Federal Court rules 'casual' worker entitled to paid leave
The Federal Court of Australia recently handed down a significant decision in the matter of WorkPac Pty Ltd v Rossato [2020] FCAFC 84, redefining Australia’s employment law landscape.
Mr Rossato was employed by WorkPac between July 2014 and April 2018. During this time, he supplied labour to companies within the Glencore Group under six consecutive contracts, all of which specified that he was a casual employee.
As such, WorkPac contended that pursuant to sections 86, 95 and 106 of the Fair Work Act 2009 (Cth), Mr Rossato was employed on a casual basis and was therefore not entitled to paid annual leave, compassionate leave or personal/careers leave. Further, it contended that section 116 precluded Mr Rossato from claiming payment for public holidays. Finally, WorkPac sought declarations that as a ‘Casual Field Member’, Mr Rossato was barred from claiming corresponding entitlements under the applicable enterprise agreement.
In the event that the Court found against WorkPac’s submissions, it sought declarations that it was entitled to restitution of the casual loading included in Mr Rossato’s hourly rate.
WorkPac noted that casual employment arises in the absence of a “firm advance commitment as to the duration of the employee’s employment or the days/ hours the employee will work.” Despite this, it asserted that as the terms of Mr Rossato’s contract specified that he was a casual employee, there was no need to have regard to how the contract was performed in practice.
The Court rejected this argument, contending that the presence or absence of the “firm advance commitment” should be assessed with regard to the employment contract as a whole. In doing so, it noted that whilst the description of the party’s relationship is relevant, it is not conclusive, and regard should also be had to whether WorkPac:
- provided for the employment to be regular or intermittent;
- permitted Mr Rossato to elect whether to offer employment on a particular day; and
- permitted Mr Rossato to elect whether to work and the duration of the employment.
The Court concluded that in spite of the language used in his employment contract, Mr Rossato was not a casual worker under the Fair Work Act or the Enterprise Agreement. Rather, the parties had agreed on employment of indefinite duration, which was stable, regular and predictable. As such, Mr Rossato was entitled to paid annual leave, paid personal/carer’s leave, paid compassionate leave and payment for public holidays.
The Court also rejected WorkPac’s claim for restitution for the causal loading paid to Mr Rossato, contending there was no relevant mistake and no failure of consideration.
Ultimately, this case highlights the need for employer’s to carefully consider the nature of work being undertaken by staff in order to prevent the risk of ‘double dipping’. It follows the 2018 decision of WorkPac v Skene [2018] FCAFC 131 which similarly held that employees who receive casual loadings may nevertheless be entitled to annual and personal leave.
Insolvency industry bears brunt of COVID-19 concessions
A survey conducted by ARITA, Australia’s peak body for insolvency and restructuring experts, has revealed the substantial impact the Government’s response to COVID-19 has had on the industry.
As outlined in a previous update, the Government has introduced a series of temporary measures in response to the pandemic, including; increasing the minimum amount for a statutory demand from $2,000 to $20,000, suspension of director's personal liability for insolvent trading and an additional safe harbour provision.
Conducted on April 17, the survey of almost 200 insolvency professionals indicated that as a result, insolvency levels have fallen significantly below the standard.
Relevantly, 38.6% of insolvency professionals surveyed reported that their current level of work was significantly less than this time last year and a further 17.8% said it was slightly less. Moreover, 31% of respondents indicated that the quantity of ‘safe harbour’ advisory work was down on the same time last month.
As the current environment continues to place pressure on the industry, more than half of all insolvency firms have registered, or intend to register, for the Government’s JobKeeper subsidy, indicating that year-on-year revenue has declined by at least 40%. The survey also revealed that 13.6% of firms are very concerned about their viability in the next 6 months and a further 42.4% are slightly concerned, with 19% having recently implemented redundancies.
In presenting the findings of the survey, ARITA CEO John Winter noted that, ‘In a typical year, we see around 8,000 natural insolvencies. There is always a natural level of insolvencies as businesses go through their natural lifecycle and it’s a healthy process. What we are seeing is that even businesses that are insolvent are delaying taking action to deal with that.’
Despite acknowledging that the Government efforts had been effective in supporting many businesses struggling in light of the pandemic, he warned that ‘a side effect of that is that businesses that under normal circumstances would have been wound up, are continuing to trade. Many of them will continue to rack up debts with unwitting creditors – quite likely SME’s themselves who are already under financial pressure, too.’
Finally, he acknowledged the ‘genuine concerns from insolvency professionals that, without the behavioural handbrake of insolvent trading laws, directors of businesses large and small are going far deeper into insolvency than they otherwise would have, with no chance of turning their business around. And it’s creditors who will wear the cost of that down the line.’
