Q&A: Impact of COVID-19 on employment

Frequently asked questions from employers about the impact of COVID-19 on their workplace and employees, on the topics of:

• JobKeeper
• leave
• stand down of employees
• redundancy
• occupational health & safety
• working from home
• other

JobKeeper

What is the JobKeeper scheme?

The JobKeeper Scheme is a wage subsidy scheme introduced to support businesses impacted by COVID-19. Eligible employers are able to claim a fortnightly wage subsidy of $1,500 (before tax) per eligible employee from 30 March 2020 for a maximum period of six months.

Who is eligible for JobKeeper?

Employers will be eligible for the subsidy if their business:

• has a turnover of less than $1 billion and their turnover will be reduced by more than 30 per cent relative to a comparable period a year ago (of at least a month); or
• has a turnover of $1 billion or more and their turnover will be reduced by more than 50 per cent relative to a comparable period a year ago (of at least a month);

The Big 4 banks and Macquarie Bank are excluded from the scheme. Otherwise, the intention appears to be that all other employers will be potentially eligible, regardless of whether they are a company, charity, partnership, statutory corporation, individual or another type of entity.

To be eligible, employees must:

• have been employed by the relevant employer at 1 March 2020;
• continue to be employed (this could include employees who have been laid off since 1 March if they are re-hired);
• be full-time, part-time, or casual with at least 12 months' service; and
• not be receiving a JobKeeper payment from another employer.

Leave

Can an employee be directed to take annual leave?

Generally, yes.

An employer can reasonably direct an award / agreement free employee to take a period of paid annual leave under section 94(5) of the Fair Work Act 2009 (Cth) (FW Act). For example, it may be reasonable if:

• an employee has accrued an excessive amount of paid leave (generally greater than four weeks);
• there is a significant reduction in work available for employees to do; or
• the employer is required to shut down for a period.

Before directing an employee to take leave, we are advising employers to first ask their employees to take any unpaid but accrued leave.

Employers may only direct employees to take paid annual leave under s 94 if they are not covered by an award or enterprise agreement.

For employees who are covered by an award or enterprise agreement, employers should check the applicable award/enterprise agreement.

Under the JobKeeper scheme

Under section 789GJ of the FW Act, an eligible employer may request that an employee who is entitled to one or more JobKeeper payments for the employer, take annual leave, including at half pay. The employee must consider the request and must not unreasonably refuse the request.

Complying with the request must not leave the employee with a balance of paid annual leave of fewer than two weeks.

Can employees use carer's / personal leave if they need to care for their otherwise healthy children due to the closure of schools or childcare centres?

Yes, provided it is an "unexpected emergency".

Under section 97 of the FW Act, an employee may take paid personal/carer’s leave to provide care or support to a member of the employee's immediate family or household in the event of an illness or injury, but also in the event of an "unexpected emergency".

We are advising that the closure of schools or childcare centres would classify as an "unexpected emergency", at least for the initial period of the closure. However, if these institutions were to remain closed for an indefinite period (e.g. schools in the state of Victoria), we think it is arguable that the closure may cease to be "unexpected". There is no clear guidance as to a reasonable period of time for which an unexpected emergency will continue in these circumstances. This is because, historically, "unexpected emergency" has been interpreted by reference to an employee's personal circumstances and not by reference to a community emergency.

Determining what would constitute a reasonable period in the current circumstances is difficult and is likely to differ between employees and their individual circumstances. Some employees may be able to implement alternative care arrangements quickly, whereas others may not be able to do so at all. As such, the period of notice for the emergency to remain "unexpected" may be longer for certain employees.

As a maximum period, an employer may wish to consider imposing an initial cap of four weeks, being the period of notice that is often required to be provided to an employee of a change to their employment (termination, for example).

If employees are required to self-isolate, are they entitled to any kind of leave?

Under the FW Act, if an employee is unable to work because they are required to self-isolate because of the coronavirus (and they cannot perform work from home) they may be entitled to be paid for the duration of the isolation period.

If a permanent employee is not fit for work and has tested positive for coronavirus, the employee will be entitled to take paid sick leave, subject to notice and evidence requirements. If an employee does not have accrued but untaken paid sick leave entitlements, the employer may allow the employee to take paid annual leave or other accrued but untaken leave (e.g. long service leave) for the duration of the self-isolation period.

