On 8 April 2020, the Fair Work Commission (FWC) made determinations temporarily varying 99 employment awards to alleviate some of the challenges employers and employees are currently facing due to the government imposed COVID-19 restrictions.
A summary of the changes is set out below.
Unpaid pandemic leave
Employees are entitled to take up to two weeks unpaid pandemic leave if they are required by government regulations or medical authorities to self-isolate. Subject to agreement between the employer and the employee, a period of greater than two weeks may be taken.
Annual leave at half-pay
Subject to written agreement between an employer and employee, an employee may take twice the amount of annual leave they have accrued at half pay.
Direction to take annual leave
In circumstances where a business has been impacted by the COVID-19 restrictions, employers can request for an employee to take annual leave provided that the employee’s leave balance will not be reduced to less than two weeks. Employees must be provided with at least one week’s prior notice (or less by agreement) if being directed to take annual leave.
On 8 April 2020, the Federal Parliament passed legislation empowering the Government to subsidise the payment of wages by qualifying employers in an amount of $1,500.00 per eligible employee per fortnight (JobKeeper Scheme).
Under the JobKeeper Scheme, an employer will be eligible for the subsidy if:
- its business has an annual turnover of less than $1 billion and it estimates that its turnover has reduced or will likely reduce by at least 30%; or
- its business has an annual turnover of $1 billion or more and it estimates that its turnover has reduced or will likely reduce by at least 50%; or
- it is a registered charity (excluding schools and universities) and it estimates that its annual turnover has reduced or will likely reduce by at least 15%.
Employees will be eligible for payment under the JobKeeper Scheme if they:
- were employed by an eligible employer as at 1 March 2020;
- have been employed as a long-term casual on a regular basis for at least 12 months as at 1 March 2020;
- are at least 16 years of age;
- are, at 1 March 2020, an Australian citizen or the the holder of a permanent visa or Special Category (Subclass 444) visa;
- are a resident for Australian tax purposes on 1 March 2020; and
- have not received a JobKeeper payment from another employer.
Coupled with the FWC’s changes to the awards, the JobKeeper Scheme amends the Fair Work Act 2009 (Cth) to provide employers who are eligible for the JobKeeper Scheme with greater flexibility to:
- make temporary and partial stand downs;
- alter employee’s usual duties and location of work;
- alter ordinary/rostered hours; and
- direct the use of annual leave.
Employers are under no legal obligation to participate in the JobKeeper scheme and eligible employees are not legally required to agree to receiving the JobKeeper payment. However, it is a requirement that an employer notifies all eligible employees that it is receiving the JobKeeper payment.
2. Annual leave
There is no requirement that employees must exhaust all annual leave entitlements before being eligible to receive JobKeeper payments. JobKeeper payments will continue as normal during any period that an employee is taking annual leave, however the employer must pay the employee the full amount that they are entitled to for the period of annual leave.
For example, where an employee takes 10 days of annual leave and is entitled to be paid $2,000 for that period of leave, the employer will need to pay the employee $2,000, which will include the $1,500 JobKeeper payment.
Employers may request an employee to take annual leave (rather than direct them to do so) if they are in receipt of JobKeeper payments (and only to the extent that the employee will not be left with an annual leave balance of less than two weeks). The request must be reasonable.
Similarly, employees in receipt of JobKeeper payments must not unreasonably refuse an employer’s request to take annual leave so long as it won’t cause their annual leave balance to fall below two weeks.
At this stage, there has been no change in Victoria to the laws as they apply to long service leave. Employers are still required to provide 12 weeks’ prior written notice of any direction to take long service leave.
3. JobKeeper payments when employees are stood down
Employers are still entitled to receive JobKeeper payments for stood down employees or those who were terminated post 1 March 2020 but re-hired.
Under the JobKeeper Scheme, an eligible employer must pay an eligible employee who has been stood down the $1,500 JobKeeper payment per fortnight (before tax). For a stood down employee, the JobKeeper payment amount is fixed at $1,500, irrespective of whether the employee’s normal fortnightly earnings are more or less than $1,500.
Where an employee earns more than $1,500 per fortnight, the employer may choose (in its absolute discretion) to cover the gap between the $1,500 fortnightly JobKeeper payment and the employee’s normal fortnightly earnings. However, at this stage there is no obligation upon the employer to pay the difference.
Leave entitlements will continue to accrue for employees who are receiving JobKeeper payments, even if the employee has been stood down. This is because an employee who has been stood down remains employed by the employer during any period that they are stood down.
Employers should keep in mind that where a stood down employee returns to work, the employer must pay the employee their normal earnings for any period during which they return to work (even though the employer will only receive $1500 from the government as a JobKeeper payment with respect to that employee).
Can a stood down employee seek alternative employment?
Yes. A stood down employee may seek and obtain paid employment elsewhere for the stand down period and will remain eligible to receive the the JobKeeper payment from their primary employer as long as the employee is only receiving the JobKeeper payment from their primary employer and not their other employer as well.
PAYG and superannuation
Under the JobKeeper Scheme, an employer must pay a minimum of $1,500 per fortnight to its eligible employees, withholding income tax as appropriate. The $1,500 per fortnight per employee is a before tax amount.
Where an employee is stood down, the employer is not legally required to pay superannuation on the $1,500 JobKeeper payment but may choose to pay this if it wishes.
Where an employee is still working and is paid:
- more than $1,500 per fortnight, the employer’s superannuation obligations will not change;
- less than $1,500 per fortnight, the employee still receives $1,500 under the JobKeeper scheme but the employer is only obliged to pay superannuation on the portion of the $1,500 which relates to the employee’s normal earnings for the relevant fortnight.
4. Multiple employers
JobKeeper payments are still accessible to eligible employees who work for more than one employer. However, as noted above, the employee is only entitled to receive the JobKeeper payment from one employer only and on the basis that they are a permanent employee of that primary employer.
Only the primary employer as nominated by the employee may receive JobKeeper payments for that employee. Any additional employers will not be eligible to receive JobKeeper payments for that particular employee and any income received by an employee from alternate employer will not affect the employee’s JobKeeper payments.
By way of example, under the JobKeeper Scheme where an eligible employer’s business has been affected by COVID-19 to such an extent that it is reasonable in the circumstances to direct an eligible employee to take annual leave, the employer may:
- direct the employee to take annual leave until their balance is reduced to 2 weeks;
- receive the $1,500 fortnightly JobKeeper payment from the government in respect of the employee for this period;
- pay the employee their normal wage for this period (where the employee’s normal wage is less than $1,500, the amount to be paid to the employee will nevertheless be $1,500 per fortnight);
- upon the expiry of the leave period, either:
- direct the employee to return to work and pay the employee their normal wage; or
- stand down the employee and continue to pay the employee the $1,500 fortnightly JobKeeper payment (note: the amount to be paid by the employer to the employee during period of stand down remains static irrespective of whether the employee’s normal wage is greater or less than $1,500 per fortnight).
An employer may select, in its discretion, which employees to stand down and whether to stand down all or only some employees.
6. JobKeeper vs JobSeeker
An employee cannot simultaneously receive both the JobKeeper and JobSeeker payments.
JobSeeker payments are only payable to the unemployed. When an employee is stood down, they remain employed by their employer.
If you are an employee or an employer that is affected in any way by the COVID-19 ramifications and would like to discuss your legal rights/obligations, please do not hesitate to contact our employment law team.