COVID-19 and its impact on employers and employees - an FAQ

23 March 2020

Social distancing and working from home are new norms for many in Australia. With closures of non-essential services, the prospect of a prolonged significant economic downturn as share markets drop dramatically across the world has become all too real.

We have already seen substantial job losses foreshadowed among airlines, union calls for paid coronavirus leave and submissions from employers’ associations for a delay to any minimum wage increase. Unsurprisingly the SME market has and will continue to be hit particularly hard by the economic downturn.

As the COVID-19 situation continues to deteriorate, many businesses are preparing for an economic downturn in various ways, including making changes to labour arrangements and reducing their labour costs. Both are difficult decisions to make and endure, especially without any legal know-how. To assist, we've provided answers to some frequently asked questions for both employers and employees:

Can I stand down my employees?

The stand down provisions in section 524(1)(c)of the Fair Work Act 2009 provide that an employer may stand down an employee without being required to pay them, if ‘the employee cannot usefully be employed’ and standing them down is ‘because of… a stoppage of work for any cause for which the employer cannot reasonably be held responsible’. This provision is intended to be temporary in nature and in effect to ‘freeze’ the employment relationship as an alternative to termination.

Importantly, the term ‘usefully employed’ and ‘stoppage of work’ is not defined. However, a directive by the Government to cease operations (for example, as required by nightclubs, gyms, pubs and cinemas) will no doubt satisfy the definition. However, an employer cannot generally stand down employees simply because of a downturn of business conditions (even where that downturn is a result of circumstances outside of the employer’s control).

Employers must also consider whether there are any applicable provisions contained in a modern award or enterprise agreement.

What is ‘Useful Employment’?

An employer that seeks to stand down employees, must demonstrate that there is no useful employment that the employees can perform.

The fundamental principles in determining whether or not an employee can be usefully employed are:

  1. if they can undertake work activities which are within the terms of their employment contract, even if they do not normally complete that kind of work
  2. if there is work for some but not all of the employees, you cannot validly stand down the entire workforce, and
  3. you cannot stand down the entire workforce only because using some workers during a stand-down period will reduce the workload when normal work resumes.

Employers must consider whether work from home or other alternative duties are available.

Can I stand down only some employees and not others?

The short answer is sometimes, as it would depend on the workforce and the type of employees you are standing down.

For some businesses of a smaller size, then a stand down would need to apply to all employees. For other larger businesses a stand down can apply to part of a business and only the staff who can’t be engaged.

For example, if you are an aviation company, you may be entitled to stand down your in-flight staff (i.e. pilots and flight attends) due to a stoppage of work for any cause for which the employer cannot be held liable. However, you may be unable to stand down your administrative staff (as there is still work for them to complete). While you may be able to stand down only part of your workforce, employers need to mindful to ensure it is due to a stoppage of work and that you are not discriminating against certain employees who complete the same duties.

If you would like to stand down some but not all employees (who perform the same duties), you may be required to look at making some positions redundant. In this case, you can engage in negotiations with your employees regarding alternatives to a redundancy.
Other options that you may consider instead of stand down include:

  1. seeking employees’ agreement to take paid or unpaid leave for a period of time
  2. directing employees to take paid annual leave (in certain circumstances)
  3. negotiating a reduction of work hours (in certain circumstances), or
  4. making your employee’s position redundant.

Do employees still accrue leave during stand down?

The Fair Work Act recognises a period of stand down as ‘service’, meaning an employee will continue to accrue entitlements to annual leave and personal/carer’s leave under the National Employment Standards (NES), and will also continue to have the benefit of a public holiday that falls on a day the employee has ordinary hours of work.

What happens if I need to make positions redundant?

If redundancies are required, it's important to remember there are three requirements for a redundancy to be genuine:

  1. the business must no longer require the person's job to be performed by anyone because of changes in operational requirements (for example, a restructure due to a significant downturn in business)
  2. the business must consult with any employees who are covered by a modern award or enterprise agreement (in accordance with the relevant consultation provision). Please note that there are very specific consultation requirements in respective modern awards and enterprise agreements, and
  3. it must not have been reasonable in all the circumstances for the person to be redeployed within the business or an associated entity or that business, even in a position with less hours and reduced pay.

Failure to properly consider and adhere to the above steps may result in an Unfair Dismissal application in the Fair Work Commission.

What are my redundancy obligations?

If redundancies are made, you must consider your obligation to provide:

  1. redundancy pay (if any)
  2. notice of termination (or payment in lieu), and
  3. other statutory or contractual entitlements (including accrued but untaken annual leave, long service leave and/or unpaid wages).

Can I direct employees to take leave?

Employers can direct an employee to take annual leave, but only when an award or registered agreement allows it and that requirement is reasonable. While there is no definition of what is ‘reasonable’, relevant considerations include:

  1. the needs of the employee and employer’s business
  2. timing and direction to take leave, and
  3. the reasonableness of the period of notice.

Can I still make my employees redundant after standing them down?

The stand down provisions are not intended to apply indefinitely. If, after consideration of your business needs you are still experiencing a significant downturn of business or cash flow issues, redundancies may still occur, provided that they satisfy the redundancy requirements (set out above).