If a full-time or part-time employee is directed by their employer to stay home in line with health and quarantine advice and the employee is not sick with coronavirus, the employee should be ordinarily paid while the direction applies.

If an employee cannot work because they are subject to an enforceable government direction requiring them to self-isolate (but the employee is not unwell), the employee is not entitled to any paid leave unless there is an express provision to the contrary in an applicable modern award, enterprise agreement or contract.

Can employers direct employees to self-isolate? If so, are they entitled to any kind of leave?

To comply with their OH&S obligations, employers may direct employees to self-isolate for 14 days if they have:

• travelled to high-risk countries (as defined by the Australian Government at the relevant time);
• been in contact with a known case of COVID-19; or
• flu-like symptoms (or other symptoms in line with the Australian Government's guidance on what the COVID-19 symptoms are at the relevant time).

If employees can work from home during the isolation period, they should be directed to do so. If they are not sick and cannot work from home, employers generally have two options.

• Seek agreement from the employee to take their accrued annual leave or other type of leave during the isolation period. If the employee doesn't have sufficient leave accrued, the employer can agree to allow the employee to take annual leave in advance (subject to any provisions of an applicable award, enterprise agreement or contract of employment).
• If an employee does not agree to take annual leave, employers can pay the employee "special paid leave". Special paid leave is a completely discretionary type of paid leave where the employer pays the employee their ordinary rate of pay for an absence, without deducting from any of the employee's other leave entitlements.

Stand down of employees

When is it appropriate to stand down employees?

Employers may be able to stand down employees without pay in accordance with section 524(1)(c) of the FW Act if there has been a stoppage of work for which the employer cannot be held reasonably responsible. However, an employer can only stand down an employee in accordance with section 524 of the FW Act if the employer can stand down the employee under an applicable enterprise agreement or contract of employment.

Depending on the circumstances, a downturn in business may not meet the requirements of section 524 by necessitating a stoppage of work. This is because the employer must not be reasonably responsible for the stoppage of work.

Measures taken due to concerns about an employer's financial viability are not likely to be sufficient to stand down an employee under section 524. However, a government directive, such as a directive requiring an employer's business to cease operating would likely be a stoppage of work in accordance with section 524.

Before standing an employee down we recommend employers consider:

• whether an applicable enterprise agreement or contract of employment contains a stand down clause;
• offering employees to take accrued but unpaid leave;
• offering employees to work fewer hours; and
• any consultation obligations imbedded within any applicable award or enterprise agreement.

Under the JobKeeper scheme

Under section 789DC of the FW Act, employers who qualify for the JobKeeper scheme will be able to give a stand down direction to employees to:

• not work on particular days which the employee would usually work; or
• work fewer hours than the employee would ordinarily work (including nil hours); or
• work for a lesser period than the period which the employee would ordinarily work on a particular day or days.

To give a stand down direction, employers must establish that the employee cannot be usefully employed for their normal days or hours due to changes to business attributable to:

• the coronavirus pandemic; or
• government initiatives to slow coronavirus transmission.

The direction must be implemented safely, having regard to the nature and spread of coronavirus.

A JobKeeper enabling stand down direction does not apply while an employee is taking paid or unpaid leave.

Other than receiving at least the amount of the JobKeeper payment, an employee will not be entitled to wages while a stand down direction is in effect.

Can employees access their leave entitlements during a stand down period?

Yes.

Annual and long service leave

Section 525 of the FW Act provides that an employee is not taken to be stood down from work where they are taking paid or unpaid leave "that is authorised by the employer". Therefore, employees may take annual and long service leave as they normally would, by agreement.

Personal / carer's leave

The question of whether employees may take personal/carer's leave during a stand down period was recently determined in the Federal Court of Australia. Previous uncertainty on the wording of the stand down provision in s 524 of the FW Act has been resolved (pending a foreshadowed appeal) in Justice Flick's judgment in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Qantas Airways Limited [2020] FCA 656. Employees are not entitled to access their accrued and untaken personal/carer's leave during a period of stand down as this would go against the object and purpose of this type of leave, namely to protect an employee's income when they cannot perform work for reasons outside their control. This purpose cannot be fulfilled where no work is available for the employee to perform and no income is being earnt.