The survey follows an earlier study conducted by the ABS in April which found that two thirds of Australian businesses were experiencing a reduction in turnover or cash flow and that 64% reported a reduction in demand for their products or services.
Legislators simplify will-making process in the wake of COVID-19
Last week the Queensland Government passed legislation in an effort to allow wills and enduring power of attorney’s to be witnessed via video conference.
Pursuant to regulation 9 of the COVID-19 Emergency Response Bill 2020 (Qld), the Government is entitled to make regulations where an Act permits or requires the signing or witnessing of a document. This regulation making power affords the making of “modified requirements or arrangements”. In effect, the legislation allows the Court to dispense of the formal witnessing requirements and determine whether an informally made will is valid.
The move follows a Practice Direction issued by the Queensland Supreme Court on the same day which allows applications for informal wills to be heard by a Registrar rather than a judge.
Specifically, the Direction grants a Registrar power to constitute the Supreme Court and hear and decide application under section 18(2) of the Succession Act 1981 (Qld). In doing so it dispenses the requirement for a party be in the physical presence of the testator, provided the Registrar is satisfied that:
- A solicitor drafted, witnessed or supervised the will’s execution;
- The deceased intended for the document to take immediate effect;
- The testator executed the will in the presence of one or two witnesses via video conference;
- The witnesses were able to identify the documents executed; and
- The reason the testator was unable to execute the will in person arose from complications relating to the COVID-19 pandemic.
The direction was issued in accordance with Rule 452(2) of the Uniform Civil Procedure Rules 1999 (Qld) and applies only to documents executed between 1 March 2020 and 30 September 2020.
Queensland is not alone in embracing technology, with a number of other jurisdictions also introducing modifications to the will-making process. In New South Wales, temporary regulations made under section 17 of the Electronic Transactions Act 2000 (NSW) facilitate witnessing via video conferencing, while across the ditch the Epidemic Preparedness (Wills Act 2007 – Signing and Witnessing of Wills) Immediate Modification Order 2020 alters section 11 of the Wills Act 2007 to permit the use of audio-visual links.
COVID-19: FWC approves reduction in redundancy pay
The Fair Work Commission (FWC) has approved the first application for a reduction in redundancy pay during the COVID-19 pandemic.
Employers may apply to the FWC to vary redundancy pay under section 120 of the Fair Work Act 2009. The section allows an application to be made where the employer either (a) obtains other employment for the redundant employer, or (b) cannot pay the redundancy pay the employee is entitled to. The FWC has discretion to reduce the amount of redundancy pay (including to a nil amount) if it is considered necessary.
In Mason Architectural Joinery Pty Ltd [2020] FWC 1897, the small business Mason Architectural Joinery Pty Ltd (Mason Joinery) had taken many steps to reduce its overheads in the wake of a downturn of business. These steps included reduction of spending, sale of the company car and redundancy of two employees.
The employee was entitled to 3 weeks’ notice of termination and 7 weeks’ redundancy pay under the Joinery and Building Trades Award 2010. Mason Joinery was able to pay the employee his accrued annual leave and accrued roster days off entitlements as well as the notice amount. Mason Joiner was however unable to pay the full redundancy pay. Mason Joinery sought an order decreasing the redundancy amount.
Commissioner McKinnon was satisfied that Mason Joinery was under significant financial strain. The Commissioner noted that the business had not received income for two months and had lost some pre-booked jobs resulting in the viability of the business being highly dependant on the how long the pandemic situation would last.
The Commissioner noted that the employee was able to secure a new job only 8 days after his termination. The new job also paid $2 an hour more than the previous position with Mason Joinery. The notice of termination that the employee received was equivalent to 15 days’ pay and covered that 8 days of non-employment.
The employee had also taken a holiday that was pre-booked during his employment with Mason Joinery from 15 March 2020 to 21 March 2020 (a month after he started his new job). Upon his return the employee was required to self-isolate for 14 days. The Commissioner held that as the employee had been paid out his accrued annual leave the employee suffered no loss in this regard as the amount was sufficient to cover both the holiday and period of self-isolation.
Accordingly, the Commissioner held that it was appropriate to reduce the amount of redundancy pay for the employee to 1 week’s pay.
Fair Work decision signals warning for COVID-19 redundancies
In a previous update we noted that while Covid-19 has created a unique situation, standard employment law procedures still apply and must be followed. A recent case in the Fair Work Commission (FWC) demonstrates the risks resulting from a failure to follow the appropriate procedures.
