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Employment during the COVID-19 crisis

The immediate crisis and panic of those last weeks in March may have passed, but the ‘new normal’ is likely to be here for some months to come.

Legal practices are still permitted to operate as they do not fall within the list of non-essential businesses prohibited from operating under the Non-essential business, activity and undertaking Closure Direction (No.5) given on 9 April 2020 by the Queensland Chief Health Officer.

However, the effect of the Queensland Chief Health Officer’s Home Confinement, Movement and Gathering Direction given on 2 April 2020 is that work should be performed from home where reasonable.

Whether work can reasonably be performed from home is a matter for each employer to determine in consultation with its employees. In doing so, both employers and employees should keep in mind that workplace health and safety obligations have not been affected by the current crisis. Employers continue to have a duty to ensure, so far as is reasonably practicable, the health and safety of their workers while at work and workers must take reasonable care for their own health and safety.

An assessment of an employee’s home working environment should be carried out (which may be a self assessment) for this purpose and there are working from home protocols available from Queensland Law Society.

COVID-19 and employee leave entitlements

If an employee is suffering from any of the recognised symptoms of COVID-19 or is diagnosed with COVID-19, whether or not they are asymptomatic, they are entitled to take their accrued paid personal leave to cover their absence.

Permanent employees have a statutory entitlement to 10 days a year paid personal leave comprising sick leave and carer’s leave, which is cumulative from year to year.

A medical certificate can be requested as evidence for sick leave.

If an employee takes carer’s leave to look after a sick immediate family or household member, a statutory declaration will usually be sufficient to evidence an absence for carer’s leave.

Where an employee has no paid personal leave accrual, they can ask an employer to allow them to access their annual leave and long service leave. If an employee has no leave owing, they can ask their employer to continue to pay them but there is no obligation for the employer to do so.

Employers continue to have a duty to ensure, so far as is reasonably practicable, the health and safety of their workers while at work.

Employees who are subject to the Legal Services Award 2020 (the award) have additional unpaid leave rights which operate from 8 April 2020 until 30 June 2020, subject to extension by the Fair Work Commission.

The award applies to most support staff, graduate lawyers and law clerks. Schedule X of the award provides an entitlement to unpaid “pandemic leave” and the flexibility to take twice as much annual leave at half pay. Any employee is entitled to take up to two weeks’ unpaid leave if they are required by the government or medical authorities, or acting on the advice of a medical practitioner to self-isolate and are prevented from working as a result. Notice of the leave must be given as soon as practicable, along with reasonable evidence of the reason on request.

Schedule X also provides that an employer and employee can agree in writing to the employee taking twice as much annual leave on half pay. The award (clause 22.6) also allows for the payment of annual leave in advance (although an overpayment may be able to be deducted on termination).

If an employee is required to self-quarantine by the authorities but is not ill, then they should be allowed to access their annual leave and long service leave. This would convert to personal leave upon request if they are subsequently diagnosed with COVID-19.

If an employer has reasonable concerns that an employee is ill with COVID-19, the employee can be directed to obtain a medical clearance before returning to work, but the employer should pay the employee for their time away as special leave if they are cleared for the period of absence.

The government’s stated intention is that employers must ensure that all eligible employees participate in the JobKeeper scheme.

How does the JobKeeper scheme assist?

If a law firm has been economically affected by the COVID-19 crisis, there are several options to allow employment to continue before considering termination of employment.

The intent of the Coronavirus Economic Response Package (Payments and Benefits) Act 2020, Coronavirus Economic Response Package Omnibus (Measures No.2) Act 2020 and the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (JobKeeper scheme) is to provide support for eligible employers to keep their employees in employment.

The JobKeeper scheme does this by providing financial support through the JobKeeper subsidy for financially eligible employees and employment flexibility through changes to the Fair Work Act 2009 (Cth) (Fair Work Act). The JobKeeper scheme started on 30 March 2020 and ends on 27 September 2020.

Financial support

The basis of the JobKeeper scheme is that employers will be reimbursed a fixed sum for continuing to employ people. To be eligible to participate in the JobKeeper scheme, an employer must meet the requirement of a substantial decline in turnover. For most law firms, this test will be met if there is a 30% decline in turnover:

  1. in any month from March to September 2020, compared with the same month in 2019, or
  2. in the April–September 2020 quarters compared with the same quarters in 2019.

There will be an alternative test for new businesses to be published by the Australian Taxation Office (ATO) and different tests apply for large businesses with aggregated annual turnover of more than $1 billion and many charities.

If an employer qualifies for the JobKeeper scheme, they will be entitled to receive $1500 per fortnight for each eligible employee on their books on 1 March 2020 for up to 13 fortnights. There is no income cap on employee eligibility. If an employee is earning less than $1500 per fortnight, their pay will need to be made up to that rate, but an employee earning more than $1500 per fortnight cannot have their pay reduced on this basis. Payments will be made by the ATO to employers commencing in the first week of May 2020 with payments backdated to 30 March 2020.

Employers should be conscious of the need to elect before the end of each JobKeeper scheme fortnight to participate in the JobKeeper scheme (a different rule applies for the first two fortnights commencing on 30 March 2020) and provide information about eligible employees. Eligible employees must also agree in writing to be nominated for inclusion. Reference should be made to the JobKeeper Rules (and Explanatory Statement) as well as the ATO website for details about enrolling in the JobKeeper scheme, applying for payments and ongoing obligations.

The JobKeeper scheme Acts provide a framework, but the detail of employer and employee eligibility is contained in the JobKeeper Payment Rules made by the Treasurer. The rules’ starting point is that payments will be made to cover:

  1. any permanent employee, and
  2. any casual employee with 12 months’ service on a regular and systematic basis; who was employed as at 1 March 2020, over 16 years of age and either an Australian resident or holder of a Special Category migration visa.

