With the rapid spread of COVID-19 throughout Australia and the subsequent restrictions imposed by the government to contain the spread, many individuals and organisations have been placed in an unprecedented predicament. The lockdown of certain non-essential activities and the government’s pleading for the public to remain at home and practice social distancing have left countless businesses with little to no customers, many of which are now facing severe financial hardship.
In light of the circumstances, employers have been forced to cease operating or limit the extent of their services which poses the question of what to do with the employees and the legality of standing down, redundancies, dismissals and directions to take annual leave.
Direction to utilise leave
An employer has the authority to direct an employee to take leave, however this is dependent on the contract of employment and any relevant enterprise agreements (‘EA’) and/or modern awards that may be applicable. Some modern awards and EA’s only allow an employer to direct leave to be taken where the leave balance is excessive.
Where there is no applicable modern award or EA, the Fair Work Act 2009 (Cth) (‘FWA’) provides that an employer may require an employee to take a period of paid annual leave, if the requirement is reasonable.
If an employee is covered by a modern award, an EA or an employment contract which contains clauses in relation to standing down, those provisions will need to be complied with.
Where an employee is not covered by any of the above, the FWA provides that they can be stood down without pay where they cannot be usefully employed because of a stoppage of work, and the employer cannot reasonably be held responsible for that stoppage.
It is important to note that a deterioration of business conditions does not amount to a stoppage of work. There must be an actual stoppage, such as a government direction that businesses of a certain nature close and therefore there is no work at all for any of those employees (i.e. cinemas, beauty parlours).
A redundancy is lawful and genuine if:
- the role was no longer required to be performed due to changes in the operational requirements of the employer’s business;
- the employee was consulted about the redundancy in line with the employment contract and any applicable modern award or EA; and
- the employee could not be reasonably redeployed to another role within the business.
Employees made redundant are to be paid out their entitlements and provided with sufficient notice and redundancy pay. Certain employees such as casual workers, apprentices and those with less than 12 months of continuous service can be subject to redundancy without notice or redundancy pay.
Any dismissals must be in accordance with the employment contract and/or any applicable modern awards or EA’s which prescribe the protocol to be followed and the required notice periods.
In the current climate, it is important to note that the reason for dismissal cannot be based on an employee’s absence due to illness as this is generally considered discriminatory.
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.