Jobkeeper 2.0 – What does it mean for your business?

The Australian Government’s introduction of JobKeeper on 9 April 2020, has helped Australian businesses, not-for-profits and workers get through one of the most difficult times in our history in dealing with the COVID-19 pandemic. With Stage 4 restrictions in place in Victoria and the threat of similar lockdown in other states, the untimely termination of JobKeeper support on the 27 September 2020 brought great panic to businesses and employees.

On Tuesday, 21 July 2020, the Australian government announced the extension of JobKeeper benefits by six months to 28 March 2021, although there will be a gradual reduction in payments. In this week’s client alert, we will discuss the renewed JobKeeper payment, the JobKeeper directions which are scheduled to be repealed on 28 September as well as a number of other considerations in relation to managing your employees during this difficult time.

Update to JobKeeper payments

The Australian government have announced changes to its JobKeeper Payment scheme, which will extend the scheme by a further six months from 28 September 2020 until 28 March 2021.  The amendments are as follows:

1. Changes for extended period:

28 September 2020 to 3 January 2021 (“Period 1”):

• $1200 per fortnight for eligible employees that, in the four weeks before 1 March 2020, were working in the business for 20 hours or more a week on average, and for business participants who were actively engaged in the business for more than 20 hours per week; and
• $750 per fortnight for eligible employees that, in the four weeks before 1 March 2020, were working in the business for less than 20 hours a week on average, and for business participants who were actively engaged in the business for less than 20 hours per week in the same period.

4 January 2021 to 28 March 2021 (“Period 2”):

• $1000 per fortnight for eligible employees that, in the four weeks before 1 March 2020, were working in the business for 20 hours or more a week on average, and for business participants who were actively engaged in the business for more than 20 hours per week; and
• $650 per fortnight for eligible employees that, in the four weeks before 1 March 2020, were working in the business for less than 20 hours a week on average, and for business participants who were actively engaged in the business for less than 20 hours per week in the same period.

1. Eligibility criteria for JobKeeper extension:

Businesses seeking to claim JobKeeper, from 28 September 2020 onwards, will be required to reassess their eligibility for the JobKeeper extension. The business will be required to demonstrate that they have suffered an ongoing significant decline in turnover using actual GST turnover in the June and September quarters 2020.

Businesses must have met the relevant decline turnover tests in both these quarters to be eligible for the JobKeeper payment for Period 1. Further reassessment of actual GST turnover in each of the June, September and December quarters 2020, must be conducted to remain eligible for Period 2.

The relevant decline in turnover that businesses and not-for-profits will need to demonstrate are:

• 50% for those with an aggregated turnover of more than $1 billion;
• 30% for those with an aggregated turnover of $1 billion or less; or
• 15% for Australian Charities and not-for-profits Commission-registered charities (excluding schools and universities)

Businesses and not-for-profits will generally be able to assess eligibility based on details reported in the Business Activity Statement (BAS) as representing their GST turnover.

JobKeeper enabling stand down directions

To support the implementation and operation of the JobKeeper scheme in Australian workplaces, the Fair Work Act 2009 (Cth) (“FWA”) was amended to enable employers to give eligible employees a direction to stand down, or reduce their hours or days of work – known as  Enabling Stand Down Directions (“JobKeeper Direction”). However, with the relevant legislation due to be repealed on 28 September 2020, these provisions will cease on 28 September 2020. As yet no announcement has been made regarding the extension of these legislative provisions. As such, the future operation of the JobKeeper enabling rules and directions framework is uncertain (although we suspect it will be continued in some form or another).

However, the continued effects of the COVID-19 pandemic continue to create an enormous impact to businesses in multiple industries. Accordingly, there is some concern for employers in relation to what will occur if the JobKeeper Directions cease on 28 September 2020. In addition, even if the JobKeeper Directions continue in some form or another, some businesses may not be eligible for the revised JobKeeper Payments and many employers may need to consider how they will effectively continue to keep their business viable and trading, if they cannot rely on the Jobkeeper Directions.

In this connection, we consider a number of issues below that may arise as businesses respond to the ongoing effects of COVID-19 in the coming months.

Standing down employees

Under the JobKeeper Direction, a qualifying employer can stand down an eligible employee, if the employee cannot be usefully employed for their normal days or hours because of business changes attributable to COVID-19 or government initiatives to slow down COVID-19 transmission. However, if the JobKeeper Directions are altered or cease operation from 28 September 2020, or in circumstances where the JobKeeper Directions continue but your business is no longer eligible for JobKeeper, it will be much more difficult to stand down employees, or unilaterally change their working hours.

In these circumstances, it may be possible for an employer to rely on section 524 of the FWA to stand down full-time or part-time employees, without pay. However, a stringent condition of this provision, relevant to the current COVID-19 situation, is that a stand down can only be used where there is a “stoppage of work for any cause for which the employer cannot reasonably be held responsible”. For example, if the Australian Government requires the business to close as a means of protecting the public during the pandemic (e.g. when the Australian Government ordered all fitness centres to close).

However, if an employer simply faces a reduction in trade volumes or where it is merely uneconomical to continue to employ staff, this will not be considered a “stoppage” of work under section 524 of the FWA. In these circumstances, the organisation would be best suited to consider alternative measures such as having their employees work from home (if possible), asking staff to reduce their hours or encourage employees to take paid or unpaid annual leave.