In Australian Municipal, Administrative, Clerical and Services Union v Auscript Australasia Pty Ltd [2020] FWC 1821, the FWC assessed an application bought by the Union alleging that Auscript failed to consult in respect of employee redundancy and closure of sites.
In January 2020, Auscript decided to close offices in Hobart and Adelaide as well as downsizing one of its Sydney offices. This was done without consultation with the Australian Municipal, Administrative, Clerical and Services Union (ASU). The ASU and Auscript agreed to develop a joint Consultation and Communication Protocol (the Protocol) to avoid further potential failure in Auscript complying with their obligations under the Auscript Australasia Enterprise Agreement 2010.
Auscript sought to make further redundancies in response to the impact of Covid-19 on its transcription work. Auscript alleged that restrictions in Courts and Tribunals as well as its own forecasts necessitated the sudden decision to maintain the viability of its business. Auscript claimed that it fulfilled its obligations under the Protocol. The ASU disagreed and sought the urgent assistance of the FWC.
At a conference the FWC issued a statement which among other things noted that the parties agreed to “abstain from any compulsory redundancy until at least the parties finalise a strategy … to preserve as many jobs as possible and communicate the identified options clearly to staff so they can make informed decisions”. No agreement was able to be reached after the conference and Auscript would not commit to engage in further consultation. Auscript sought to press ahead with closing the Melbourne office and implement redundancies in Queensland. The matter was then progressed to a hearing.
Upon perusing the evidence, Commissioner Yilmaz determined that Auscript had not given genuine consideration to options other than redundancy. The Commissioner was not satisfied the participation in the conference by Auscript was not genuine, describing its actions as a “mere formality”. The Commissioner criticised Auscript’s communication to employees, labelling it an “empty offer” and not “genuine consultation.” Further, Commissioner Yilmaz concluded it was clear the company had already made a decision unable to be influenced by employees or their representatives.
While it was accepted by all parties that it was a necessity that major decisions had to be made, the Commissioner noted that “an obligation to treat staff with dignity” remained. Accordingly, the Commissioner made an order in favour of the ASU.
High Court clarifies definition of ‘officer’ under Corporations Act
In Australian Securities and Investments Commission v King [2020] HCA 4, the High Court of Australia recently examined the scope of the definition of the term “officer of a corporation” in section 9 of the Corporations Act 2001 (Cth). The Court unanimously held that there is no requirement that a person be a named officer of the corporation to be captured by the definition. The test to establish whether a specific individual is an officer is whether they have the capacity to “significantly affect the financial standing of the company”.
Case Facts
Mr King, was the CEO and executive director of MFS Ltd, the parent company of the MFS Group of companies. The MFS Group was involved in funds management and financial services.
The Premium Income Fund (PIF) was a managed investment scheme operated by the MFS Group with an entity known as MFS Investment Management Pty Ltd (MFSIM) acting as the responsible entity. In June 2007, MFSIM entered into a $200 million loan facility with the Royal Bank of Scotland to be applied solely to the PIF. On 27 November 2007, MFSIM and senior personnel in the MFS Group arranged for $150 million to be drawn down from the loan facility. $147.5 million was disbursed by MFSIM to pay the debts of other companies in the MFS Group.
While two disbursements were made, only one was ultimately relevant to the High Court. A disbursement of $130 million was made on 30 November 2007 to an entity known as MFS Administration that acted as the treasury company of the MFS Group. On the same day the funds were received, MFS Administration paid $103 million to Fortress Credit Corporation (Australia) II Pty Ltd (Fortress). This money was paid in satisfaction of a short-term loan made to another MFS Group entity that was due to be repaid on that same date.
This series of events culminated in ASIC bringing enforcement proceedings against MFSIM and several of its officers for breaches of the Corporations Act. MFSIM was held to have contravened subsections 601FC(1) and (5) in relation to its duties as the responsible entity of PIF, and had breached section 208(1) by providing a financial benefit to a related party. Ay trial and on appeal to the Queensland Court of Appeal, Mr King was found to been knowingly involved in MFSIM’s contraventions and by consequence of section 79(c), was also held to have contravened sections 601FC(5) and 209(2).
Legal Issues
ASIC further contended Mr King was liable under s 601FC as an officer of MFSIM despite the fact he had ceased being a director on 27 February 2007 some nine months prior to the events. The Queensland Court of Appeal had held that Mr King was not an officer in the sense of having capacity to “affect significantly the corporation’s financial standing”. The Court deemed it was necessary for AISC to show Mr King had acted in an office of MFSIM in order to fall within the definition of s 9(b)(ii). ASIC appealed this finding contending that the Court had misconstrued the definition of “officer” by requiring ASIC
High Court Findings
The High Court unanimously found that the Court of Appeal erred in ruling that ASIC was required to prove Mr King had acted in an office of MFSIM in the sense of being in a ‘recognised position with rights and duties attached to it’. The Court adopted a literal interpretation of s 9, stating that subsection (b)(ii) required an inquiry into the role the person in question plays in the corporation. Such an inquiry is made on a case by case basis, considering the entire facts and circumstances of the individual and corporation including: the role of a person; what they did or not do to fulfil that role; and the relationship between their actions or inaction and the financial standing of the corporation.
