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COVID-19 Australia: Weekly Briefing (20 April)

  • Legal Development 20 April 2020 20 April 2020
  • Asia Pacific

  • Coronavirus

COVID-19 Australia: Weekly Briefing (20 April)

Responding to the impacts of Coronavirus is difficult for both businesses and governments around the world.

In Australia, there have been a series of legislative changes that impact the way businesses engage with their employees, work with their customers and ensure that business operations will be stable during this period. 

To assist you with keeping up to date, we will be summarising the effects of the legislative changes on a weekly basis. Clyde & Co also has a dedicated Coronavirus Information Hub (COVID-19) which hosts many articles from around the world that provide different perspectives and in-depth analysis on many of these issues.

ASIC's Temporary Relief Measures Make it Easier to Access Financial Advice 

With the Commonwealth Government allowing individuals early access to their superannuation where they are subject to COVID-19 related financial hardship, ASIC has recognised the need for individuals to seek urgent financial advice before accessing their superannuation (Super Advice). To make it easier for individuals to access this financial advice in a timely manner, ASIC has introduced temporary relief measures to facilitate the scope of advisors that can provide this advice while waiving the need for a detailed statement of advice to be provided.

Under these measures, registered tax agents who do not hold an Australian Financial Services Licence (AFSL) or are not an AFSL authorised representative are permitted to provide Super Advice to their existing clients without solicitation. When providing Super Advice, registered tax agents must ensure that they charge the client no more than AUD 300 for the advice and they must provide the client with a record of advice. This record of advice must set out the tax agent's recommendations and the basis for those recommendations, including whether the client is eligible and whether they should apply for early access to their superannuation. The record of advice must also inform the client of any conflicts of interest or remuneration that the tax agent will receive that could influence their advice.

These measures also permit financial advisors to provide Super Advice without the need to provide the client with a statement of advice. Provided that the Super Advice is provided without solicitation and for a maximum fee of AUD 300, financial advisors are only required to provide the client with a shorter record of advice containing the same information as set out above for registered tax agents.

ASIC has also introduced temporary measures that allow financial advisors to avoid the need to provide a detailed statement of advice for certain COVID-19 matters for existing clients, provided that a number of conditions are satisfied. These measures also increase the deadline for providing a detailed statement of advice for urgent COVID-19 matters from 5 to 30 business days, provided that a number of conditions are satisfied.

ASIC Extends the Time for Unlisted Entities to File Financial Reports

ASIC continues to take a proactive and flexible approach to supporting corporations affected by COVID-19. This includes an acknowledgment by ASIC that remote working arrangements, travel restrictions and other COVID-19 related disruptions will likely increase the time required to prepare financial reports. In response, ASIC has provided the following extensions for unlisted entities with a balance date between 31 December 2019 and 31 March 2020 to lodge their financial reports:

  • For unlisted disclosing entities and registered schemes, the deadline for full year financial reports, directors' reports and auditor's reports are extended from 3 to 4 months;
  • For all other unlisted entities, the deadline for full year financial reports, directors' reports and auditor's reports are extended from 4 to 5 months;
  • The deadline for half year financial reports, directors' reports and audit reviews is extended from 75 days to 75 days plus 1 month;
  • For unlisted AFSL holders that are bodies corporate and disclosing entities, or registered schemes, the deadline for lodging profit and loss and balance sheets is extended from 3 months to 4 months;
  • For unlisted AFSL holders that are bodies corporate and are not disclosing entities, or registered schemes, the deadline for lodging profit and loss and balance sheets is extended from 4 months to 5 months; and
  • For AFSL holders that are not bodies corporate, the deadline for lodging profit and loss and balance sheets is extended from 2 months to 3 months.

These extensions do not apply for entities with a 31 December 2019 balance date where the reporting deadline has already passed.

ASIC will also consider extending the reporting deadlines for listed entities on a case by case basis.

Real Estate

On 7 April 2020, the Federal Government announced a Mandatory Code of Conduct (Code) relating to commercial leasing.  The Code will be given effect through state and territory legislation.

The Code applies to commercial tenancies where the tenant:

a)    is eligible for the JobKeeper programme; and
b)    has an annual turnover of up to $50 million.

