COVID-19 – It’s not all about stand down; what about varying your enterprise agreement?

Posted by on Apr 3, 2020

In response to the coronavirus pandemic, you would have seen in the media that a number of employers, large, medium and small, from a wide range of industries are standing down employees. Stand down is permissible in more limited situations than current reporting would have you believe.

Employers are also utilising other measures such as temporarily reducing employee’s hours and pay to manage the new economic pressures they are facing. We are also seeing a growing number of applications from employer groups and unions across various industries and occupations to vary modern awards. Most recently the Clerks – Private Sector Award 2010 and the Restaurant Industry Award 2010 have been temporarily varied. Now employers have started making applications to the Fair Work Commission (FWC) for approval to vary their enterprise agreements to improve flexibility at this time of uncertainty. On 31 March 2020 the FWC published a fact sheet here on the steps to be taken to lawfully vary an agreement.

The FWC has the power to approve an enterprise agreement that does not pass the Better Off Overall Test (BOOT) in exceptional circumstances if doing so would not be contrary to the public interest. However, the FWC has warned that it is currently unclear whether it would be able to approve a variation to an enterprise agreement in exceptional circumstances if the varied agreement does not pass the BOOT. This matter will be considered by a Full Bench of the FWC when it considers one of the early COVID-19 triggered variation applications that has been made.

On 2 April 2020, the FWC approved the first enterprise agreement variation application prompted by COVID-19. The variation was made to terminate the next wage rise agreed under the enterprise agreement which the FWC determined passed the BOOT. 

Whether varying your enterprise agreement is a real and practical option remains to be seen. We will be carefully following developments in this area.

Kelly Ralph is a Senior Associate at Justitia. To view Kelly’s profile, click here.