Western Australian employers have an added level of complexity to deal with because there are two systems of industrial law in Western Australia: the Federal system enacted through the Fair Work Act 2009 (Cth) (FWA) covering corporations (constitutional), corporate trustees and Federal government departments (Federal Employers); and the State system enacted through the Industrial Relations Act 1979 (WA) covering sole traders, partnerships, family trusts (with a non-corporate trustee) and State government departments (State Employers).
1. How can I temporarily reduce employment costs to stop my business from closing?
Employers should first explore with employees whether they will voluntarily access paid leave entitlements. This could include annual leave, and where applicable, long service leave. Due to recent changes, State Employers can agree with employees to take annual leave at half pay and Federal Employers covered by many Modern Awards can do likewise.
If that is not an option, then Employers may consider an alternative option of scaling back business operations including a voluntary reduction in employee hours.
Any contractual variation to the terms and conditions of an employee’s employment requires mutual agreement. A contract cannot be changed unilaterally. Advice should be sought prior to making any changes to written or verbal contracts. Although, we note that Federal Employers in receipt of the JobKeeper Wage Subsidy may also be able to access temporary adjustments to leave taking, and hours and location of work (see our further comments below).
Employers should also consider whether any consultation obligations are triggered by the proposed changes. A State Award or Federal Modern Award may require an employer to consult with employees on major workplace changes such as “alteration of hours of work” and “major changes in the composition, operation or size of the employer’s workforce”. Failure to comply could result in a civil penalty.
2. Can I require employees to take annual leave or their other entitlements?
An applicable industrial instrument (an award or enterprise agreement) may permit such a direction to be made, however, it must be reasonable and in accordance with any specific requirements listed. In the absence of such a term, an employer is not usually permitted to direct their employees to take a period of leave. Employers should flag with employees that if they access their leave entitlements it may enable the employer to avoid the need to implement redundancies. However, if a Federal Employer qualifies for the JobKeeper Subsidy Scheme there are temporary changes to the FWA annual leave provisions which are discussed at point 5 below.
3. Are there stand down powers available to my business and my employees?
For State Employers unless there is an applicable State award or industrial agreement which includes stand down powers there are otherwise no stand down powers contained in WA employment legislation. For Federal Employers, there are powers available under the FWA to stand down employees in certain circumstances, which are addressed at points 4 and 5 below.
4. I am a Federal Employer: When can I stand down employees?
For Federal Employers, generally 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”.
The employer must demonstrate:
- A stoppage of work;
- Employees stood down cannot be usefully employed (which is not limited to the work an employee usually performs); and
- The cause of the stoppage is one which the employer cannot reasonably be held responsible.
Note that the stoppage of work would be satisfied if there is a government direction. A stand down is not an employer’s right if it is the most convenient way of avoiding economic loss. Therefore, a downturn in business is unlikely to satisfy the provisions.
Where an employee is taking paid or unpaid leave, or is otherwise authorised to be absent from employment, they are not taken to have been stood down. An employee who has been stood down may be eligible for the JobKeeper Wage Subsidy and potentially could access their superannuation early.
However, in response to the coronavirus pandemic, the Australian parliament has responded by introducing interim powers in the FWA that will apply until 28 September 2020. Relevantly, this means that Federal Employers, who qualify for the JobKeeper Wage Subsidy, may also have access to additional stand down powers (and other powers to assist with responding to the economic impact of COVID-19) where certain requirements are met. This is addressed at point 5 below.
5. Amendments to the FWA to support the operation of the JobKeeper Wage Subsidy
Overview
Various temporary legislative changes to the FWA (applicable until 28 September 2020), were enacted on 9 April 2020 to support the implementation and operation of the JobKeeper Wage Subsidy scheme and are governed by the Coronavirus Economic Response Package Omnibus (Measures No.2) Act 2020 (the Act).
These changes are the legal means by which employers could lawfully circumvent certain contractual and statutory restrictions which were previously not available, including (i) stand down directions which are broader than the powers currently available under section 524 of the FWA and (ii) directions to change duties and/ or location of work.
Employers may access the JobKeeper Wage Subsidy to assist them to continue paying their employees. Eligible businesses that elect to participate in the scheme will receive a payment of $1500.00 per fortnight per eligible employee they employed as at 1 March 2020 who is retained in employment. Further information regarding the Scheme can be found here.
