On 8 April 2020, Federal Parliament passed the Coronavirus Economic Response Package Omnibus (Measures No. 2) Bill 2020. The legislation amends the Fair Work Act 2009 (FW Act) to help give effect to and complement the establishment of the JobKeeper scheme.
The amendments commence on 9 April 2020 (Commencement Date) and are automatically repealed on 28 September 2020.
Federal Parliament also passed the Coronavirus Economic Response Package (Payments and Benefits) Bill 2020. This legislation provides that the Federal Treasurer may make detailed rules (JobKeeper payment rules) for the operation of the JobKeeper scheme. This legislation will be effective immediately after the amendments to the FW Act become effective.
The JobKeeper payment rules (Payment Rules) have yet to be publicly released by the Government but it is expected that they will reflect the details of the JobKeeper scheme which were released by the Treasury when the JobKeeper scheme was announced by the Prime Minister on 30 March 2020. These Payment Rules will provide critical details of the scheme, particularly regarding an employer’s eligibility for the JobKeeper payment. We will be monitoring the progress and finalisation of the Payment Rules closely and provide updates as they are made available.
FW Act changes at a glance
- Employers must pay their employees at least $1,500 in respect of each fortnight in order to be eligible to receive the JobKeeper payment as a wage subsidy.
- The changes to the FW Act apply only to employers who qualify for the JobKeeper scheme (within the meaning of the Payment Rules), when the direction is given and who become entitled to JobKeeper payments, as well as their employees who will receive these payments.
- Subject to consultation obligations and reasonableness requirements, employers may give three different types of directions to employees (each a JobKeeper enabling direction):
- reducing their days and hours of work (Jobkeeper stand down direction);
- performing any other duties within the employee’s skill and competence (Duties direction); and
- perform duties at a different work location (Location direction).
- Specific income protections for employees who are subject to a JobKeeper stand down direction.
- Employers may request that an employee perform work on different days or at different times during a period, compared with the employee’s ordinary days or times of work. The employee must not unreasonably refuse the request.
- The right for employers to request employees to take annual leave which must not be unreasonably refused.
- An employer and employee may agree to take twice as much annual leave at half the employee’s rate of pay.
Employer’s obligation to make JobKeeper payments
The Government has announced that the Payment Rules will oblige employers, who are entitled to the JobKeeper payment, to pay their employees at least $1,500 per fortnight with the first fortnight commencing on 30 March and ending on 12 April 2020. This will be known as the wages condition. In short, it requires that employers pay their employees the required amount in each fortnight (or for employers with pay periods that are longer than a fortnight, amounts are reasonably allocated to each fortnight)
Minimum payment guarantee
Where the JobKeeper payment is payable to an employer in respect of any fortnight, the employer pay an employee for that fortnight the greater of:
- the JobKeeper payment of $1500 per fortnight; and
- the amount that is payable to the employee for the performance of work during the fortnight including any loadings, allowances, penalty rates, and leave payments.
If an employee is not working (either because they are on unpaid leave or have been stood-down without pay), they will be entitled to the full amount of the JobKeeper payment. If employees are actually working, their employer must make all payments which are due and payable for that work where they exceed the JobKeeper payment.
The FW Act now provides employers with the right to make significant changes to an employee’s hours of work by making a JobKeeper enabling direction. By reducing an employee’s hours of work, such a direction would directly impact how much an employee is entitled to receive for the performance of work.
An employer must comply with the minimum payment guarantee even if they reduce an employee’s hours of work under a JobKeeper stand down direction.
The JobKeeper enabling directions (addressed below) may be given to an employee:
- in writing after the Commencement Date;
- by employers who qualify for the JobKeeper scheme (within the meaning of the Payment Rules) when the direction is given; and
- by employers who become entitled to JobKeeper payments for the employee in respect of the period of the direction.
The right to make these directions does not apply to any other employer or to a qualifying employer in respect of an employee who is not eligible to receive a JobKeeper payment.
1. JobKeeper enabling stand down direction
A JobKeeper enabling stand down direction may require the employee:
- not to work on particular days;
- to work for a lesser period; or
- to work a reduced number of hours than the employee would ordinarily work (including no hours at all).
A JobKeeper enabling stand down direction is effective despite any other provisions of other instruments such as the FW Act, any modern award or enterprise agreement or employment contract. The direction will apply to the extent of any inconsistency with these instruments.
