Contact Us

    JobKeeper: What you need to know

    Apr 16, 2020 12:49:14 PM

    Last week, Parliament passed legislation making changes to the Fair Work Act 2009 to accommodate the JobKeeper wage subsidy announced the week before.

    The new laws override any modern award, enterprise agreement or employment contract. Under the new laws an employer can:

    • Stand down an employee without pay (completely or partially) for any period that they cannot be usefully employed.
    • Change employment arrangements (such as what they do, where they work and when they work) for a specific employee.

    The changes provide for the following:

    1. New stand-down provisions

    2. Direct an employee to perform different duties to normal

    3. Direct an employee to perform duties at a place different to their normal workplace including the employee’s home

    4. Request the employee to perform duties on different days and at different times compared to the employee’s normal ordinary hours of work

    5. Requesting an employee to take paid annual leave

    6. Consultation requirements

    These changes are significant compared to the provisions we are familiar with in Fair Work Act. It is therefore intended to be temporary and it will be the subject of a review in July 2020.

    We will now deal with each change separately:

    1. NEW STAND DOWN PROVISIONS (called a JobKeeper enabling stand down direction)

    The new stand down provisions allow an eligible employer to give a direction to an employee to:

    1. Not work on a day or days on which the employee would usually work.
    2. Work for a lesser period than the period which the employee would ordinarily work.
    3. Work a reduced number of hours (compared with the employee’s ordinary hours of work), and not be paid for the period that work is not performed.
    When an employer gives a ‘direction’, it means the employer does not need to get the approval or agreement from the employee to do so, provided the requirements are met. These requirements are:
    1. When the direction is given the employer qualifies for the JobKeeper scheme.
    2. For the period of the stand down the employee cannot be usefully employed for the employee’s normal days or hours because of changes to business attributable to the COVID-19 pandemic or Government initiatives to slow the transmission of COVID-19.
    3. The implementation of the stand down direction is safe and specifically safe having regard to the nature and spread of COVID-19.
    4. The employer becomes entitled to one or more JobKeeper payments for the employee for the period that the JobKeeper direction applies.
    5. The “wage condition” is satisfied (explained below).
    6. The minimum payment guarantee is met (explained below).
    7. The hourly rate of pay guarantee is met (explained below).

    What is the ‘wage condition’?

    Essentially it means the employer:

    1. Qualifies for the JobKeeper scheme.
    2. Is entitled to JobKeeper payments for an employee and otherwise complies with the Coronavirus Economic Response Package (Payments and Benefits) Act 2020. Compliance will involve “Rules” yet to be announced by the Government through the ATO.

    What is the Minimum Payment Guarantee?

    The employer must ensure that the total fortnightly amount payable to the employee is not less than the greater of the following:

    1. The fortnightly amount of JobKeeper payment payable to the employer for the employee.
    2. The fortnightly amounts payable to the employee in relation to the performance of work.

    What is the “hourly rate of pay guarantee”?

    If a stand down direction is given by an employer to an employee, the employer must ensure that the hourly base rate of pay is not less than the rate that usually applies to the employee (as if the direction had not been given to the employee).

    If an employer has directed the employee to perform different duties to normal (explained below) the employer must ensure that the employee’s hourly base rate of pay is not less than the greater of the following:

    1. The hourly base rate of pay that would have been applicable to the employee if the direction had not been given to the employee.
    2. The hourly base rate of pay that is applicable to the duties the employee is performing.

    What is the “hourly base rate”?

    The hourly base rate is the rate of pay payable for an employee’s ordinary hours of work, without any additional allowances, loadings or penalties added.

    If the employee is not paid hourly, the hourly base rate of pay will generally be determined by:

    1. The provisions of any applicable industrial instrument (e.g. a modern award or enterprise agreement).
    2. Where no industrial instrument applies, dividing the payment made in each pay cycle by the number of ordinary hours in the period (again, minus any additional allowances, loadings or penalties added).

    Further advice should be sought regarding this issue where unique payment arrangements exists with varying numbers of ordinary hours in each pay cycle.