Mr King was involved in the management of MSFIM and had not only the capacity to affect the financial standing of the entity, but actively intervened in its management. Accordingly, Mr King was held to be an officer of MSFIM despite not holding a formal executive role at the time of transaction.
JCL Comment
Importantly this decision makes it clear that individuals who hold a named office in a corporation will be captured by paragraph (a) of the s 9 definition, individuals who do not hold a named office may be captured by paragraph (b). This reasoning is consistent with the ‘shadow director’ regime which similarly provides that individuals that do not hold the office of director may still be considered a director where they have the capacity and custom of being able to affect the company.
This case is also important as it was made in the context of a group of companies. The Court expressly noted that corporate structure would not assist in avoiding liability for breaches of statutory prohibitions.
Does an employee owe a fiduciary duty for credit limit increases?
Employees owe certain fiduciary duties to their employers. Generally, this means an employee cannot do either of the following things:
- Make or pursue a personal gain in circumstances in which there is a real and substantial possibility of a conflict of interest arising between the personal interests of the employee and the interests of the employer (the no conflict duty); and
- Make or pursue a personal gain based by using his or her position as an employee or by using information or opportunities received in the course of his or her employment (the duty of trust).
As these duties are quite broad in scope a variety of circumstances could constitute a breach of either duty. A recent case in the Queensland Court of Appeal examined whether an employee owed a fiduciary duty to his employer in regard to providing a credit limit increase to a customer.
In Metal Manufactures Limited v Johnston & Anor [2020] QCA 42, a company was permitted to purchase goods on credit up to an amount of $20,000 which was later extended to $50,000. However, the company was unable to keep within this agreed credit limit and, with the assistance of an employee of its supplier, was ultimately able to purchase goods up to an amount of $325,797.50.
The supplier sought to recover this owing account; however, the company was wound up in insolvency prior to trial leaving no possibility of recovery. A case was instead bought against the company’s director and the employee of the supplier.
The supplier alleged a breach of fiduciary duty on the part of their employee for allowing the company to purchase goods beyond their credit limit in contravention of section 182(2) of the Corporations Act 2001 (Cth). The case against the director was that he had knowingly, or ought to have know, assisted the employee in breaching his duty. The case was accordingly dependant on successfully proving a breach of duty by the employee.
There is a long line of authority establishing that employees owe a fiduciary duty to their employers. This is also expressly indicated in section 182(2) of the Corporations Act. Not all employees will owe a fiduciary duty however and accordingly it must be established that a particular employee owes by looking at all circumstances of the case.
In this case the Court did not find that a fiduciary duty was established. Whilst the employee was a store manager, he was not a senior employee in the overall context of the business, did not have discretionary power to allow a customer credit beyond what was already agreed. On this basis the employee was not deemed to be in a position of special trust or confidence.
Even if a fiduciary duty had been established, the claim still may not have succeeded. While the Court was willing to accept that the employee had deliberately allowed unauthorised supply beyond the credit limit which was “consciously wrongful” and took deliberate steps to conceal the conduct, the Court was not willing to label the conduct dishonest in the sense of impropriety.
The basis for this finding was an absence of evidence demonstrating the employee received some personal benefit, either from his employer in terms of commission, salary increase or promotion; or from the company or director in the form of a bribe.[iv]
Whilst a fiduciary duty could not be established on these particular facts, it may still be possible for an employee of a similar position or standing to be considered a fiduciary of their employer. Additionally, further causes of action may be pleaded against an employee; simply not being in a fiduciary relationship will not be sufficient to avoid liability.
COVID impact on civil trials
COVID-19 has had an impact on a number of businesses and institutions. Courts and Tribunals are still operating with some modifications to their general procedures. A recent case in the Australian Capital Territory (ACT) saw judicial consideration given to the effects of the virus in deciding an application to adjourn proceedings.
In Talent v Official Trustee in Bankruptcy (No 5) [2020] ACTSC 64, the applicant sought an adjournment of the proceedings on the basis of medical advice, specifically that they suffered from leukaemia which placed them at a greater risk if exposed to the virus. The application was supported by a letter from the applicant’s doctors stating they “strongly support [the applicant] self-isolating until further notice”. The application related to a proceeding regarding a claim relating to a property in which the applicant resided. The property formed part of a deceased estate.