Employers are generally free to vary a casual employee’s hours (including zero hours), however, employers should be more cautious when it comes to casual employees who have worked regular and systematic hours.

Reduction of hours

From 28 September 2020 onwards with repeal of the JobKeeper scheme contained in the FWA, full time and part time employees will have an automatic right to return to the hours they were working prior to the JobKeeper Direction being issued unless the legislation is extended. Accordingly, in order to lawfully reduce or vary an employee’s working hours, the employee must consent to such variation. This means the employer should consult with the affected employees and request employees to reduce their hours. It is unlikely employees will consent unless they properly understand why it is necessary for them to do so. However, if employees do not consent to the reduction, even if all other employees do consent, they cannot be forced to comply.

Further, employers should review any modern award or enterprise agreement that applies to the business and how it prescribes the variation of working conditions. Most modern awards have been varied to allow flexibility to change hours by agreement. These changes however, are also due to terminate on 30 September 2020.

Employers are generally free to vary a casual employee’s hours as they fit, however again, should consult with employees who work regular hours and should aim to keep all employees informed of forthcoming changes.

Where an employer cannot come to an agreement to reduce an employee’s hours, this may result in consideration as to whether the only other viable option is for the employer to make roles redundant. We discuss this further below.

Directing employees to take annual leave

Following the insertion of section 789GJ of the FWA in response to COVID-19, employees who are qualified for the JobKeeper scheme are required to consider, and must not reasonably refuse, an employer’s request to take paid annual leave. Employers can further agree to an arrangement with employees where twice the amount of annual leave is taken at half pay. This applies to certain award covered employees and all employees who are receiving JobKeeper.

Most modern awards now provide express provisions regarding the ability for employers to request employees to take annual leave. For example, modern awards which contain an express provision regarding the request for employees to take annual leave usually requires the employee to agree and the employee must not be left with less than a 2-week annual leave balance. However, like the Jobkeeper provisions, the employee cannot unreasonably refuse such a request. These provisions are also due to expire on 30 September 2020.

In the case of cessation of the JobKeeper Direction from 28 September onwards or in circumstances where your business may no longer be eligible for to receive JobKeeper, employers will only be entitled to request an employee to take annual leave if the employee has an excess of annual leave or if the business is being shut down for a period (e.g. Christmas/New Year period). The employer and employee will be required to come to an agreement in this regard.

Redundancy

In instances where the company has already considered alternative cost-saving avenues (such as reducing employee hours) or it is clear that the roles will not be viable regardless, employers may be required to consider redundancy. The JobKeeper Direction has not altered the rules in relation to redundancy and/or for calculating an employee’s redundancy entitlement, thus general redundancy rules under Division 11 of the FWA still apply.

In this regard, it is recommended that employers adhere to the following guidelines when undertaking redundancies:

1. Identify a potential selection of employees and ensure the employees chosen for potential redundancy is objectively fair.
2. Ensure the business consults with all employees potentially affected by redundancy (including any employees on maternity leave or long-term sick leave) and ensure consultation provisions contained in applicable modern awards and/or enterprise agreements are followed. Consultation should include the reasons for the redundancy, any attempts to find alternative roles within the organisation (including any related entities) and any other matters relevant to the employee concerned.
3. Give employees an opportunity to provide feedback during the consultation period and ensure the business genuinely considers the feedback provided. Even though we are currently experiencing unprecedented times, this will not be an excuse to forego a proper consultation process with employees and as such, employers must strictly comply with their consultation obligations.
4. Once a decision has been made in relation to the redundancy and all other options have been considered, employers must give employees notice (either provide the required contractual notice as long as it is more than the minimum notice required by the FWA, or pay notice in lieu).
5. Employers may also be required to pay the employee a redundancy payment. Redundancy pay is based on the employee’s original and usual rostered hours (not the hours under JobKeeper direction). However, employees with less than one-year service or where they are employed by a business with fewer than 15 employees, are not entitled to a redundancy payment. Where an employer is unable to afford to make a redundancy payment, there is an ability under section 120 of the FWA to apply to the Fair Work Commission for a reduction in the amount to be paid, potentially to a zero payment. It is also important to note that the termination payment must include all accrued (but unused) annual leave, including during any stand down period.

Notably, in circumstances where the redundancy is not a genuine redundancy and/or a proper redundancy process is not followed, an employee may be entitled to pursue an unfair dismissal claim. Depending on the reasons for the redundancy/termination of their employment they may be able to assert that they were terminated for other reasons (such as discrimination, etc) and may be able to pursue alternative claims available to them.

A way forward for employers

Undoubtedly the uncertain future of businesses due to the re-emerging threat of COVID-19 has created grey areas in the original JobKeeper scheme implemented by the Australian Government. The extension of JobKeeper payments till 28 March 2021, has provided comfort for many businesses, however, the uncertainty of the continued operation of the JobKeeper Direction and award provisions still remain.  Ultimately, an employer’s policy and decisions in regard to stand downs, reduced hours and redundancy should be of collaboration and consultation with affected employees.

If any further information in relation to any aspect of this alert is required, please do not hesitate to contact us. Otherwise, we are available and ready to assist should you require any advice or legal support.

This alert is not intended to constitute, and should not be treated as, legal advice.