The Code sets out:

a)    overarching principles; and
b)    leasing principles.

Further, where landlords and tenants cannot reach an agreement on leasing arrangements, the Code specifies that the issue should be referred and subjected to applicable state or territory retail/commercial leasing dispute resolution processes for binding mediation.

Overarching Principles

Parties have an obligation to negotiate in good faith and share, in a proportionate, measured manner, the financial risk and cash flow impact during the COVID-19 impact, whilst seeking to appropriately balance the interests of tenants and landlords.

Leasing Principles

Set out below is a high level summary of the main leasing principles.  Please note that the summary does not cover all the leasing principles.

  1. Landlords must not terminate leases due to non-payment of rent during the COVID-19 pandemic period (or reasonable subsequent recovery period).
  2. Tenants must remain committed to the terms of their lease, subject to any amendments to their agreement negotiated under the Code. Material failure to abide by substantive terms of their lease will forfeit any protections provided to the tenant under this Code.
  3. Landlords must offer tenants proportionate reductions in rent payable in the form of waivers and deferrals of up to 100% of the amount ordinarily payable based on the reduction in the tenant’s trade during the COVID-19 pandemic period and a subsequent reasonable recovery period.
  4. Rental waivers must constitute no less than 50% of the total reduction in rent payable under principle #3 above over the COVID-19 pandemic period.
  5. Payment of rental deferrals by the tenant must be amortised over the balance of the lease term and for a period of no less than 24 months, whichever is the greater, unless otherwise agreed by the parties.
  6. Landlords must not draw on a tenant’s security for the non-payment of rent (be this a cash bond, bank guarantee or personal guarantee) during the period of the COVID-19 pandemic and/or a reasonable subsequent recovery period.
  7. The tenant should be provided with an opportunity to extend its lease for an equivalent period of the rent waiver and/or deferral period.
  8. Landlords agree to a freeze on rent increases (except for retail leases based on turnover rent) for the duration of the COVID-19 pandemic and a reasonable subsequent recovery period, notwithstanding any arrangements between the landlord and the tenant.

Public Health and Wellbeing Infringements

Since our last update, the National Cabinet has stressed the importance of adhering to the orders and directions implemented by the State and Territory governments. The National Cabinet notes that these orders and directions will be reviewed regularly, although Australia remains in its "suppression" phase of the response to COVID-19, and will remain in this phase for the foreseeable future. In their meeting on 9 April 2020, the National Cabinet determined that the State and Territory governments would need to implement arrangements for non-cruise maritime crews and air crews, who transit to and from work, and across jurisdictions. Further, the National Cabinet noted that State and Territory governments needed to implement measures supporting the agricultural workforce while ensuring that social distancing could be upheld to the extent possible. The National Cabinet will meet again on 16 April 2020 for its 13th meeting.

Previously, we reported that the States and Territories had made orders and directions under their respective public health legislation, with the exception of South Australia, which had made directions under emergency management legislation. Western Australia has now also enacted directions under the Emergency Management Act 2005 (WA). The new Closure and Restriction (Limit the Spread) Directions close certain places and prohibit specified gatherings and activities. These directions were previously made under the Public Health Act 2016 (WA).

Since last week, further requirements have been implemented under the State and Territory orders and directions, including:

  • Expanding the 'reasonable excuses' to leave one's premises;
  • Implementing further restrictions on movement and isolation for those with a confirmed diagnosis of COVID-19;
  • Implementing further requirements for compulsory quarantine for overseas arrivals; and
  • Implementing further requirements for compulsory quarantine for certain interstate arrivals.

The past week has seen further evolution in the regulatory response by States and Territories. Further orders have been passed which not only relate to movement and gatherings, but also behaviour. For example, NSW has made the Public Health (COVID-19 Spitting and Coughing) Order 2020 which prohibits spitting or coughing on public officials (including police officers and health workers) in a way that causes fear about the spread of COVID-19. There has also been controversy in many States, including NSW and Victoria, over the enforcement of the orders and directions. Many are relying on clarification provided by local police area commands, which have not been consistent in their responses. Some infringement notices have been reviewed and withdrawn.