A number of additional circumstances were considered including the age of the applicant’s solicitors, being 59 and 56; the medical conditions of the legal representatives including suffering from asthma, obesity; the respondent senior counsel being unable to travel by air and residing in Queensland resulting in the junior counsel having to conduct the matter.
Whilst the Respondent was appreciative of the health concerns of the applicant and their legal representatives, the adjournment was opposed on the basis that the proceedings could still be conducted via video link. The Respondent argued that it was pertinent to have the proceedings determined as soon as possible to give effect to the will of the deceased.
Elkaim J agreed that it was important to give effect to the will and that a good deal of the case could be conducted from a remote location. However, it was noted at [14] that it is important to give the litigants an opportunity to appear at court:
On the other hand, litigants have a right to appear in court to not only give evidence but also to observe the running of their case. This will involve providing instructions, sometimes very promptly. There is no doubt that many procedures within a litigated case can be effectively conducted through remote forms of communication. However, I think there can be an important distinction with a final hearing.
Elkaim J then moved to considering the practical consequences of the adjournment. The primary consideration was the impact the current climate had on property values. It was noted that property value was likely to be substantially reduced which would result in the true value of the property not being obtained if it were sold. A secondary consideration was the necessity of the applicant having to leave the residence if it were to be sold. Elkaim J noted that this would expose the applicant to a higher level of risk that may have a tragic result.
No specific prejudice aside from general delay could be identified as being suffered by the Respondent if the adjournment was granted. On that basis, Elkaim J was satisfied that the potential consequences balanced in favour of granting the adjournment. Elkaim J concluded noting that “We are living in an unprecedented and unpredictable atmosphere.”
From this case it is apparent that while the typical procedural principles will apply to an adjournment application, the ultimate decision will be coloured by the practical consequences of making any such order.
Employment Law and Covid-19
Due to the rapidly evolving situation involving the novel Covid-19 disease (Coronavirus) many workplaces and individuals are implementing and taking precautions to minimise the risk of infection. One such precaution is a period of self-isolation when an individual has come into contact with an infected person. Isolation may also be necessary when a partner or family member has been exposed.
It is important to understand the implications this may have for an individual in terms of employment, particularly employee entitlements, employer obligations and protections for both parties. This is important as the Fair Work Commission and Courts are still operating meaning an application can be bought against an employer at this time.
This article will answer some common questions that may be causing uncertainty during this time.
Relevant materials
The primary source for all specific rights and obligations in an employment relationship is the employment agreement. This may take the form of an individual agreement, enterprise agreement or award. Prior to taking any action you should check your relevant award and agreement.
Aside from the employment agreement, the minimum standards are provided for in the Fair Work Act 2009 (Qld) (FWA) and the Industrial Relations Act 2016 (Qld) (IRA).
Leave Entitlements
There are several kinds of leave available to employees but this article will only focus on sick leave and annual leave.
In terms of sick leave, which is also known as carers leave, there is a statutory entitlement for full-time workers under both the FWA and IRA for 10 days sick leave per year, accrued progressively throughout the year. Part-time workers are entitled to a pro-rata of 10 days in accordance with their hours of work.
Similarly, there is a statutory entitlement under both Acts for four weeks of annual leave for full-time and part-time workers. An additional week of leave may be available if you fulfil the criteria to be considered a shift worker.
When is leave taken?
Sick leave can be taken because the employee is not fit for work because of personal illness or injury; or to provide care or support to a member of the employee’s immediate family or household who requires it because of personal illness or injury or unexpected emergency. Leave may bet taken for a whole or part of a day.
The procedure for taking sick leave will be dependant upon the terms of your relevant employment instrument, however section 41 of the FWA requires at least that the employee promptly notifies the employer of the illness and period of time they are away as well as giving evidence of the illness.
Similarly, the procedure to take annual leave will be governed by the relevant employment instrument. Pursuant to section 88 of the FWA, paid annual leave may be taken for a period agreed between an employee and his or her employer.
Accordingly taking any form of leave must follow the procedures established in either an employment instrument or in accordance with the relevant Acts.
Will isolation count against leave?
This will depend on what arrangement is made between yourself and your employer. While an employer may direct you to see a doctor or stay home you cannot be forced to use any accrued leave. However, if you do not elect to take a form of paid leave, your employer has no legal obligation to pay your wages. You must therefore carefully consider your personal circumstances before electing to take unpaid leave.