An employer’s right to give a JobKeeper stand down direction is subject to other conditions:
- the employee cannot be usefully employed for their normal days or hours caused by business changes attributable to the pandemic or government initiatives to slow the spread of the virus, such as government health orders; and
- the direction can be implemented safely. The nature of the spread of the virus is one of the factors to be taken into account.
A JobKeeper enabling stand-down direction by an employer does not apply to the employee if the direction is unreasonable in all of the circumstances. One example given in the legislation is that a direction may be unreasonable depending on the impact of the direction on an employee’s caring responsibilities.
An employee’s hourly rate cannot be reduced as a result of a JobKeeper stand down direction. This means that the employee’s base rate of pay is not less than the base rate of pay that would have applied to the employee if the direction had not been given. The legislation explains how to make this comparison regardless of if the employee is paid on an hourly basis.
An employee may ask their employer in a range of circumstances for permission to engage in reasonable secondary employment, training or professional development, and the employer must not unreasonably refuse any such request.
In relation to previously issued stand down directions under s.524(1)(c) of the FW Act, in order to take advantage of the other options available to stand employees down (such as working reduced hours or days) under these legislated changes, employers should issue new JobKeeper stand down directions in accordance with these changes. This will require employers to comply with the obligations addressed in this article, such as the wage condition and the consultation obligations.
2. Duties direction
An employer may direct employees to perform any duties within their skill and competency.
An employer’s right to give a Duties direction is subject to other conditions, including that:
- the duties are safe. The nature of the spread of the virus is one of the factors to be taken into account;
- the employee holds any licenses required to perform the work and is qualified to perform the duties; and
- the duties are reasonably within scope of the employer’s business operations.
3. Location of work direction
An employer may direct their employee to perform duties at a place (including the employee’s home) that is different from the employee’s normal workplace.
An employer’s right to make a Location direction is subject to other conditions, including that:
- the place is suitable for the employee’s duties;
- if the place is not the employee’s home – the employee is not required to travel a distance that is unreasonable including with regard to the pandemic;
- performance of the employee’s duties at the place is safe. The nature of the spread of the virus is one of the factors to be taken into account; and
- performance of the employee’s duties at the place is reasonably within the scope of the employer’s business operations.
Common elements of the Duties direction and Location directions
A Duties direction and Location direction:
- are effective despite any other provisions of other instruments such as the FW Act, any modern award or enterprise agreement or employment contract;
- will apply to the extent of any inconsistency with these instruments; and
- are not effective unless the employer has a reasonable belief that the Duties direction or the Location direction is necessary to continue the employment of one or more employees of the employer. The employer will need to have information on which the belief is founded
The employee is not required to comply with a Duties direction and Location direction, unless it is reasonable in the circumstances.
Employer consultation obligations
An employer must consult the employee (or a representative of the employee) before giving a JobKeeper enabling direction. This requires the employer to:
- provide at least three day’s written notice (in any prescribed form) of their intention to issue the direction. Lesser notice may be given by agreement; and
- consult with the employee (or their representative) before giving the direction. The employer must keep a written record of the consultation.
In some circumstances, if the employer has previously consulted with an employee about another proposed direction, the prior consultation may satisfy the employer’s consultation obligations in relation to a proposed new direction.
Changes to days of work by agreement
An employer may request that an employee perform work on different days or at different times during a period, compared with the employee’s ordinary days or times of work. The employee must not unreasonably refuse the request.
Any such agreement is authorised if:
- performance of the duties on different days or at different times is safe. The nature of the spread of the virus is one of the factors to be taken into account;
- performance of the duties on different days or at different times is reasonably within the scope of the employer’s business operations; and
- the agreement does not reduce the employee’s number of hours of work compared with the employee’s ordinary hours of work. A reduction in hours of work may only occur by way of a JobKeeper enabling stand down direction.
An employer may request an employee to take annual leave provided that the employee’s leave balance would not be reduced to less than two weeks. The employee must not unreasonably refuse the request.
Further, an employer and their employee may agree to the employee taking twice as much annual leave at half the employee’s rate of pay for a period.
Powers of the Fair Work Commission (FWC)
An employee, employer, trade union or employer organisation may notify a dispute to the FWC or an employee organisation, or an employer or an employer organisation about any of the above provisions.
The FWC may exercise its conciliation and arbitration powers in relation to a dispute and make any of the following orders:
- any order it considers desirable to give effect to a JobKeeper enabling direction;
- setting aside, or substituting, a JobKeeper enabling direction; and
- any other order it considers appropriate.