On 1 September, the parliament passed legislation amending JobKeeper provisions as part of its JobKeeper 2.0 announcement. These changes will come into effect on 28 September. Tom Earls from Fair Work Lawyers unpacks the detail.
As part of its JobKeeper 2.0 announcement, parliament passed legislation amending Jobkeeper provisions in Part 6-4C of the Fair Work Act 2009 (the Act). We previously advised in relation to the first tranche of changes. These amendments change the ability for employers to issue JobKeeper-enabling directions and particularly limit the rights of businesses that cease to be eligible under JobKeeper 2.0.
The amendments take effect from 28 September 2020.
Scope of operation
The legislation differentiates between employers that remain eligible for JobKeeper under the 2.0 formulation and those that were previously eligible for JobKeeper and who continue to satisfy a 10% decline in turnover test (referred in this update as “Legacy employers”).
Employers eligible under JobKeeper 2.0
Employers who remain eligible for JobKeeper payments will continue to be able to issue JobKeeper-enabling directions (other than annual leave, see below). Refer to our previous update for an overview of these provisions.
Annual leave request flexibility removed
The legislation removes the ability for employees and employer to agree on taking annual leave at half pay and the right for an employer to request that employees take annual leave. This means the default provision applies unless an award/enterprise agreement provides otherwise.
Some awards contain flexibilities although these are expressed to expire on a nominated date (at or around 27 September 2020) unless extended. Employers relying on these clauses should pay close attention to the applicable awards as those flexibilities will otherwise expire.
Employers no longer eligible under JobKeeper 2.0 (Legacy employers)
Legacy employers’ ability to issue JobKeeper-enabling directions is significantly reduced.
10% decline in turnover test
Legacy employers must satisfy the 10% decline in turnover test to be able to issue any of the directions outlined below. This must be certified by an eligible financial service provider (registered tax agent, BAS agent or qualified accountant). A small business employer can provide a statutory declaration from an authorised person.
The Legacy employer must meet the test at certain “test times” for designated quarters or lose their ongoing ability to issue directions:
- Before 28 October 2020: in respect of the April – June 2020 quarter.
- 28 October 2020: in respect of the July – September 2020 quarter.
- 28 February 2021: in respect of the October – December 2020 quarter.
If, at the applicable test time, the Legacy employer does not satisfy the decline in turnover test, any of the directions below cease to have effect. Importantly, the legislation provides that before the test time, the employer must write to the employee explaining that the direction will cease to have effect and when that will occur. An employer can be prosecuted for failing to do this, although it provides a prosecution may only occur for the second and subsequent breach.
Furthermore, Legacy employers who continue to have directions in place must write to their employees before each test time to confirm that the direction will continue to be in place.
Similar provisions apply to agreements made pursuant to the below requirements.
Reduced scope for Legacy employers
In addition to the decline in turnover test, there are further reductions for specific JobKeeper directions, as set out below.
Stand down directions
Existing JobKeeper directions to fully or partially stand down will cease to have effect unless the Legacy employer meets a number of additional criteria (in addition to the above further limitations, and the existing JobKeeper limits).
A JobKeeper-enabling stand down issued after 28 September 2020 will only be effective if, in addition to the existing requirements:
- 60% ordinary hours: a stand-down must not result in the employee working less than 60% of their pre-COVID-19 ordinary hours.
- At least 2 hours per day: the employee must be rostered for at least 2 hours on a day that they are directed to work.
Performing different duties
Provided the employee is properly licenced and qualified, the duties are safe and reasonably within the scope of the employer’s operations, a Legacy employer is still permitted to issue JobKeeper directions to perform different duties.
Performing work at a different location
A Legacy employer may still issue JobKeeper directions to perform duties at a different location (including the employee’s home) provided it is safe and reasonably within the business’ scope. If the location is at a different place, it must not be unreasonably far to travel (including taking into account COVID-related risks in travelling).
Performing work on different days/times
Legacy employers are no longer entitled to direct an employee to work on different days/time. This is replaced by an ability to ‘request’ the employee to work on different days, which the employee must not unreasonably refuse.
In addition to the ability to “request”, there is an ability for an employee and employer to “agree” (in writing) to change days/times of work. These agreements will override an applicable award/enterprise agreement provision, provided that it meets certain criteria, notably that it is safe, reasonably within the business’ scope, does not reduce the employee’s total ordinary hours and the employee works at least 2 hours per day. The Explanatory Memorandum indicates that all penalty rates, loadings etc. applicable to the work would continue to apply, suggesting this flexibility only relates to working fewer than the Award minimum hours, which would be of limited real world use.
Extended consultation obligations
Legacy employers who wish to issue directions are required to engage in a longer consultation process. Broadly, the process requires:
- 7 days’ notice: the employer must provide a minimum of seven (7) days written notice of their intention to issue the direction.
- Consultation: during the seven day period, the employer must provide specified information to, and consult with, the employee (and their representative) and keep written records of same. This information includes the nature and timing of the direction and its expected effects (excluding confidential/sensitive information).
- Direction issued: after genuinely considering employee feedback and waiting the minimum period, the employer may issue a written direction.
The employer must keep written records of all of the above steps.
Note: there is no obligation to consult a second time in relation to a direction that has already been issued, provided that the previous consultation traversed the same ground.
The legislation confirms the emerging position of case law that directions in relation to stand down, hours of work etc. will be considered unreasonable if they have an unfair effect on a particular person (ie. reductions in hours must be shared appropriately).
Alternative options (including for ineligible employers)
For employers who cease to be either JobKeeper eligible or Legacy employers, their obligations revert to those that prevailed prior to the JobKeeper amendments.
These provisions do not otherwise modify or limit an employer’s obligations under any award or agreement, or generally at law, to seek to modify or make unilateral changes to employee conditions.
For employers who have already implemented changes by contractual agreement with employees outside of the JobKeeper-specific legislation, those changes would continue to apply. These provisions relate to ‘directions’ by employers (i.e. unilateral steps) and not to matters by agreement. Note that any agreed matter must be compliant with the employer’s legal obligations (e.g. awards/agreements, the NES etc.).
Stand-down and redundancy for ineligible employers
As JobKeeper is reduced, employers who are still affected by the general economic downturn may need to look at staffing numbers and overheads. For employers who are not eligible to utilise the protections above, and who are unable to reach agreement with their employees (as set out above), employers may consider other options. Specific advice should be sought in relation to those circumstances.
The legal position relation to stand-down due to slowdown in work is extremely uncertain and it is not recommended that an employer who is not eligible to stand down under the JobKeeper provisions take steps to stand any employee down without seeking specific advice.
Where an employer is considering redundancy, it is important to remember that to meet the genuine redundancy exclusion from unfair dismissal, the employer must have a genuine operational reason, comply with the consultation provision in any applicable award or enterprise agreement, and consider redeployment opportunities. Care must also be taken to ensure the selection is suitable.
Beyond March 2021?
These reforms have an in-built expiry date of 28 March 2021. It is anyone’s guess as to whether there will be any further provisions and, if so, in what form. We will continue to provide updates as more information comes to hand.
Tom Earls is a Founding Partner of Adelaide-based Fair Work Lawyers. 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. If you would like further information about the changes to the Fair Work Act 2009, or otherwise in relation to managing employee terms and conditions during the COVID-19 pandemic, please contact the team at Fair Work Lawyers.