If possible, look to make alternative arrangements with your employer such as working remotely or a compromise in terms of the amount and type of leave taken. You may have a formal right under your employment agreement to request a flexible or alternative working arrangement. In addition, full or part-time employees with 12 months of continuous service may also have a right to request a flexible or alternative working arrangement under the FWA.
Requests for flexible work arrangements must be seriously considered by the employer and can only be refused on reasonable business grounds. Workplace regulators have encouraged employees and employers to work together to find solutions to meet the needs of workplaces and staff.
Can I be directed to take leave?
Employers cannot direct employees to take sick leave. An employer may direct an employee to leave the work place or attend a doctor if they suspect they are suffering from an illness.
In regard to annual leave, under the FWA an employer can direct an employee to take annual leave, but only when the request is reasonable. In assessing whether a direction is reasonable, the following factors are relevant:
- The needs of the employee and the business;
- Any arrangements in place;
- Custom and practice of the business;
- Timing of the direction or requirement to take leave; and
- The length of the period of notice to take leave given.
Directions to take leave during shut down periods have been held to be reasonable. On this basis it appears that a direction issued at this time may be reasonable.
Can an employee be dismissed while on leave?
An employee may be dismissed while on leave provided that the reasons for termination are not based on or related to the employee taking leave.
In regard to personal/carers leave, section 352 of the FWA provides the protection for employees temporarily absent because of illness or injury. There are however two exceptions: where the employee’s absence extends beyond three (3) months; or where the total absences over a 12-month period equate to more than three (3) months and the employee is not on paid person/carer’s leave.
There is not a similar protection for those on annual leave. However, a dismissal effected while an employee is on annual leave may give rise to certain general protections such as the protection against unfair dismissal. Employers should be careful in complying with their termination obligations in this regard.
Can an employer make directions to an employee?
Yes, an employer is entitled to make a number of directions in regard to an employee’s work provided the direction is reasonable and do not place an employee at imminent risk.
Directions that can be made include:
- A direction to work from home;
- A direction to continue working;
- A direction to leave the workplace and attend a medical facility;
- A direction to take annual leave;
- A direction to cease work.
Typically, when a direction is made, the employer will bear a continuing obligation to pay wages and entitlements. In circumstances where business is stopped, this may not be financially viable. Employers should accordingly consider their circumstances.
Can employees refuse to attend work?
This is a complicated question and there is no simple yes or no answer.
Whether refusing to attend the workplace is a legitimate exercise of a workplace right or undertaking of industrial action is highly dependent on all the circumstances surrounding the refusal. There is no clear answer that will apply to all types of employees. Best practice in this situation is for the employee to communicate their concerns with their employer and attempt to make alternate arrangements such as working from home.
Can workers be stood down without pay?
Usually when an employee is stood down, they are still considered ‘employed’ and accordingly are paid salary and receive entitlements, however in certain circumstances, a worker can be stood down without pay.
If an employment agreement does not include stand down provisions, the circumstances in which a stand down is permitted are outlined in section 524 of the FWA. This section provides that an employee may be stood down during a period where they cannot usefully be employed during one of three situations. Most relevant to the current situation is “a stoppage of work for any cause for which the employer cannot reasonably be held responsible.”
Whether a particular employee can be usefully employed is a question of fact to be determined having regard to the circumstances that face the employer. Previously the provision has been held to apply to incidents such as inclement weather which may indicate that a pandemic would be viewed as a stoppage of work that cannot be reasonably deemed as employer caused.
Alternatively, under section 525, an employee and employer may agree for the employee to take leave (paid or unpaid) instead of being stood down during this period.
Aside from the stand down powers of employers, the State and Federal Governments also have the power to make an enforceable government order, determination or direction to prevent an employee from attending a workplace. When such an order is made, an employer is not required to pay the employee. This has occurred in Queensland following the ordered shutdown/limitation of many ‘non-essential’ businesses such as restaurants, gyms and pubs.
Can an employer change an employee’s roster or hours of work?
Yes, a variation in hours or roster may occur. Employers must consult with the employee and their relevant employment agreement before making a variation. This includes a consideration of the employee’s views on the change and cannot be affected unilaterally.
The parties may also choose to enter into an ‘individual flexibility agreement’ (IFA) which allows the variation of employment agreement terms relating to hours or rosters. An IFA does have some formalities that must be satisfied before the agreement becomes effective.
Alternatively, employees may wish to agree to a variation in the span of their hours which may assist them avoiding peak times. Again, this will require a consultation of the employee and their existing employment agreement.
Dismissal/Redundancy
An unfortunate side effect of the situation is a down turn in business and by extension a loss of jobs. While employers are able to terminate employers, they must follow proper protocols and comply with their obligations under the relevant employment agreements and the FWA.