The orders and directions can be accessed at the following State and Territory websites (as at 15 April 2020):

Employment

In response to the numerous applications from unions and employer associations seeking additional flexibility for employers and employees to vary working arrangements to deal with the challenging, unpredictable and continually evolving circumstances surrounding the COVID19 pandemic, the Fair Work Commission (FWC) has given employers a range of new temporary measures.

To date, the FWC has made determinations to vary certain modern awards, including the:

  • Clerks – Private Sector Award (Clerks Award
  • Banking, Finance and Insurance Award;
  • General Retail Industry award;
  • Professional Employees Award; and
  • Storage Services and Wholesale Award.

1. Variations to the Clerks Award - on 28 March 2020, the Full Bench of the FWC varied the Clerks Award by inserting a new temporary 'Schedule I' (applying from 28 March 2020 until 30 June 2020, unless extended on application to the FWC). Schedule I gives employers with employees covered by the Clerks Award additional temporary powers to:

  • direct employees to undertake alternative duties that are within their skill and competency (regardless of their award classification), but without reduction to their pay;
  • reduce the hours of work of permanent fulltime and parttime employees, subject to the approval of at least 75% of the employees in the relevant workplace or section;
  • allow employers to agree with their employees to take up to twice the amount of annual leave at a proportionally reduced rate for all or part of the leave period;
  • direct their employees to take annual leave (with one week's notice or shorter if agreed) as part of a temporary shutdown of operations, and employees with insufficient paid leave accrual will be on unpaid leave for all or part of the shutdown period;
  • direct their employees to take annual leave in any other circumstances (with one week's notice or shorter if agreed), provided it does not result in a leave balance of less than 2 weeks; and
  • allow employers to agree with their employees who work from home (upon employees' request) to change their span of ordinary working hours. However, there are also new obligations for employers to roster parttime and casual employees who work from home by agreement for a minimum of 2 hours.

2. Additional variations to 99 modern awards - on 8 April 2020, the FWC varied 99 modern awards (including the Clerks Award and the other awards listed above) by inserting a new temporary 'Schedule X' (applying from 8 April 2020 until 30 June 2020, unless extended on application to the FWC).   Schedule X introduces new temporary measures to allow employers with employees covered by the relevant modern awards to:

  • provide award covered employees with two weeks' of unpaid pandemic leave for selfisolation purposes on the advice of a medical practitioner or if required by the Government. Employers should be mindful that employees taking unpaid pandemic leave and/or paid personal/carer's leave will be subject to protections under the general provisions of the Fair Work Act 2009 (Cth) (FW Act); and
  • agree with awardcovered employees to take double the amount of annual leave, at half pay.

3. Variations to enterprise agreements - employers considering applying to the FWC to vary an existing enterprise agreement will need to have the majority of their employees approve the variation.  For any variation to be approved by the FWC it will usually need to pass the 'Better Off Overall Test'. Applications to vary enterprise agreements are being expedited by the FWC to provide employers with additional flexibility to address the significant impacts of COVID19.

4. How does JobKeeper scheme come into these changes?

The JobKeeper scheme provides eligible businesses (that elect to participate in the scheme) access to a subsidy payment of $1,500 per fortnight per eligible employee (employed as at 1 March 2020, including those who are stood down or rehired) to help employers keep their employees in their jobs. The scheme operates for a temporary period from 30 March 2020 to 27 September 2020. Under the scheme, employers must pass on the full subsidy (that is, a minimum of $1,500 per fortnight) to eligible employees.

The Government is also proposing to introduce amendments to FW Act to provide employers with additional powers for a temporary period of time to vary staff working arrangements to deal with the COVID19 pandemic. These proposed changes will be introduced under two pieces of legislation, the Coronavirus Economic Response Package Omnibus (Measures No. 2) Bill 2020 and the Coronavirus Economic Response Package (Payments and Benefits) Bill 2020. These Bills, if passed, will provide eligible employers with additional powers including to stand downemployees, direct employees to undertake alternative duties or to work at  an alternative location (e.g. from home), and/or request employees to reduce their hours of work or to take annual leave.

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