Paul Ronfeldt

JobKeeper legislation temporarily expands employment arrangement options in face of COVID-19

Paul Ronfeldt

15 April 2020

Legislation Update

It has become obvious to us all that our existing employment laws were not designed for a pandemic.

To some extent, those problems have now been addressed by changes to the Fair Work Act 2009 (Cth) (FW Act) made as part of last Wednesday’s Commonwealth COVID-19 economic relief package.

In particular, changes have been made to the FW Act (effective 9 April 2020) to assist employers who qualify for the JobKeeper scheme to temporarily reshape their employment arrangements, while retaining employees in their employment.

These changes enable employers who qualify for the JobKeeper scheme to give certain types of directions to eligible employees (JobKeeper Enabling Directions) and make certain types of agreements with eligible employees (JobKeeper Enabling Agreements).

JobKeeper Enabling Directions

An eligible employer may give one or more of the following JobKeeper Enabling Directions to an eligible employee:

1. A JobKeeper Enabling Stand Down Direction, being a 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 down to and including nil hours (compared with the employee’s ordinary hours of work);

2. A JobKeeper Enabling Duties of Work Direction, being a direction to perform duties different to the employee’s usual duties that are reasonably within the scope of the employer’s business operations, provided that the duties are:

  • within the employee’s skill and competency; and
  • safe, having regard to (without limitation) the nature and spread of COVID-19; and
  • if relevant, duties for which the employee holds the requisite licence or qualification;

3. A JobKeeper Enabling Location Direction, being a direction to perform duties during a period (the relevant period) at a place that is different from the employee’s normal place of work, including the employee’s home, if:  

  • the alternate location is suitable for the employee’s duties; and
  • if the alternate location is not the employee’s home, working there does not require the employee to travel a distance that is unreasonable in all the circumstances, including the circumstances surrounding the pandemic; and
  • work at that alternate location is safe, having regard to (without limitation) the nature and spread of COVID-19; and
  • work at that alternate location is reasonably within the scope of the employer’s business operations.

JobKeeper Enabling Agreements

JobKeeper Enabling Agreements allow employers to request their employees to enter into agreements to work on different days or at different times, or to take annual leave, or take longer periods of annual leave at a reduced amount.  In some cases, if the employer makes a request in the manner allowed by the new laws, the employees cannot unreasonably refuse their agreement to the request.  The circumstances when changes can be made through JobKeeper Enabling Agreements differ from those when JobKeeper Enabling Directions are available.

These Agreements cannot be used to reduce an employee’s ordinary hours, however they do override ordinary hours/span of hours provisions in enterprise agreements, modern awards and/or employment contracts.  That means that the Agreement can provide that ordinary hours are to be worked (and paid for at ordinary time rates) at times in the week where overtime and other penalty rates would have otherwise been payable.

Key considerations

These changes to the FW Act are already in effect, however, there are a number of requirements that must be met in order to use the power to give a JobKeeper Enabling Direction or request a JobKeeper Enabling Agreement.  A failure to comply with those requirements may expose the employer to substantial civil penalties or claims for underpayment of wages and other entitlements.  As well as the specific requirements of these new provisions, the new legislation makes it clear that the usual FW Act protections of employee interests apply to these scenarios – for example the requirements to pay wages, and prohibitions on unlawful adverse action (indeed, the new FW Act provisions create additional protected ‘workplace rights’), unfair dismissal and discrimination.

In summary, care must be taken, and legal advice is recommended, in relation to:

  • whether the employer in question will qualify for JobKeeper payments in relation to the employees who will be subject to the directions/agreements – ultimately, JobKeeper Enabling Directions and JobKeeper Enabling Agreements will only be valid if the employer is eligible to receive the JobKeeper payment and the employer makes that payment to the employee;
  • if and when an employer is eligible to use the powers – among a number of other limitations, an employer must be able to demonstrate that the direction or agreement is reasonable in the circumstances (that will depend on the kind of direction given, but will include considerations such as whether the employee is otherwise being able to be usefully employed);
  • the notice and consultation requirements that must be met before a direction can be given;
  • the form of a direction or agreement;
  • the period of time that a direction or agreement can apply – there are rules for determining this – in any case, any direction or agreement will automatically cease to have any effect at the beginning of 28 September 2020;
  • how to calculate employees’ wages when they are subject to a direction or agreement;
  • the interaction of periods when a direction or agreement applies to an employee and the employee’s entitlements to personal leave, annual leave and long service leave;
  • the accrual of leave during a JobKeeper Enabling Direction Period;
  • the calculation of payments during a Jobkeeper Enabling Direction Period;
  • how to vary, cancel or extend directions or agreements;
  • procedures to resolve disputes with, or take disciplinary action against, employees who refuse or fail to comply with Jobkeeper Enabling Directions or refuse offers of JobKeeper Enabling Agreements; and
  • record keeping obligations. Importantly, failure to comply with record keeping requirements could result in the employer needing to repay JobKeeper payments to the ATO.

Employers now need to decide whether, if eligible, they should take the steps provided by these new laws, and whether they should review, revoke or replace the arrangements that they have already made in the past month to respond to COVID-19.

Please contact a member of our Employment, Workplace Relations & Safety team if you would like further advice concerning these changes.