Termination
Employees must be paid their accrued entitlements. A party may lawfully terminate the employment in one of two ways: through giving notice in accordance with the terms of the employment agreement, or in response to conduct in breach of the employment agreement.
Section 117 FWA provides that an employer must not terminate the employment of an employee without first giving the employee a minimum period of notice in writing. The minimum period starts at one week and may be up to five weeks depending upon the employee's length of service and age. The statutory minimum can be satisfied by payment in lieu of giving notice.
Redundancy
Redundancy is slightly different to a standard termination. Redundancy occurs when an employer no longer requires the job to be done by the employee or anyone else. If an employee is made redundant, the employer must pay redundancy pay in accordance with the statutory entitlement in section 119 FWA. Redundancy may also be voluntary or involuntary. In terms of involuntary redundancy, it must be demonstrated that the redundancy is “genuine”, otherwise any termination may attract protections under the FWA.
There are three elements to the meaning of genuine redundancy:
- The employer must no longer require the employee’s job to be performed by anyone because of changes in operational requirements;
- The employer must comply with any consultation obligations it has under a modern award or enterprise agreement; and
- Redeployment within the employer’s business or an associated entity must not be reasonable in the circumstances.
Demonstrating satisfaction of these elements requires a factual examination of the circumstances leading up to the decision to make the employee redundant. In a recent case note, we examined redundancy in the context of a downturn in business.
Termination Protections
A range of protections exist for employees. These include unfair dismissal and the general protections which prevent dismissal on a discriminatory basis (which may include sickness or injury) or for exercising workplace rights.
For example, an employee cannot be dismissed because simply because they fall ill or are unable to attend their workplace due to family or caring obligations.
Protections at work
Aside from protection against dismissal, the general protections provisions of the FWA also apply to work generally and protect workers against: adverse action (an employer or industrial association taking action, threatening to, or organising action against an employee), coercion, misrepresentation, and undue influence or pressure.
These acts may arise in a huge variety of circumstances including termination, the payment or non-payment of entitlements or salary, discussion about workplace conditions, entitlements or rights, the making or variation of agreements, and the effects of workplace decisions.
COVID-19: Unprecedented Times, Desperate Measures
The coronavirus pandemic has caused governments across the world to take measures that impact the movement of people rarely, if ever, seen in peacetime before. Understandably, this has adversely affected businesses and created a host of employment law issues in every country.
When the first case of coronavirus – or COVID-19 – was reported in Wuhan, China in December 2019, nobody could have guessed that within three months it would spread across the globe at lightning speed. Indeed, from the start of March hundreds of thousands of cases of the disease have been reported in more than 160 countries and territories, resulting in thousands of deaths.
The speed of the spread of the virus – declared a pandemic by the World Health Organization on March 11 – caught governments across the world off guard. And many have since reacted with draconian action. This includes travel restrictions, quarantines, curfews and event cancellations, and advising people to avoid all but essential contact with each other for the foreseeable future.
Of course, this has had a tremendous impact on employment and with employment law in ways that have never been seen before. For instance, with employees being told to stay at home, flexible working has become more common than ever, although in some professions it just isn’t feasible. What this means for employers and employees – especially in terms of payment for those employees who have to take time off because they are sick, to quarantine or self-isolate, or to take care of dependents – has never been tested and different jurisdictions are reacting in different ways.
With the Covid-19 crisis and the response to it among different countries evolving daily, employment lawyers are advising employers on what they can or cannot do to safeguard their businesses and their employees under existing legislation. And the disease is spreading faster than laws can be adopted – although some countries are starting respond quickly to take care of workers and ensure that businesses stave off bankruptcy.
Wiebke Herrmann recently joined 8 fellow IR Global members from jurisdictions around the world to discuss the challenges COVID-19 is posing for employment law. Ms Herrmann's responses are outlined below:
The coronavirus is moving faster than the law – how are lawyers responding and adapting to this evolving crisis?
Rapid spread of the virus in Australia has meant that the government has had to implement strong measures. The government has forced many industries to close doors including restaurants (except for takeout) bars, beauty services, cinemas, entertainment venues, fitness and recreation centres, museums, and libraries. There can be no more than five people at a wedding and no more than 10 people at a funeral. The government's message is to stay at home unless it is essential. Essential means for groceries, medical supplies, exercise and work. The government considers that anyone who has a job as an essential worker has to keep working, but the government is also encouraging people who can work from home to do so. People are being urged to social distance themselves by staying 1.5 metres away from others. Australians can no longer leave the country and many Australian State borders have closed unless travel is essential.
