Another lockdown - employer obligations and what this means for employees
Posted on July 23, 2021
As we approach the end of July 2021, we find ourselves still in the grip of the coronavirus (COVID-19) pandemic.
Whilst South Australia has so far largely avoided the substantial case numbers experienced in other States, and the various lockdowns that have followed, the impact of the Delta variant has meant SA has found itself under a government-imposed 7 day lockdown.
In 2020, the complex nature of industrial relations in Australia meant the ability of businesses to deal with government imposed lockdowns, or other shutdown of certain businesses was difficult and confusing. As a result the Federal Government introduced temporary JobKeeper provisions into the Fair Work Act 2009, which generally made it easier for businesses to stand-down employees, and provided a funding arrangement to assist businesses to pay its employees.
However, as at the end of March 2021, the JobKeeper provisions no longer apply. This means that when a sudden lockdown happens – as is currently the case in SA as well as other States – on or after March 2021, employers cannot rely on JobKeeper Enabling Stand Down provisions under the Fair Work Act. Instead they will need to rely on the stand down provisions as set out in the Fair Work Act.
This article seeks to provide both employers and employees with information about the options available to them following a lockdown.
One of the first questions that employers started asking as COVID-19 started to take hold in 2020 was “what am I allowed to do with my staff?” Similarly, employees immediately started asking “is my employment safe?”
These questions are particularly relevant again now.
First, changes to employment terms and conditions can occur with the agreement between the employer and the employee. This is simply an agreement to vary the employment terms for a short period of time while the business works out how to deal with the pandemic crisis. As with any agreement, it requires the genuine consent of both parties involved.
One of the most common questions arising out of the COVID-19 situation is whether employers can direct employees to take accrued leave. Ordinarily, such a direction depends on whether the employee is covered by an Award or Enterprise Agreement, and what the provisions of that instrument prescribe.
If an employee is Award or Agreement covered, the employer must follow the steps outlined in the respective Award or Agreement. For example, the Seafood Processing Award 2020 requires that an employer and employee must first genuinely attempt to reach agreement about taking annual leave before any direction is issued. Failing an agreement, the employer may only direct leave be taken if:
- the employee has “excessive leave” owing (which is defined as at least eight weeks);
- the employee’s accrued balance does not drop below six weeks after taking the leave; and
- the employer’s direction must give at least eight weeks’ notice (but cannot be more than 12 months’ notice) before the leave is taken.
If the relevant employee is not Award or Agreement covered, the employer may direct annual leave to be taken so long as it is reasonable to do so.
In response to the unusual circumstances faced by the COVID-19 pandemic, and the requirement for many businesses to close as a result of government-imposed restrictions or a lockdown, emergency provisions were included in most industrial awards to allow greater flexibility for taking leave. ‘Additional Measures During the COVID-19 Pandemic’ have been included as a schedule in 99 of the 121 modern awards. These provisions remain valid until the end of December 2021. They allow an employee to take up to two weeks unpaid pandemic leave if the employee is required to self-isolate and is prevented from working.
The additional measures also allow an employee to take twice as much annual leave at half pay on the agreement of the employer. In respect of personal leave (commonly referred to as ‘sick leave’), employees’ entitlements to take such leave remain unchanged. Many employers have, by agreement, allowed employees to use their accrued sick leave for periods of self-isolation (even if the employee is not actually unwell), and to even utilise sick leave entitlements not yet accrued. It is important to note that such circumstances are by agreement between the employer and employee and do not give rise to an entitlement to access personal leave if not sick or caring for a sick relative or dependent.
Reducing Work Hours
Many businesses identified early into the COVID-19 pandemic that they were going to have to significantly reduce staff hours in order to try to preserve the employment of as many employees as possible.
As businesses continue to suffer very significant downturns and are forced to reduce hours of operation, consideration turns to how to reduce staff hours. An employer attempting to unilaterally reduce workers’ hours carries significant risk, particularly in respect of claims for constructive dismissal, or claims of genuine redundancy. An employee whose hours are significantly reduced (at the direction of the employer) may claim that the reduction in hours constitutes a change to existing employment which is of such significance that their position has in fact been made redundant. Alternatively, consideration must also be given to the possibility that reducing an employee’s hours significantly may give rise to a claim of constructive dismissal. Such a claim was considered by the Fair Work Commission in the case of Urand v Beaconsfield Children’s’ Hub  FWC 2024, where the Applicant’s shifts were reduced by about half. The Applicant argued that it was therefore no longer tenable for her to work for her employer and that the employer had reasonably anticipated that the applicant would resign as a result of the reduction in shifts. The Commission found that such conduct amounted to constructive dismissal and compensation was ordered.
Standing Down Employees
As mentioned above, the legislative provisions introduced by the JobKeeper scheme have come to an end and as such the ability of an employer to stand down employees depends on whether the employee is covered by either an Enterprise Agreement or an Award or whether section 524 of the Fair Work Act 2009 applies.
If the employee is covered by either an Enterprise Agreement or an Award the terms of that Agreement or Award prevail. The employer is bound to follow the steps as outlined in the relevant industrial instrument including any consultation requirements.
Section 524 of the Fair Work Act provides a right for an employer to stand down an employee provided certain specified criteria are met. At the onset of the coronavirus pandemic a number of organisations sought to stand down employees relying on section 524 of the Fair Work Act. Media articles covered the more prominent instances of this occurring, for example Qantas’ decision to stand down a significant number of its employees.
There are three primary criteria which must be satisfied for a stand down to be lawful under Section 524 of the Fair Work Act. First, the employee must be stood down during a time in which they cannot be usefully employed. Second, one of the following three sub-criteria must be present:
- industrial action (other than industrial action organised or engaged in by the employer);
- a breakdown in machinery or equipment that the employer cannot reasonably be held responsible for; or
- a stoppage of work for any cause which the employer cannot reasonably be held responsible.
The third of the criteria is the one most relevant for the COVID-19 pandemic. The principle articulated by the Fair Work Commission in the case of CEPU vs FMP Group  FWC 2554 is that the third criteria dictates that the employee cannot be usefully employed because of the stoppage of work. What constitutes a stoppage of work has not been subject of a great deal of judicial consideration. However, whilst the nature of events that could cause a stoppage have never been fully prescribed, the requirement of a genuine stoppage of work has been considered and interpreted strictly. A mere reduction in available work cannot constitute a stoppage.
One of the questions that has arisen out of the COVID-19 pandemic impact is whether a genuine stoppage of work occurs when the employer’s business is not trading but there still exists some limited functions that can be performed. This was considered in Marson v Coral Princess Cruises (NQ) Pty Ltd  FWC 2721. In that case the employer ceased trading as a result of the government imposed restrictions on travel. The Applicant was stood down accordingly. He contended that there was, nonetheless, useful work that he could do and therefore the necessary requirements for a valid stand down pursuant to Section 524 had not been enlivened. The Commission found that whilst there was some work the applicant could do and some of it he had traditionally done, the amount of work was severely limited, and the allocation of that work was appropriate and reasonable. As such, the volume of work available to the applicant is insufficient for him to be characterised as “usefully employed”.
The rules concerning redundancy remain unaffected by the COVID-19 pandemic. If the employer no longer requires a particular position to be performed by anyone, the position is made redundant and the employee is entitled to the payment of his/her entitlements.
As always, if you have any questions at all concerning employment entitlements and most particularly the impact of the government imposed lockdowns on entitlements, our team are more than happy to help.