Miss out on ‘JobKeeper’? Here are some options for Employers
Announced on Monday, eligible employers will have access to $1,500 fortnightly payments for every eligible employee through the ‘JobKeeper’ scheme.
Although ‘JobKeeper’ creates breathing room for business owners across the nation, many will miss out as they do not meet the eligibility criteria. Further information on the eligibility requirements can be found here.
Even if eligible, there is another catch for employers. Payment under the scheme won’t be available until 1 May 2020. The reality is, there are many businesses who may not survive another six weeks without immediate support.
Undoubtedly, employers are facing a period of unprecedented financial strain. Employers may be forced to stand-down or make their staff redundant in order to adjust to the changing climate. Each avenue is governed by strict guidelines. Employers must be clear on their legal duties before undertaking action. A misstep can have devastating impacts on employees, the business’s reputation or brand and the long-term viability of the business.
Who misses out on the ‘JobKeeper’ scheme?
The Government estimates that the JobKeeper subsidy will reach six million workers across Australia.
Businesses likely to miss out are;
- Small to medium businesses (turnover of less than $1 billion) where their revenue has not decreased by 30% or more; and
- Large businesses (turnover of $1 billion or more) where their revenue has not decreased by 50% or more.
Employees who will not be eligible include;
- Casual staff employed for less than 12 months as at 1 March 2020;
- All staff hired after 1 March 2020; and
- Temporary visa holders (other than subclass 444 special category visa holders) such as bridging visas and skilled working visas.
Reducing labour costs – Alternatives to standing down and redundancy
Employers may be able to implement the following to reduce labour costs;
- Inviting staff to access accrued annual or long service leave;
- Reducing staff hours; and
- Salary reductions.
Employees must consent to any adjustment to pre-existing arrangements. Further, the terms of any applicable industrial instruments will require careful navigation. The Fair Work Commission is currently proposing amendments to 103 Awards to specifically deal with the COVID-19 pandemic. So, it is important to keep up with any changes to any Awards that apply to their staff.
Corporate business could supply employees to a third party through labour hire or secondment arrangements. Such arrangements pose legal issues of their own. The drafting of such agreements requires careful consideration and planning. They may allow employers to maintain employment for their workforce and avoid standing down or making their staff redundant.
Can I Stand-Down my employees without pay?
Unfortunately, like many Australian businesses already, some businesses may have no choice but to reduce their workforce and associated costs by standing down their staff. Understanding the legal implications in this situation is vital for employers. The consequences of incorrectly standing down staff can be extremely detrimental.
The stand down provisions in the Fair Work Act 2009 (Cth) (FWA) (Stand Down Provisions) allow employers to stand down an employee without pay where the employee cannot be usefully employed. This includes due to the stoppage of work where the employer cannot reasonably be held responsible.
To trigger the Stand Down Provisions, Employers will have to ask themselves the following questions;
- Are stand downs covered specifically in pre-existing employment agreements? If yes, such terms must be complied with instead of relying on the Stand Down Provisions.
- Can the external reason for the stoppage of work be established? Could the employee allege that there is another reason the employer stood them down?
- Is there an actual stoppage of work? A mere downturn of profit or delay of certain projects will not suffice.
- Can the employee be employed usefully elsewhere in the business? For example, the employee may be able to be utilized remotely or in an alternative role. This avenue must be exhausted before employers can rely on the Stand Down Provisions
- Is the stand down ‘fair’? Consideration must be given to allowing staff adequate notice as to avoid as much inconvenience to the employee as possible.
The Stand down provisions of the FWA should not be taken lightly. The Fair Work Ombudsman has specifically stated that standing down employees without pay generally will not be available where there is a mere deterioration of business conditions or where an employee has contracted COVID-19. Where employers cannot satisfy the elements above, they are exposing themselves to action by the Fair Work Commission. Further, all employers should be aware of the requirements that trigger a stand down provision in case employees have questions or misconceptions.
How does Stand-Down compare to redundancy?
Standing down employees is essentially like pressing a pause button. Employees will not be required to perform their duties and employers do not need to pay their employees. Employees will remain employed for the period of stand down. Employees will continue to accrue entitlements such as annual leave during this time. On the other hand, redundancy is the decision to terminate an employee’s employment because the position is no longer required. The employer will be required to pay redundancy entitlements.
There are strict guidelines on a business’ ability to rely on redundancy. Essentially, the employee’s role must no longer be required and he / she cannot be reasonably deployed in another role (in any location within the business).
Whether stand-down or redundancy is more appropriate should be decided on a case by case basis. Some businesses making permanent changes to the way they operate (e.g. permanently closing retail operations and opening an online store), may determine that all retail roles of staff working in physical stores are redundant. In comparison, retailers that are temporarily shutting their doors and who intend to re-open after the crisis may find stand downs more appropriate.
Whatever option employers choose to take, they must be clear on their legal duties. Employers that act uninformed may expose themselves to penalties and/or applications made to the Fair Work Commission by disgruntled employees.