We anticipate that further restrictions will be imposed shortly requiring any worker who is able to work from home, to do so.
Initially many Australian companies and businesses were implementing new workplace policies including a focus on hygiene and avoiding all face-to-face interactions unless necessary. If an employee is unwell, they must go home and stay home. If an employee has been in contact with someone who has tested positive for coronavirus or is suspected of having the virus, they must self-quarantine at home for a period of 2 weeks.
However, as the virus continues to spread implementation of technology has been the focus. Over the past week, the majority of businesses in Queensland, particularly law firms and accountants, are now already working remotely.
The most notable implication arising from these shifting work practices is what happens to employees who conduct work of a nature that is not able to be done remotely. This has raised questions regarding leave entitlements, especially where the employee is off work, but not sick themselves. In Australia, full time employees are entitled to a minimum of 10 days paid sick leave each year which can be used if an employee is caring for a sick family member and a minimum of 4 weeks paid annual (holiday) leave.
The question now for businesses is whether employees should be able to take paid leave and if that leave should be deducted from their ordinary sick leave entitlements, or whether the pandemic gives rise to the creation of a new leave classification.
For casual workers, the position is dire. They are employed on a daily basis when the need arises, with no guaranteed hours of work and they are not entitled to receive paid sick or annual leave. At the moment, the Government is yet to answer what solutions it is putting in place for the unsecured workforce or provide any guidance to businesses about leave entitlements. While we have a social security system to assist the unemployed, the system has been unable to cope with the amount of inquiries and applications.
To assist businesses, the Queensland State Government is creating a $500 million loan facility, which will comprise of loans of up to $250,000 with an initial 12 month interest free period to prevent businesses from collapsing during the coronavirus crises. Australian Banks are deferring loan repayments and offering interest free loans to small businesses. The Australian Taxation Office is providing relief options for businesses including payment deferrals & instalment variations for income tax, GST, PAYG instalments, FBT & excise by up to 4 months, low interest payment plans and potential remission of interest and penalties on tax liabilities incurred after 23 January 2020.
How are specific industries or sectors and their employees impacted and what are the potential legal consequences?
At the moment the position with respect to leave entitlements remains as is under Australian law and businesses are having to consider and formulate their own policies. The Government is yet to provide any certainty to businesses as to how leave entitlements should be managed if an employee is sick with coronavirus, or has been in contact with someone suspected of having the virus and needs to be quarantined for 14 days. We anticipate a rise in demand for employment lawyers over the coming months.
However, the Australian Federal Government has already passed temporary amendments to insolvency and corporations laws in light of the challenges that will be faced by business due to COVID-19 which provide temporary relief for financially distressed businesses and individuals. The changes made are contained in Schedule 12 of the Coronavirus Economic Response Package Omnibus Act 2020 (Cth). The changes came into force on 25 March 2020 and will remain in for a period of six months. An example of some of the changes that will apply include:
- directors will be temporarily relieved from the risk of personal liability for insolvent trading, where the debts are incurred in the ordinary course of business;
- the threshold at which creditors can issue a statutory demand has increased from $2,000 to $20,000; and
- companies will now have 6 months in which to respond to a statutory demand rather than the previous 21 days.
- the threshold for a creditor to initiate bankruptcy proceedings against an individual has increased from $5,000 to $20,000; and
- Individual debtors will now have 6 months to respond to a bankruptcy notice rather than the previous 21 days.
How are specific industries or sectors and their employees impacted and what are the potential legal consequences?
All industries are affected in Australia. While some industries have not been forced to close, other industries are still very much feeling the pressure.
The fate of specific industries such as hospitality, tourism, entertainment, and beauty is unknown. Currently, they present severe ramifications for casual employees and independent contractors who are only legally entitled to be paid for work that is performed. This is particularly problematic in Australia given that one in four workers are categorised as casual.
In the short term, businesses have assistance. We are encouraging business owners to review their insurance policies, communicate as much as possible with their staff and speak to their landlords and bank now to implement a plan. To take advantage of loan deferrals and the banks and governments interest free loans. The new temporary changes to insolvency will also offer much relief.
The real concern is what will happen in six months' time. What happens when loan repayments recommence, interest rates kick in, insolvency laws return to a compliance period of 21 days and the ATO ceases to provide tax incentives and deferrals of payments?
Once a business re-opens they can anticipate much slower trade and income than prior to the coronavirus and additionally be faced with significant debt.
Whether the assistance being provided by the government will be enough to save these businesses in the long term is not yet known.
This article is an excerpt from the IR Global Employment Virtual Series publication on COVID-19: Unprecedented Times, Desperate Measures. A full copy of the publication can be accessed here.