Given the similarity in wording between ss524 and 525 on the one hand and s789GDC on the other, it seems likely the decision will also apply to "JobKeeper enabling stand downs" under Division 3, Part 6-4C of the Act where hours are reduced to zero.

Employers may however exercise their discretion to allow stood-down employees to access paid personal/carer's leave. It is likely employers will face increased demands from unions to exercise this discretion. [1]

Redundancy

When is it appropriate to make an employee's role redundant?

In the case of a business downturn, where employees are no longer required to perform their role, employers are permitted to make an employee's role redundant. However, given the unprecedented nature of the current pandemic, its human impact as well as reputational risks, we are advising employers only to make employees redundant as a last resort.

What process should be followed when making an employee's role redundant?

In the absence of an applicable award or enterprise agreement, there is no legislative requirement to consult about the redundancy before a decision is made to make an employee redundant.

However, as these are novel circumstances and employers will be scrutinised for the decisions they make during this time, we recommend nonetheless consulting with the impacted employees, particularly in regard to whether there are any suitable alternative roles for them. Consultation with employees may also result in the generation of valuable ideas by the employees for employers to consider.

We recommend employers complete and document the following steps when making an employee's role redundant.

• Provide the employee with a notice of redundancy.
• Consider redeployment options through the notice period and keep records of options considered and reasons why they are not available or reasonable in the circumstances.
• If employees cannot be redeployed, provide the employees with a notice of termination.

Occupational health & safety

Does an employer have an obligation to protect workers from COVID-19?

Yes.

General occupational health and safety obligations continue to apply in respect of coronavirus. That is, employers have a duty to, so far as is reasonably practicable:

• provide a working environment for employees that is safe and without risks to health; and
• ensure that persons other than employees are not exposed to risks to their health and safety arising from the conduct of the employer's operations.

We are advising employers fulfil their obligations by:

• staying up to date with current advice from state and federal health departments;
• providing employees with health and safety information about the virus and how to minimise the risk of infection;
• implementing social distancing practices and avoid meeting in large groups where possible;
• directing employees who have come in contact with the virus to stay home and self-isolate; and
• consider flexible work arrangements for employees to work from home.

Can an employer be liable if an employee claims they caught COVID-19 while at work?

Yes.

To the extent that an employer falls short of its occupational health and safety obligations to, so far as is reasonably practicable, provide a working environment that is safe and without risks to health, there is a risk of liability under occupational health and safety legislation. This may occur if an employer is aware that an employee or customer has contracted coronavirus away from the workplace, or the source is unknown, and does not take steps to manage the risk of infection to employees and others.

However, if basic preventative measures are implemented, we view this risk as low given it is not possible for employers to entirely prevent an employee from catching the virus within a pandemic situation.

Working from home

Can employers direct employees to work from home?

Depends.

To comply with their occupational health and safety obligations, it will be reasonable for employers to direct employees to work from home and self-isolate if they have:

• travelled overseas;
• been in contact with a known or suspected case of COVID-19; or
• flu-like symptoms (or other symptoms in line with the Australian Government's guidance on what the COVID-19 symptoms are at the relevant time).

Employees will be required to comply with reasonable directions from their employer.

Where employees have been directed to work from home, employers' duty of care for workers extends to the home.

Under the JobKeeper scheme

Under section 789GF of the FW Act, an employer may direct an employee for a period to perform duties at a place that is different from the employee's normal workplace, including their home if:

• the place is suitable for the employee's duties;
• if the place is not the employee's home – it does not require the employee to travel an unreasonable distance;
• performance of the employee's duties at the place is safe, having regard to the coronavirus.

A direction to change work location will not apply if it is unreasonable.

Can employees refuse to come to work?

Generally, no.

If an employee is not showing any symptoms and has not been exposed to COVID-19 but nevertheless wishes to self-isolate during the crisis, it will generally be reasonable for an employer to require them to attend work.

