Guidelines for JobKeeper-qualifying-employers in managing employees

Last Thursday, the Australian Federal Government passed  the legislation (Coronavirus Economic Response Package (Payments and Benefits) Act 2020 (Cth)) enabling the payment of the $1,500 (pre-tax) JobKeeper wage subsidy (JobKeeper Subsidy) to those employers (and employees) that qualify under the rules.   At the same time,  the Coronavirus Economic Response Omnibus (Measures No. 2) Act 2020 (the COVID-19 Act) was enacted, making it easier for employers to (lawfully) manage employees hours and work arrangements as revenues decline.  
 
This is a succinct guide as to the most important aspects of these changes which overcome restrictions that the existing law places upon employers in holding onto (and providing some work opportunities for) employees in this hugely challenging period. 
 
Unfortunately, these beneficial amendments only apply in relation to employees to whom the employer qualifies for receipt of the JobKeeper subsidy.  For other employers/employees, the current law remains the same.
 
For the purposes of this Guide, we shall focus upon the amendments to the Fair Work Act.’

What is the eligibility criteria for employers to receive the subsidy and for which employees?

The eligibility for the JobKeeper Subsidy is subject to Coronavirus Economic Response Package (Payments and Benefits) Rules.   Employers that qualify for the JobKeeper Subsidy (‘Eligible Employer’) will receive a $1,500 per fortnight payment to be passed on to an employee who is eligible to receive it. (‘Eligible Employee’)

Employers can clarify their entitlement to receive this subsidy (and for which employees) via their accountant. 
We will publish a summary of the rules of eligibility for employers later this week. 

What is a JobKeepers enabling stand down direction (‘JKES direction’)?

Essentially, any Eligible Employer can now issue a JKES direction in relation to an Eligible Employee during the period that they are entitled to receive the JobKeeper subsidy for that employee, known as the JobKeeper enabling stand down period (‘JKES period’)

Note that such directions can only be given by an Eligible Employer to an Eligible Employee (i.e. noting as an example that employees on student visas do not qualify for the subsidy as Eligible Employees). 

A JKES direction may be given to an employee on or after 8 April 2020:

• about the nature of the employee’s duties, within their skill and competency;
• to perform duties at a place different from their normal place of work, including the employee’s home
• to reduce their hours (including nil hours); or
• to require an Eligible Employee to reasonably consider a request to work on different days.

(‘Jobkeeper variations’)

Are these relevant to casual employees that are Eligible Employees?

Effectively, no, because employers already enjoy a great deal of flexibility with rostering casuals.  Hence, these changes to the Fair Work Act primarily help employers in managing the increased flexibility that will be necessary over the next 6 months in relation to their permanent employees (i.e. full-time/part-time).

What if a JKES direction conflicts with an Eligible Employee’s relevant award or employment contract?

A JKES direction has effect despite the fact that it is contrary to:

• a provision of the Fair Work Act (other than the current amendments and the excluded provisions outlined below);
• an award or enterprise agreement; or
• a contract of employment;

 (‘a designated employment provision’).
 
The excluded provisions of the Fair Work Act (i.e. those provisions that are not affected by these changes) are:  

• the rules around the payment of wages, etc (Division 2 of Part 2-9);
• unfair dismissal (Part 3-2);
• general protections (Part 3-1) and other rights attached to employment not to be terminated on certain grounds (section 772) of the Fair Work Act;
• a Commonwealth, State or Territory anti-discrimination law;
• a Commonwealth, State or Territory law that deals with health and safety obligations of employers or employees, or with workers’ compensation; and
• a person’s right to be represented, or collectively represented, by an employee organisation or employer organisation.

What is the minimum an employer has to pay an Eligible Employee (Minimum payment guarantee)?

If an employer issues a JKES direction to reduce hours for an Eligible Employee, the employer is required to ensure the total amount payable to an employee in respect of each fortnight during the JobKeeper Period (for a maximum of six months per Eligible Employee), is either:

1. the JobKeeper Subsidy; or
2. an amount greater than the JobKeeper Subsidy for the performance of work during the fortnight i.e. > $1,500.

NB. The amount paid to an employee in a fortnight, includes; incentive-based payments and bonuses; loadings; monetary allowances; overtime or penalty rates; and leave payments.

Can an employer reduce an Eligible Employee’s hourly rate (Hourly rate of pay guarantee)?

No. 

In circumstances where a JKES direction has been implemented, Eligible Employers:

• cannot reduce an Eligible Employee’s ordinary hourly base rate of pay (whether paid under a modern award, enterprise agreement or annualised salary arrangement etc); and  
• must pay the JobKeeper Subsidy.