The FWA has been amended to support the JobKeeper Wage Subsidy scheme and qualified Federal Employers can:
- Make temporary and partial stand downs in certain circumstances (‘JobKeeper enabling stand down provisions’);
- Temporarily alter employees’ usual duties and locations of work in certain circumstances (‘JobKeeper enabling directions’);
- Agree with eligible employees to agree on altering an employee’s days and times of work and use of annual leave in certain circumstances.
These provisions will not reduce minimum pay rates and other monetary entitlements. Therefore:
- An employer must pay the employee their correct base pay rate for the work they’re still performing, where an employer partially stands down an employee;
- Where duties have changed, the employer must pay the employee the higher of:
i. The base pay rate that applies to their previous duties; or
ii. The base pay rate that applies to the new duties the employee is performing.
JobKeeper enabling stand down provisions
JobKeeper enabling stand down directions can only be given if the (i) employee can’t usefully be employed for their normal days or hours because of business changes attributable to (a) COVID-19; or (b) government initiatives to slow the transmission of COVID-19; and (ii) direction is safe having regard to the nature and spread of COVID-19.
The direction must be in writing and employers must ensure:
- The direction is reasonable in the circumstances;
- They notify and consult their employees at least 3 days before issuing the direction (unless the employee agrees otherwise); and
- Keep a written record of the consultation.
An employee’s hourly base rate cannot be reduced as a result of the direction.
If an employee is taking paid or unpaid leave or is otherwise entitled to be absent from work, then the direction will not apply. Additionally, employees will continue to accrue leave, and service continues for the purposes of redundancy and pay in lieu of notice.
Where an employee normally receives a leave payment that is less than the JobKeeper payment then the employee is entitled to an amount equal to the JobKeeper payment.
JobKeeper enabling direction to work different days/times/location
An employer can direct an employee to perform any duties or work in a different work location provided the following requirements are met:
- The direction is reasonable;
- The performance of duties on different days/times/location is safe in the context of COVID-19 and is reasonably within the scope of employer’s business operations;
- Any new location is within a reasonable travelling distance.
- The place is suitable for the employee’s duties;
- The modified duties are within the employee’s skill and competency, and the employee has the required licenses or qualifications;
- The place does not require the employee to travel a distance that is unreasonable in all the circumstances;
- The employee’s usual work hours aren’t reduced (to reduce hours see JobKeeper enabling stand down);
- the employer becomes entitled to one or more job keeper payments for the employee for all or part of the relevant period.
Written notice and consultation must occur at least 3 days before the direction is issued (unless the employee agrees otherwise). A written record of the consultation must also be kept.
The employee’s hourly base rate of pay cannot be reduced as a result of the direction.
Agreement to take annual leave
A qualifying employer can request that an employee take paid annual leave (if they keep a balance of at least 2 weeks).
A qualifying employer and employee can also agree in writing to the employee taking annual leave at half their usual pay rate.
Whilst the amendments to the FWA do not confer any power on an employer to direct an employee to take annual leave, an employee must (i) consider the request; and (ii) not unreasonably refuse the employer’s request.
It is important to note however, that even if an employee agrees with an employer’s request to take annual leave at half pay, the employee will continue to accrue their usual leave entitlements.
6. Can I make an employee’s position redundant and terminate their employment?
This is an extreme measure and other options should be considered first.
It is best practice to (and in many instances a mandatory requirement of State Awards and Federal Modern Awards) to consult with the affected employees about the need for redundancies, to give them written information about the foreshadowed redundancies and to give the employees an opportunity to respond to the proposed changes. A change in operational requirements is likely to include a change due to a global pandemic, however it must be assessed on its merits to determine whether a genuine redundancy is satisfied.
In the event of termination on the basis of redundancy, an employer must comply with any obligation to pay redundancy pay and the notice provisions required by contract, legislation or industrial instruments.
Please contact our employment workplace relations team on (08) 9321 0522 should you require any advice on the various significant employment changes enacted as a result of the ongoing pandemic.
This Alert has been provided as general information only, and employers should seek advice on their particular circumstances. Due to the pace of change of the law related to the COVID-19 crisis, the accuracy of any legal advice may be subject to change at short notice.
