We stress that due to the unprecedented nature of the pandemic and the very rapidly changing landscape, the guidelines below are general in nature and subject to change. Many of the laws that now apply to this situation were not written with regard to what is currently occurring. Therefore please exercise caution in relying on this general advice, and seek advice specific to your circumstances.
COVID-19 has had a significant impact on many businesses, large and small. The situation is constantly evolving with many workplaces implementing ‘work from home’ policies, and individual employees self-isolating by choice or necessity.
There will be and has been a significant financial impact on many businesses as a result of COVID-19. Some businesses can continue to operate with home-based employees, but many can’t. For those that can, there may still be some roles which cannot effectively be performed from home.
Employees working from home to ‘self-isolate’
The position depends upon whether the directive to work from home is made by the employer, or whether it is a government directive.
If the directive is made by the employer, for example as a matter of safety or simply following government guidelines, then the employer must continue to pay the employee their ordinary pay while the directive applies.
This is subject to the following:
- if the employee is sick, or is caring for a member of their household who is sick, then they would be able to use their personal/carers leave; and
- if the employee is covered by an Award or Enterprise Agreement that instrument may allow the employer to direct the employee to take annual leave in accordance with the relevant process set out in that instrument. Generally, this is where there has been excessive leave accrual by the employee.
The employer may elect for example to direct those employees who can work from home effectively to do so, and to require other employees who can only work at their place of employment to continue to work from their place of employment.
If an enforceable direction is made by the Government (for example, a general lockdown, or a requirement for gyms and cinemas to close down as has occurred recently) and as a result, an employee is unable to attend their workplace then the following applies:
- if the employer directs the employee to work from home then the employee must continue to be paid;
- If the employee is unable to work from home then the employer is not under an obligation to continue to pay the employee.
Certain employees and categories of employees may be able to be stood down without pay in certain circumstances pursuant to s524(1)(c) of the Fair Work Act (Cth). The requirements are:
- there is a stoppage of work;
- the employee cannot be usefully employed elsewhere by the employer (e.g. another role or a change of functions); and
- the stoppage must be for a cause for which the employer cannot reasonably be held responsible.
Whether or not this option is available depends on the circumstances. Within each workforce, there will be different scenarios, and the answer to the question of whether employees can be stood down will be different for each.
Also, by way of example, if there is reduced work available for an employee (as opposed to no work), this is not a legitimate reason to stand down the employee.
Other options for reducing or restructuring the workforce
There are other options for reducing or restructuring the workforce which are set out below.
Before making a decision to stand down employees, or to reduce or restructure the workforce, consideration should be given to the benefits provided by government support packages that have been made available to employers affected by the COVID-19 pandemic. Stimulus packages announced to date are structured in such a way as to encourage employers to keep their employees.
Another alternative is to allow employees to use up accrued leave entitlements given the fluidity of the situation, and the time and expense that may otherwise be involved in rehiring employees when the situation normalises.
An employee can be directed to use up accrued annual leave in certain circumstances but only to the extent that they have 6 weeks of accrued annual leave remaining after using up the period of directed leave.
However, an employer and employee may reach an agreement that the employee can use up some or all of their accrued annual leave, and possibly long service leave entitlements in certain circumstances. A further option is that agreement is reached between the employer and employee that the employee take a period of unpaid annual leave.
Termination of employment and redundancy
The employee’s employment contract should be carefully reviewed to see whether it has any provisions that allow for the termination or standing down of the employee in the circumstances that have occurred, or that deal with processes to be followed if a redundancy is to occur.
A redundancy can occur where an employer no longer requires a person’s job to be performed by anyone because of changes in the operational requirements of a business (whether due to COVIC-19 or otherwise).
All modern Awards and enterprise agreements set out consultation provisions that must be followed in the event that an employer wishes to engage in any restructuring of the workforce, including redundancies. The consultation provisions are detailed and generally require that:
- affected employees are notified in writing that a decision has been made to introduce significant changes which may have an impact on the affected employees;
- a discussion is to take place with affected employees, either individually or in a group, as to the proposed changes, with the employees given an opportunity to provide feedback.
A failure to comply with consultation provisions can result in a civil penalty being imposed on the employer.
Further, in order for a redundancy to be considered a ‘genuine’ redundancy, the consultation provisions must be followed. If a redundancy is not genuine the employee may be entitled to make a claim for unfair dismissal.
However, ‘small business employers’, being employers who employ fewer than 15 employees on a simple headcount of all employees that are employed on a regular and systematic basis:
- are protected against unfair dismissal claims where the Small Business Fair Dismissal Code is followed; and
- do not have to pay redundancy pay to employees that are made redundant.
If an employer is not a ‘small business employer’ then it must pay to the employee such redundancy pay as is set out in the National Employment Standards, which is based upon the number of years of continuous service. This payment is in addition to other accrued entitlements of the employee ordinarily paid out upon termination such as accrued annual leave.
In addition to redundancy pay (if applicable) and accrued entitlements, employees made redundant must also be paid for the period of notice set out in their employment agreement, or the National Employment Standards.
This is intended to be information of a general nature in a fast-developing situation. We recommend that you seek advice as to your specific circumstances. You do this by contacting us online or on 9299 4912.