Can an employer reduce the days or hours that the employee carries out their duties?

Yes.

Such a direction is authorised if:

1. it is made after 8 April 2020 and
2. the direction is given by an Eligible Employer to an Eligible Employee; and
3. it is given during a the JKES period;

and:

4. the Eligible Employer gave the Eligible Employee a JKES direction to:

• not work on a day or days on which the employee would usually work; or
• work for a lesser period than the period which the employee would ordinarily work on a particular day or days; or
• work a reduced number of hours (compared with the employee’s ordinary hours of work);

during a the JKES period; and 

5. the employee cannot be usefully employed for the employee’s normal days or hours during the JKES period because of changes to business attributable to:
   1. (i)         the COVID-19 pandemic; or
   2. (ii)        government initiatives to respond to the virus; and
   3.  
6. the direction did not include a requirement to work outside the Eligible Employees ordinary hours (i.e. on a different day); and
7. the implementation of the direction is safe, having regard to (without limitation) the nature and spread of COVID-19; and
8. the Eligible Employer follows the JobKeeper payment rules and becomes entitled to one or more JobKeeper payments for the employee for the period (or where more than one period, when considered together) that the direction applies; and
9. the Eligible Employee’s hourly rate is not reduced; and
10. the Minimum Payment Guarantee is maintained.

Note that this direction applies despite conflicting with a designated employment provision.

What are the requirements of a (JobKeeper enabling stand down) direction regarding a change in the location of where the employee carries out his duties?

Such a direction is authorised if:

1. it is made after 8 April 2020; and
2. the direction is given by an Eligible Employer to an Eligible Employee; and
3. it is given during a the JKES period; and
4. the employer gave the employee a direction to carry out their duties at a place that is different from the employee’s normal place of work, including the employee’s home; and 
5. the place is suitable for the employee’s duties;

and:

6. if the place is not the employee’s home – it does not require the employee to travel a distance that is unreasonable in all the circumstances (including those surrounding the Coronavirus pandemic); and
7. performance of the employee’s duties at the place is safe, having regard (without limitation) to the nature and spread of Coronavirus, and is reasonably within scope of the employer’s normal business operations; and
8. the employer becomes entitled to one or more JobKeeper payments for the employee for the period (or where more than one period, when considered together) that the direction applies.

Note that this direction applies despite conflicting with a designated employment provision.

What are the features of a (JobKeeper enabling stand down) direction regarding duties of the employee?

The JKES direction is authorised if:

1. it is made after 8 April 2020 and
2. the direction is given by an Eligible Employer to an Eligible Employee; and
3. it is given during a the JKES period;

and:

4. the employer directed the employee to perform any duties that are within the employee’s skill and competency; and
5. in a case where the employee was required to have a licence or qualification in order to perform those duties—the employee had the licence or qualification; and
6. performance of the employee’s duties at the place is safe, having regard (without limitation) to the nature and spread of Coronavirus, and is reasonably within scope of the employer’s normal business operations; and
7. the employer becomes entitled to one or more JobKeeper payments for the employee for the period (or where more than one period, when considered together) that the direction applies.

Note that this direction applies despite conflicting with a designated employment provision.

Can an employer change the days or hours that the employee carries out their duties?

Yes

Where an employer makes a request to an employee:

1. after 8 April 2020 and
2. the direction is given by an Eligible Employer to an Eligible Employee; and
3. the request is made during a the JKES period;

and

4. the request is to agree in writing to the employee performing duties during the period: 
   1. (i)         on different days; or
   2. (ii)        at different times;

compared with the employee’s ordinary days or times of work;

5. then the employee must:
   5. (i)         consider the request; and
   5. (ii)        must not unreasonably refuse the request.

Note that this direction applies despite conflicting with a designated employment provision.

Do JKES directions apply employees are on leave? 

Importantly, a JKES direction does not apply while an employee is taking paid or unpaid leave authorised by the employer (for example, annual leave), or is otherwise authorised to be absent (for example, on a public holiday).

Can an employer request an employee to take paid annual leave?

Yes.

An Eligible Employer can request an Eligible Employee to take paid annual leave as long as it results in the Eligible Employee retaining a balance of 2 weeks accrued annual leave.

When such a request is made, an employee must consider (and must not unreasonably refuse) their employer’s request to take annual leave.

Can an employer and an employee agree to an employee to taking twice the length of annual leave, but at half pay?

Yes.

An Eligible Employer can agree with the Eligible Employee for the employee to take twice as much annual leave at half the employee’s rate of pay for a period.

Post by Warwick Ryan