How to Retain Staff During the Coronavirus Pandemic

Tom Earls , 31 March 2020

The response to COVID-19 is unprecedented and evolving daily. As government decisions impact on businesses, architectural employers are looking at ways to continue operating in the face of immediate challenges, and with one eye on maintaining future workflow in uncertain economic times. Tom Earls from Fair Work Lawyers briefly looks at the options available to practices.

By agreement

The recommended first step is to look to reach agreement with staff. In the short term, leave and leave without pay can be agreed with willing employees. Every employee is under a contract of employment and it can be varied by mutual agreement. There is substantial flexibility in terms of the things that can be agreed. This might be a reduction in wages, hours (reduction of hours, variation to usual normal hours or minimum hours per normal day), an agreed period of absence, taking leave or any combination of these options.

Care must be exercised to ensure that you are still meeting award obligations. Wages and salaries must still meet award minimums. Many awards contain restrictions on part-time engagements and can be very inflexible. While the Architect’s Award does not include such provisions, arrangements for employees working under other awards should be carefully checked.

Access to leave entitlements

Employees can only be directed to take leave in circumstances where they are permitted by law. For the most part this is set out in the applicable award or enterprise agreement (or contract, for award/agreement free employees). Otherwise, it must be by agreement, as above.

For example, annual leave is generally only taken by agreement which the employer cannot unreasonably withhold. Subject to any specific rules there would need to be a very good reason why leave could not be taken during a period of stand down. On the other hand, while the employer may request leave be taken, it cannot necessarily be forced (see below).

Long service leave (LSL) rules vary from State to State. In Victoria, LSL can only be taken by agreement in a similar manner to annual leave. A temporary amendment to NSW LSL legislation has been introduced for a specific period, permitting directions to take LSL in a wider variety of circumstances among other flexibilities. In other States an employer can direct leave be taken but usually by providing notice – typically one or two months, which would be impracticable in the current circumstances, making agreed periods likely the only effective use. It is also likely that further changes on a state-by-state basis may occur, so maintaining up-to-date information is important.

State legislation typically permits access to LSL in advance of the entitlement, although each State’s rules are different and should be carefully checked, particularly as short-term measures might impact on these processes (as is the case, for example, in NSW).

An employee cannot access personal leave during a period of stand down.

Leave without pay (whether for blocks of time or for parts of weeks) is another available option. Leave without pay must be by agreement with the employee but differs from stand down because during an agreed period of leave without pay, the employee does not accrue entitlements under the Fair Work Act 2009, and may not be able to receive government assistance, although the rules regarding this are changing continuously and will need to be checked at the time.

Unilateral options

If agreement cannot be reached, then the employer needs to consider unilateral options.

Leave cannot generally be forced except if permitted by lawful arrangements. Where leave is available, consideration should be given to the nature and extent of the rights and obligations for that type of leave.

Where agreement is not reached, or leave not able to be directed, other unilateral options are still available.

Stand down: Subject to any overriding contract/agreement, to stand an employee down they must be unable to be usefully employed because of a cause beyond the employer’s control. A government directed shutdown is a clear cause. Where the cause is less direct (eg. acute loss of business due to an identifiable cause) the availability of stand down is less clear and may not be available.

Stand down can only occur to the extent that the employee cannot be usefully employed. This means if there are some duties available (including, at least arguably, duties that may be performed while working from home) they must be allocated before stand down can occur. In turn, an employer should consider how available work would be allocated. There are no set criteria for this aside from not doing so in an unlawful manner, although long-term HR relations should also be considered. 

An employee continues to accrue leave and service-based credits provided under the Fair Work Act (ie. annual leave, sick leave and credit towards notice of termination/redundancy) during a period of stand down. Once accrued, these are taken in accordance with the same rules outlined above meaning that during extended periods of stand down, leave requests can be expected. Long service leave rules vary from State to State. Government assistance to stood down employees may be available, but due to changing rules in this respect, this will need to be checked at the time.

Redundancy: This is a permanent decision to terminate an employee. Unfair dismissals and other laws relating to dismissal continue to apply and, at least historically, cases tend to increase in times of economic uncertainty. The employer must comply with consultation obligations under any applicable award/agreement and must consider redeployment options (if available).

For example, if the employer does not want a full-time role but only a part-time one then that would need to be offered as an alternative to redundancy. If the employee rejected the offer, they would be redundant and entitled to notice, severance pay (where applicable) and payout of leave entitlements. If they accept the alternative position, agreement should be reached as to how the transition to the new role would occur. A move to a part-time role would not occasion redundancy pay in addition to the new role but the situation is less clear in the move to casual employment.

In offices with a staff of 15 or more, redundancy pay would be applicable, and this may need to be fully paid out before former employees can seek government assistance, although due to the changing landscape, this will need to be checked at the time.

Documenting outcomes

It is also important that whatever occurs is properly documented. Any agreed position should be confirmed in writing. Where unilateral action is taken it should be properly documented and communicated in order to minimise the risk of challenge.

JobKeeper payment  

The Federal Government has recently announced its JobKeeper wage subsidy package, which will apply from 30 March 2020. Employers who suffer a dramatic reduction in turnover can access the package.

For architects with an annual turnover of less than $1bn, they must have suffered a 30% reduction in revenue. Full-time, part-time and casual (regular and systematic for more than 12 months) employees as at 1 March 2020 are eligible. Employers must register for the scheme (via www.ato.gov.au). The scheme does not extend to most temporary visa holders.

If employees are stood down, they receive the full $750 per week payment (even if a part-time employee normally receives less). If employees are working and earning more than this, the employer continues to pay the employee as normal, with the $750 a subsidy for the employee. The payments are reimbursed to the employer on a monthly basis. Superannuation remains payable where the employee is working but optional where they are stood down.

This provides significant relief for eligible firms. Where stand down is available, it will soften the blow for employees and make reaching agreement on matters (as outlined above) an easier proposition. For employers who continue to work, the subsidy will assist with the inevitable drop in productivity and revenue.

Note: the package is subject to legislation and may change, although the responses from opposition / minor parties indicates that this will likely be passed by parliament without substantial amendment.

Fair Work Commission response

It is noted that on 28 March 2020, the Fair Work Commission varied the Clerks – Private Sector Award 2020. Most architects engage some clerical workers. The changes permit additional flexibility for those workers than previously prevailed and should be checked in relation to those workers.

Tom Earls is a Founding Partner of Adelaide-based Fair Work Lawyers. This information has been developed in consultation with the ACA Industrial Relations Committee. The information contained here is general in nature and does not constitute legal advice. Each circumstance is different and requires consideration of a variety of matters. Clients should seek legal advice in relation to any particular circumstances.