What if an employee cannot attend work because their child’s school has closed?

If an employee is unable to come to work because they need to care for a child whose school has closed, paid leave may be taken. Paid carer’s leave is available to permanent employees to look after a family member or member of their household who requires care and support because of a personal illness or unexpected emergency. The Fair Work Ombudsman has released information indicating it believes school closures due to the pandemic will constitute an unexpected emergency and attract paid carers leave. Casual employees are entitled to 2 days of unpaid carers leave per occasions. Permanent employees can take unpaid carer’s leave if they have no paid sick or carer’s leave left.

Can I change my employee’s hours or work given a downturn in business?

Employers need to consult with employees about a change to their regular roster or ordinary hours under their modern award or their enterprise agreement. In particular, employees have to:

  • provide information about the change
  • invite employees to give their views about the impact of the change (for example, any impact in relation to their family obligations), and
  • consider the employees views about the impact of the change.

Reducing a permanent employee’s ordinary hours will require their agreement and consent.

What if my employees ask to wear PPE gear (masks or gloves) at work?

There is not yet an express provision in the relevant statutes that generally requires an employer to have non-healthcare employees wear masks or gloves, although such a requirement might be imposed in certain limited areas/industries to minimise risk.

However, PPE measures such as masks or gloves have been generally adopted throughout many in the retail sector and in the broader community. Some workers may want to wear a mask, such as a surgical mask, and even if the employer has considered that it is an unnecessary control measure.

It is be prudent to allow this request depending on the business. For example, employees may request to use gloves in day-care centres when changing nappies or preparing food. Refusing this request may be difficult in circumstances where it could be considered a breach of the employer’s health and safety obligations.

It is ultimately a consideration for the employer, who should have regard to your WHS obligations and duties. Employers should also consult with employees on this issue and find out why they want to wear a mask or gloves at work.

Most importantly, employers need to consider whether a mask is an appropriate control measure in minimising exposure to the COVID-19 virus noting the nature of their business and has done so in consultation with workers.

Whether an employer can direct an employee not to wear a mask or gloves will depend on whether the direction is permitted by the model WHS laws or is otherwise lawful and reasonable. This will need to be determined on a case by case basis depending on the circumstances.

Can a worker be directed to wear a mask?

Workers may require a P2 or N95 mask if they are potentially exposed to respiratory substances when coming into close contact with people (for example, when a person sneezes or coughs).

Workers can be directed to wear a P2 or N95 mask if the employer, in consultation with workers, considers it is a necessary control measure to minimise the risk of exposure to the COVID-19 virus. This may not be a reasonable and lawful request if wearing a mask would not be a typical control measure in the environment in which they work (for example, in an office setting).

By permitting staff members and directing them to wear a mask, employers separate considerations of ensuring they provide appropriate training or information regarding its use.

Does the employer have to allow an employee to work from home?

The answer would need to be considered in conjunction with the government directives and the individual circumstances of the employee. For example, the prime Minister, Premier Andrews in Victoria and Premier Berejiklian in NSW has declared that workers should work from home wherever possible. Employees in certain circumstances remain able to request flexible working arrangements under the Fair Work Act 2009 (Cth).

Operationally, there should be a need for the work to be performed, and the employee should have the means to work from home (i.e. access to a computer, phone, etc, where required). However, this would depend on the nature of the business.

For example, allied health business (including dentists, physiotherapists and chiropractors) may be unable to permit their staff to work from home due to operational difficulties. However, businesses that conduct themselves in an office setting may be able to continue operating remotely.

Employers need to consider:

  • operational equipment required by employees;
  • safety equipment required by employees;
  • whether IT systems can be implemented;
  • coordination of work, managing and supervising employees; and
  • ensuring you comply with safety and privacy legislation.

What if an employee refuses to come into work or perform certain duties as they are concerned about being exposed to Covid-19?

If an employee refuses to attend work (or perform certain duties) as a precaution against being exposed to COVID-19, unless the employee is acting in accordance with government directions to do so, the employer does not have to pay them or allow them to access leave.

Depending on the circumstances, an employee could be subject to disciplinary action if they refuse to attend work or perform certain tasks or duties if the direction is lawful and reasonable and does not put the employee at any risk. However, this needs to be considered in light of other protections afforded to employees.

These including potential discrimination laws (for example, if the employee is immunosuppressed), occupational health and safety legislation (and whether by requiring them to attend work the employer can provide a workplace that is reasonably free from hazards), and the general protection provisions of the Fair Work Act 2009 (Cth) (which prevents taking action against employees for raising genuine safety concerns or exercising their entitlements such as taking leave).

Can the employer allow some employees to take accrued paid leave (annual leave or long service leave) and not allow other employees to take paid leave?

Employers should treat all employees equally. However, employers are not legally required to pay employees their accrued leave or long service leave entitlements while stood down. On that basis, employers may allow some employees to take accrued leave whilst not approving others to take leave while stood down.

When doing so, employers need to be mindful not to act in a discriminatory way when selecting which employees can take leave (i.e. the employer cannot treat employees differently due to a protected attribute).

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Barry Nilsson acknowledges the traditional owners of the land on which we conduct our business, and pays respect to their Elders past, present and emerging.
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