On 9 April 2020, the Coronavirus Economic Response Package Omnibus (Measures No. 2) Act 2020 (Cth) received Royal Assent. Employers need to be aware that this legislation amends the Fair Work Act 2009 (Cth) (the Act) in a number of significant ways.
Given the current situation, many employers are grappling with reduced demand and/or government restrictions which are impacting their revenue. Some employers are exploring changing their employees’ terms and conditions of employment as a way of avoiding redundancies. For example, some employers are requesting employees work reduced hours for a corresponding reduction in remuneration. Employers would be aware that, in most instances, an employer must obtain an employee’s agreement to reduce their hours of work and remuneration.
Changes without employee agreement
These most recent amendments to the Act allow employers who qualify for the JobKeeper scheme to make changes to terms and conditions of employment without employee agreement. They are powerful amendments which override both contracts of employment and industrial instruments such as enterprise agreements. Subject to a number of conditions, relevant employers will be able to do the following without employee agreement.
Relevant employers will be able to direct an employee not to work on a particular day or days or unilaterally reduce the employee’s hours of work, including to nil. This is called a “jobkeeper enabling stand down direction.” These powers will apply only if the employee cannot be usefully employed for their usual hours (or days) because of changes to the employer’s business caused by the current pandemic.
The direction to not work, or the unilateral reduction in hours, will allow a corresponding reduction in remuneration, with some important safeguards. For example, an employer will be able to unilaterally reduce a full-time employee’s hours to part-time hours with a corresponding reduction in pay. Where the reduced hours mean the employee is earning less than the JobKeeper payment, then the employee will be paid the equivalent of the payment. Where the reduced hours result in the employee earning more than the JobKeeper payment, then the employee is entitled to be paid for the actual hours worked, with part of their wage subsided by the JobKeeper payment.
Change duties or location of work
Relevant employers will be able to unilaterally change an employee’s:
- duties, provided that the new duties are within the employee’s skill and competency;
- place of work to another location, including their home.
Unilateral changes to an employee’s duties or work location are only permitted if they are necessary in order to keep one or more employees of the employer in their employment.
At all times, the above unilateral changes must be reasonable in all the circumstances and there are other conditions. There are also strict consultation requirements before these unilateral changes can be implemented. And it is important to remember that these powers only apply to employers who are eligible for the JobKeeper scheme.
Changes with employee agreement
Employers who qualify for the JobKeeper scheme can also make changes to terms and conditions of employment by agreement. While employee agreement is required for these changes, an employee cannot unreasonably refuse their employer’s request for the change. The changes which an employee cannot unreasonably refuse are as follows:
- performing their duties on different days, compared to their ordinary days of work; and
- performing their duties at different times, compared to their ordinary times of work.
Employers may also request that an employee take annual leave, which again the employee cannot unreasonably refuse. However this request is subject to the employee retaining an annual leave balance of two weeks. (Employers and employees can of course continue to agree for the employee to take all of their accrued annual leave, in accordance with the National Employment Standards, where the employee has made the leave request.)
The caveat to these new powers to make these changes and requests, which under the Act an employee cannot unreasonably refuse, is that they only apply where there is eligibility for the JobKeeper scheme.
Lastly, an employer who qualifies for the JobKeeper scheme can agree with their employee for the employee to take twice as much paid annual leave, at half the employee’s rate of pay. For example, an employee who has accrued two weeks of annual leave could agree with their employer to take four weeks of annual leave and be paid for the equivalent of two weeks’ leave in that period.
The above measures, both unilateral and agreed, are temporary and apply only until 27 September 2020.
The Fair Work Commission (the Commission) may deal with any disputes about the above measures, including by arbitration. For example, if an employee refuses an employer’s request to take annual leave, the employer can take the matter the Commission who can settle the dispute. The Commission also has the power to override an employer’s unilateral changes. The Treasury of the Australian Government has prepared some helpful factsheets about the JobKeeper payment scheme. To work out if you are an employer who qualifies for the scheme you can access the facts sheets here.
Magda Marciniak is a Partner at Justitia. To view Magda’s profile, click here.