Reference should be made to the JobKeeper Payment Rules for the detail of particular situations. Employees who have been terminated from 1 March 2020 will be covered by the JobKeeper scheme if they are re-employed, as will employees who have been stood down, as long as payments have been made to them of at least the amount of the JobKeeper payment. Self-employed people are also covered, but not employees receiving workers’ compensation payments or employees receiving parental leave payments or dad/partner pay from the Australian Government.

The Government’s stated intention is that employers must ensure that all eligible employees participate in the JobKeeper scheme, although at the time of writing this has not been specifically spelt out in the JobKeeper scheme. Workers who are not eligible to receive a benefit may be entitled to the JobSeeker allowance or other government benefits.

Changes to the Fair Work Act

The second limb to the JobKeeper scheme comprises changes to the Fair Work Act to facilitate ongoing valuable employment during the crisis. The temporary changes to the Fair Work Act enable a qualifying employer, subject to the conditions below, to direct one or more employees:

  • to work fewer days or hours (but not reducing the employee’s hourly rate of pay) or be stood down completely where the employee cannot be usefully employed for their normal days or hours because of business changes brought about by the COVID-19 pandemic or associated government directions
  • to perform any duties within their skill and competency that are safe and reasonably within the employer’s business operations
  • to work at a different place to their normal place of work, including their home, as long as it is suitable, does not require unreasonable travel, is safe and reasonably within the employer’s business operations.

These changes only apply to employers who qualify for the JobKeeper scheme. They effectively limit the ability of non-qualifying employers to stand down employees under the existing provisions of the Fair Work Act or unilaterally change the hours of work or conditions of employees. While there does not have to be a stoppage of work to stand employees down under the JobKeeper scheme (which is a condition of the general stand down provision in s524 of the Fair Work Act), it is necessary that employees cannot be usefully employed because of pandemic-related changes. There is no ground for stand down if an employee is still able to do work which is of benefit or value to the employer.

Arrangements where employees have agreed to take a temporary pay cut for the same hours of work can continue as long as the hourly rate paid to employees is greater than provided by an applicable award or enterprise agreement or, for award-free employees, the federal minimum wage and at least the amount of the JobKeeper subsidy is being paid.

People remain the biggest asset of any law firm

Under the JobKeeper scheme, employers and employees can also agree in writing to an employee:

  • working on different days and times to normal, while not changing the number of ordinary hours of work, and
  • taking paid annual leave or twice as much annual leave at half-pay subject to the requirement to keep a balance of at least two weeks.

Any directions must be reasonable and necessary, and only given after at least three business days’ notice (unless a shorter period is agreed by the employee) and after consultation with the employee. Other points to note are:

  • Employee entitlements continue to accrue as normal during this period.
  • An employee can ask the employer to agree to their undertaking secondary employment, training or professional development during a stand down period or reduced hours.
  • The Fair Work Commission has broad powers to deal with any disputes about these matters.
  • These provisions also have the effect of workplace rights under the Fair Work Act.

It is important that:

  • Employers correctly assess scheme and employee eligibility because a failure to do so may expose employers to claims of breach of the Fair Work Act and claims for underpayment as well as potential liability for repayments to the ATO.
  • Employers properly consult with employees and take a cooperative approach by talking to them and taking their views into account so that disputes do not escalate.
  • A paper trail is kept of consultation, short-term agreements and directions in order to avoid confusion.

The JobKeeper scheme offers employers the ability to keep valuable staff in employment and substantially offset their wage costs whether it be by continued employment on their existing arrangements, by working at home under adjusted hours of work, working lesser or different hours on a short-term basis, carrying out different duties, taking leave, or ultimately being stood down and receiving at least the JobKeeper subsidy amount.

What about redundancy?

For some businesses, the JobKeeper scheme may not be enough to keep staff employed. However, caution should be exercised because redundancy is not a short-term solution and employers leave themselves open to claims of unfair dismissal and other claims. The merits of redundancy should be carefully considered because it may not be easy to employ skilled people in the future.

If considering making one or more positions redundant, the first question to ask is whether the proposed redundancy is genuine. Where the employer decides that it does not wish a job performed by the employee to be performed anymore, or proposes to redistribute the duties of the job amongst other employees, the position may be made redundant.

The important thing about redundancy is that it relates to the position itself rather than the person holding the position. An employer should be able to demonstrate financial grounds for termination and a record substantiating the selection of particular positions.

In addition, the employer should consult with the employee about the proposed redundancy by inviting their views about minimising the impact of the proposal and taking those views into account before a final decision is made (this is compulsory for award-covered employees). Lastly, an employer is required to consider whether there are any other suitable positions open within the business for redeployment.

Once a decision to make a position redundant has been made, notice should be given to the employee or paid in lieu and payment of redundancy pay made in accordance with contractual or statutory requirements (whichever is the greater). The statutory requirement to pay redundancy pay does not apply if the employee has less than 12 months’ continuous service or if the employer is a “small business employer” with less than 15 employees.

People remain the biggest asset of any law firm and care should be taken in making decisions which will have a significant impact on people’s lives and livelihoods as well as the continued existence and future of businesses.

Footnote:
1 Coronavirus Economic Response Package (Payments and Benefits) Rules 2020.

Rob Stevenson is the Principal of Australian Workplace Lawyers and a QLS Senior Counsellor. rob.stevenson@workplace-lawyers.com.au

This story was originally published in Proctor May 2020.

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