    It is important to note that a stand down direction does not apply to the employee during a period when the employee is:

    1. Taking paid or unpaid leave that is authorised by the employer.
    2. Otherwise authorised to be absent from the employee’s employment.
    2. DIRECT AN EMPLOYEE TO PERFORM DIFFERENT DUTIES TO NORMAL

    An employer can direct (as opposed to seeking agreement from the employee) an employee to perform different duties to normal provided that:

    1. The duties are within the employee’s skill and competence.
    2. The employer qualifies for the JobKeeper scheme.
    3. The duties to be performed are generally safe and specifically safe having regard to the nature and spread of COVID-19.
    4. The employee holds any necessary licence or qualification required to perform the duties.
    5. The duties are reasonably within the scope of the employer’s business operation.
    6. The employer becomes entitled to one or more JobKeeper payments for the employee for the period that the JobKeeper direction applies.
    3. DIRECT AN EMPLOYEE TO PERFORM DUTIES AT A PLACE DIFFERENT TO THEIR NORMAL WORKPLACE INCLUDING THE EMPLOYEE’S HOME.

    An employer can direct (as opposed to seeking agreement from the employee) an employee to perform duties at a place different to their normal workplace including the employee’s home provided that:

    1. The place is suitable for the employee’s duties.
    2. The employer qualifies for the JobKeeper scheme.
    3. The performance of the duties at that place are generally safe and specifically safe having regard to the nature and spread of COVID-19.
    4. The performance of the duties at that place is reasonably within the scope of the employer’s business operation.
    5. The employer becomes entitled to one or more JobKeeper payments for the employee for the period that the JobKeeper direction applies.

    When giving any of these directions, an employer needs to make sure that the direction isn’t unreasonable taking into account all of the circumstances, including the employee’s caring responsibilities. If a direction is unreasonable, it does not apply to an employee. The employer must also reasonably believe that the direction about duties or location is necessary to continue the employment of one or more employees.

    4. REQUEST THE EMPLOYEE TO PERFORM DUTIES ON DIFFERENT DAYS AND AT DIFFERENT TIMES COMPARED TO THE EMPLOYEE’S NORMAL ORDINARY HOURS OF WORK.

    An employer can request an employee to perform duties on different days and at different times compared to the employee’s normal ordinary hours of work provided that:

    1. The employer requests (as opposed to directs) the employee to do so.
    2. The employee must consider and not unreasonably refuse the request.
    3. The employer qualified for the JobKeeper scheme.
    4. The performance of the duties on those days is generally safe and specifically safe having regard to the nature and spread of COVID-19.
    5. The performance of the duties on those days is reasonably within the scope of the employer’s business operation.
    6. The employer becomes entitled to one or more JobKeeper payments for the employee for the period that the days or hours are worked.

    5. REQUESTS AN EMPLOYEE TO TAKE PAID ANNUAL LEAVE

    An employer can request an employee to take paid annual leave provided that:

    1. The employer requests the employee to do so.
    2. The employee must consider and not unreasonably refuse the request.
    3. The employer qualified for the JobKeeper scheme.
    4. The employee will maintain a balance of paid annual leave of no fewer than two weeks.
    5. The employer becomes entitled to one or more JobKeeper payments for the employee for the period of the leave.

    6. CONSULTATION REQUIREMENTS

    Before you give a JobKeeper direction the employer must:

    1. Give the employee written notice of the intention to give the JobKeeper direction at least three days before the JobKeeper direction is given or a lesser period if agreed with the employee.
    2. Consult with the employee (or a representative of the employee) about the direction.

    If you have any further questions about these changes to the Fair Work Act, please contact Frank Law at frank@franklaw.com.au.

    This is not legal advice. 

    NOTE: This article is a varied version of the original article “Changes to the Fair Work Act for employers and employees on the Jobkeeper wage subsidy” published in business australlia on 9 April 2020 and written by Nigel Ward, the Director and CEO - Australian Business Lawyers & Advisors (https://www.ablawyers.com.au/)