Overview – New flexibilities unlocked for JobKeeper employers
Legislation was passed yesterday to implement the JobKeeper scheme. The JobKeeper scheme is a $1,500 a fortnight payment for JobKeeper employees paid through their JobKeeper employer (as opposed to JobSeeker, which is a smaller payment paid through CentreLink to the JobSeeker). The Fair Work Act 2009 (Cth) is amended temporarily (until 28 September 2020) (Updated Fair Work Act).
In reading this update, it is important to remember that there is still important detail that will be dealt with in the “JobKeeper payment rules” to be issued by the Treasurer, which we can expect to see soon. These will answer questions such as:
- Which employers and employees are eligible for JobKeeper payments?
- Should employers start paying JobKeeper payments to employees now before their eligibility is confirmed?
- Will employers be able to use JobKeeper payments to fund annual leave or long service leave payments?
Although there is a risk in making decisions now without these rules, we are aware that some clients will make their own commercial judgements in this regard. Please reach out to your Mills Oakley Partner Contact and we can provide guidance.
What do employers need to know about changes to the Updated Fair Work Act?
The Updated Fair Work Act gives a JobKeeper employer new flexibility to manage its workplace in this COVID-19 environment. Most of the flexibilities are only available after consultation with employees and/or their representatives. The Fair Work Commission has the power to deal with disputes. There are also new penalty provisions, which give employees, unions and Fair Work inspectors the right to pursue JobKeeper employers for serious breaches.
New flexibilities unlocked for JobKeeper employers – JobKeeper Enabling Directions
The Updated Fair Work Act will allow a JobKeeper employer to give written “JobKeeper Enabling Directions” that can override Award or Enterprise Agreement restrictions in relation to what employees do, when they perform their work (i.e. hours and days of work) via a stand down direction, and where they work.
JobKeeper employers are empowered to make these directions if they reasonably believe that the direction is necessary to continue the employment of employees, and is attributable to the COVID-19 pandemic. Prior consultation with employees and/or their representatives is mandatory before implementing an enabling direction.
Additional Stand Down Rights for JobKeeper employers, adapted for COVID-19
The Updated Fair Work Act gives additional rights of stand down to those already in the existing s524 of the legislation. It allows JobKeeper employers rights to stand down JobKeeper employees either for all or part of their usual working hours. A “JobKeeper Stand Down Direction” can only be issued if 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:
- The COVID-19 pandemic; or
- Government initiatives to slow the transmission of COVID-19.
It would appear the normal considerations around stand down continue to apply in relation to the JobKeeper Scheme. If an employer qualifies for the JobKeeper scheme, eligible stand down circumstances may include where an employee is restricted from performing their job as a result of COVID-19 or Government initiatives such as lock downs for social distancing (resulting in the closure of hotels and restaurants). An employer must consider whether there are alternative duties that the employee can perform (whether at work or from home) before stand down can be lawfully enacted.
It would be critical that these stand downs are “attributable to the COVID-19 pandemic” and they are consulted upon with employees and/or their representatives before implementation. Any lawful stand down direction is subject to giving at least three days’ written notice to the employee (unless they genuinely agree to being given less notice) and consultation. It will not have effect during a period of paid or unpaid leave authorised by the employer.
During a stand down, a JobKeeper employee can request to engage in secondary employment or additional outside training. An employer cannot unreasonably refuse the employee’s request.
A JobKeeper Stand Down Direction will cease to have effect no later than 28 September 2020.
(If a JobKeeper employer cannot meet the technical requirements for a stand down direction, an employer has the right to request new days of work from the employee without reducing their hours; and an employee cannot unreasonably refuse.)
Alteration to duties and location of work
The JobKeeper scheme also enables employers to alter the duties and location of work. The alternative duties must meet a number of criteria such as being safe, reasonable, within the employees’ skill and competency and reasonably within the scope of the business in question. In relation to alternative location for work, similar considerations apply, including whether the location is safe, the place of work is suitable and there are no unreasonable travel requirements.
New right to direct JobKeeper employee to take annual leave
A JobKeeper employer has the right to direct a JobKeeper employee to take annual leave until their balance runs down to 2 weeks. A JobKeeper employer can also agree with their employer to take twice as much paid annual leave at half the employee’s usual rate of pay.
As mentioned above, there is also the ability for the JobKeeper employer to request JobKeeper employees to work alternative days without reducing their hours (which cannot be unreasonably refused by the employee).
The JobKeeper payment rules should tell us whether an employer can use JobKeeper payments to fund annual leave entitlements for employees.
Protection of employee terms and conditions – the $1,500 and rates of pay
The JobKeeper scheme does provide flexibility for employers to stand down employees, alter duties and location of work and enable the direction to take annual leave. However, this cannot result in (for example):
- Alteration in the amount of the JobKeeper payment to the employee (the full $1,500 must be passed on to the employee);
- Reduction in the amount payable to the employee for the performance of work during the fortnight (for example, if the employees pay on reduced hours is $2,000 per fortnight, the employer would have to pay the $2,000 to the employee – it can however apply the $1,500 against the $2,000 payable to reduce the employer’s wages burden); and
- Reduction in an employee’s base hourly rate of pay under the amount that would have been applied to the employee prior to a JobKeeper enabling direction (i.e. the hourly rate must remain the same, even if the actual hours of work have been reduced).
A Worked Example – the Basics
As mentioned the JobKeeper payments rules are yet to be finalised; this is a basic example:
An eligible JobKeeper employee usually earns $200 per day (i.e. $2,000 a fortnight) for working five days a week. The employee is stood down one day per week and thus is now being paid $1,600 a fortnight. An eligible JobKeeper employer can use the $1,500 JobKeeper payment it receives from the Government, to help fund this employee’s wages and the remaining $100 is funded by the employer.
If an employee earns more than $1,500 a fortnight, the employer is not legally obligated to pay the employee’s usual wage, plus the JobKeeper payment. If an employer wants to pay more, that is up to the employer. Also, for any eligible employee, the whole $1,500 per fortnight that the employer receives must be paid to the employee by the employer – not less. Rules in relation to superannuation and other on-costs will need to be finalised as part of the JobKeeper payment rules.
New JobKeeper-related penalties to be inserted into Updated Fair Work Act
Apart from taking disputes to the Fair Work Commission, an aggrieved employee or union or an inspector from the Fair Work Ombudsman’s office, can pursue a JobKeeper employer for damages and penalties in connection with new offences, these include:
- Not passing on the full $1,500 per fortnight to the JobKeeper employee;
- Misusing the JobKeeper enabling directions.
This summary is not a substitute for legal advice as applicable to your specific situation. Please contact your Mills Oakley Partner Contact for further guidance and advice.
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