However, if there is an unreasonable risk to health or safety in the workplace then employees may refuse to attend work. This may occur if other employees have either tested positive for COVID-19 or have failed to self-isolate after returning from overseas. Employees and employers need to come to arrangement for the employee to either work from home or take some form of paid or unpaid leave.

Can employers be liable if employees are injured whilst working from home?

Yes.

Employers have a duty to ensure that their employees' working environments at home are safe and healthy. Consequently, an employer may be liable if they fail to do this and an employee suffers an injury. This duty extends to ensuring employees are psychologically safe and healthy while working from home - which is particularly important if the requirement to work from home extends for a significant period.

To ensure employees are provided with safe working from home environments, employers may consider:

• asking employees to self-report and assess their working from home set-up and direct them to take steps to improve it if necessary;
• providing online training or resources to employees so they can assess and ensure their working from home set-up is ergonomic;
• providing items to assist (eg technology, chairs, lamps) where the employee's self-assessment identifies risks of concern; and/or
• maintaining regular communication with employees while they are working from home, and may consider measures such as daily catch ups, virtual coffees and other engagement activities.

Do employers need to provide employees who are WFH with monitors, standing desks and similar equipment?

Employers are not under an obligation to provide employees who are working from home with the necessary home workplace tools, technology and systems.

Employers have an obligation under occupational health and safety legislation to ensure the working environment is safe and without risk to health and safety. We recommend that employers identify employees who do not have a safe working environment (including a poor ergonomic set-up) and consider providing assistance to those employees (e.g. allowing the employee to collect their desk chair from work).

We recommend that employers come to an agreement with employees regarding working from home arrangements with respect to conditions of work, the responsibilities of the employer and the responsibilities of the employee. In this agreement, employers and employees may consider who will purchase and install any equipment and who will pay for work-related expenses.

Under the JobKeeper scheme

Section 789GF of the FW Act enables an employer to direct employees to perform their duties from another location (including from home). Section 789GF requires employers to ensure that the performance of the employee's duties from home is safe. This may require employers to provide equipment to ensure that the employees may perform their duties safely and suitably within their home (e.g. desk chairs, monitors, lamps etc).

Other

Can employers reduce an employee's hours or pay due to a business slowdown?

An employee's hours or pay can only be varied by agreement with the employee.

Employers cannot unilaterally reduce the pay or number of hours an employee is contracted to work. A reduction in an employee's hours could trigger the employee's entitlement to a redundancy payment.

Before negotiating any reduction in an employee's pay, employers should check whether the employee is covered by a modern award and ensure they are adhering to minimum wage requirements.

If an employer cannot reach agreement with an employee, and there is genuinely no requirement for anyone to perform the employee's role (at the hours the employee is contracted to work or at all), the employer may consider making the employee's role redundant. However, we recommend that employers explore all other avenues in the first instance.

Under the JobKeeper scheme

Under section 789DC of the FW Act, employers who qualify for the JobKeeper scheme will be able to give a stand down direction to employees to:

• not work on particular days which the employee would usually work; or
• work fewer hours than the employee would ordinarily work (including nil hours); or
• work for a lesser period than the period which the employee would ordinarily work on a particular day or days.

To give a stand down direction, employers must establish that the employee cannot be usefully employed for their normal days or hours due to changes to business attributable to:

• the coronavirus pandemic;
• government initiatives to slow coronavirus transmission.

The direction must be implemented safely, having regard to the nature and spread of coronavirus.

A JobKeeper enabling stand down direction does not apply while an employee is taking paid or unpaid leave.

Other than receiving at least the amount of the JobKeeper payment, an employee will not be entitled to wages while a stand down direction is in effect.

Can employees be directed to travel?

Depends.

Whether an employer can direct an employee to travel for work will depend on the lawfulness and reasonableness of the request. In the ordinary course of business, this is generally permissible. However, with a ban on overseas travel and various state and federal governments currently advising people not to travel and with certain restrictions on interstate travel, the reasonableness of such a request is in doubt.

[1] This advice was updated on 21 May 2020 to reflect the Federal Court's decision in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Qantas Airways Limited [2020] FCA 656

Our team is actively monitoring and considering the implications of legal and regulatory developments in response to the COVID-19 pandemic. You can find our COVID-19 collection here.