of responsibility to ensure compliance, so employers and employees will need to proceed with caution as they become accustomed to the new and temporary ‘normal’ for workplace relations.
Elizabeth Devine of Devine Law at Work is a specialist in employment law and conflict management. Based in Sydney, Australia, Elizabeth provides advisory, educational and conflict management services to employers across Australia and to their related entities across Asia, North America, the United Kingdom and Europe. Connect with Elizabeth via email or LinkedIn
