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COVID-19 Australia: Fair Work Commission Amends Award Entitlements

  • Market Insight 14 April 2020 14 April 2020
  • Asia Pacific

  • Coronavirus

COVID-19 Australia: Fair Work Commission Amends Award Entitlements

With businesses impacted by COVID-19 facing a need to balance how they manage a reduction in trade while supporting their employees, the Fair Work Commission (Commission) has taken steps to provide greater flexibility to leave entitlements in modern awards.

In this article, we review how the Fair Work Commission has taken steps to amend modern awards to provide employers and employees with greater flexibility in the use of leave entitlements.

Impact of COVID-19 on Australian Businesses

With the rapid spread of COVID-19 around the globe causing concerns for businesses and governments alike, the Australian government has introduced a number of measures in an effort to 'flatten the curve' over the last month. These have included the unprecedented step to impose strict social distancing requirements and progressive restrictions on the operation of non-essential businesses.

While the intention of these measures is to protect the health of all Australians, they also have the unavoidable effect of supressing the activity of Australian businesses. A survey published by the Australian Bureau of Statistics on 26 March 2020 found that 49% of Australian businesses reported that the impacts of COVID-19 were already having an adverse impact on their trade. This was most prevalent in the accommodation and food services sectors, followed by the arts and recreation, retail and wholesale trade sectors.[1]

As a result of the combination of this reduction in trade and an increasing number of employees being subject to self-isolation and / or quarantine requirements, employers and employees are looking for greater flexibility in the use of leave entitlements.

How is the Commission Stepping in to Help?

In Australia, the employment rights and conditions of most employers and employees are subject to 'modern awards'. Together with the National Employment Standards under the Fair Work Act 2009 (Cth), modern awards outline employees' minimum employment entitlements (these include conditions of pay, work hours and leave entitlements, among others).[2]

The Commission recognises that the current leave entitlements under modern awards do not provide flexibility to employers and employees to respond to COVID-19. For example, not all employees who are unable to work from home are able to rely upon annual or personal leave. This includes casuals and employees without sufficient leave balances.[3] Further, employers and employees are looking for flexibility in how they can utilise and stretch their accrued paid leave entitlements to support household incomes and business expenses.

To provide temporary flexibility for employers and employees, on 1 April 2020 the Commission published a statement outlining that it intended to amend 103 modern awards to:[4]

(a)provide employees with 2 weeks' unpaid pandemic leave if the employee is required by government or medical authorities to self-isolate. This leave will also be available if the employee is prevented from working due to government COVID-19 measures; and
(b)permit employers and employees to agree to employees taking double their accrued annual leave at half pay.

For the unpaid pandemic leave, this leave is intended to be immediately available in full, rather than accruing over time, and be made available to full-time, part-time and casual employees without the need to first exhaust paid leave entitlements.[5]

A number of industry bodies and employers had opposed and / or proposed amendments to the Commission's proposal. While supportive of the nature of the proposal, these submissions recommended, among others, that the proposal be extended to include the construction sector, increase the pandemic leave to 20 days of leave per employee and that the proposed amendments operate beyond 30 June 2020.

On 8 April 2020, the Commission approved these temporary amendments in respect of 99 modern awards covering, among others, the retail, wholesale trade, hospitality, arts and recreation, aviation and manufacturing sectors. These temporary measures will operate from 8 April 2020 until 30 June 2020, although this period may be extended on application. In its decision, the Commission estimated that approximately 4.36 million employees will be able to access these temporary entitlements. [6]

Which Modern Awards Are Not Affected by the Amendments?

These amendments do not apply to modern awards covering the construction, maritime, and mining and resources sectors. Currently, the Commission does not consider that these sectors are likely to be impacted by COVID-19 in the short to medium term.[7]

Further, the Commission ultimately excluded the following 4 modern awards:

(a)Electrical, Electronic and Communications Contracting Award 2010;
(b)Electrical Power Industry Award 2020;
(c)Plumbing and Fire Sprinklers Award 2010; and
(d)Fire Fighting Industry Award 2020.

In reaching that decision, the Commission noted that the trades the subject of the first 3 awards have not yet experienced a downturn in demand from COVID-19. Further, due to their relationship to the construction sector, they should be considered as part of any later phases of amendments to be proposed by the Commission.[8] As for the final modern award, the Commission noted that not only are firefighters the subject of separate enterprise agreements but, as an essential service, they are not currently affected by COVID-19.[9]

Are There Further Amendments on the Horizon?

The Commission has indicated that these amendments may be just the first phase of amendments. Depending on how the impact of COVID-19 develops, the Commission will consider further amendments in the future. This could include the extension of these and other amendments to the construction, maritime, and mining and resources sector.[10]

The Commission has also floated the idea of further phases including amendments to provide greater flexibility for employers to direct employees to take annual leave. They could also include measures to facilitate reductions in the working hours of full and part time employees.[11]

Further, Master Builders Australia has proposed to engage in discussions with the construction sector on possible amendments to support that sector's response to COVID-19. The Commission has provided the sector until 17 April 2020 to provide it with a report on those discussions.[12]

What Does this Mean for My Business?

These proposals will provide greater flexibility for employers and employees in the way they can manage their leave entitlements against the business and personal impacts of COVID-19. These temporary measures will also provide guidance for employers that may be unsure of how to address employee requests for additional leave where they are personally affected by COVID-19.

The Commission has also shown a willingness to provide additional flexibility to businesses and industries on a case-by-case basis. The Commission has already approved variations to the hospitality, clerks and restaurant modern awards to provide flexibility to changes in work duties, ordinary hours, leave entitlements and business shutdowns affecting those industries. In its decision, the Commission encouraged industrial parties to continue, or enter into, discussions around further varying modern awards by consent to provide additional measures during the pandemic.[13]

Businesses facing unique COVID-19 challenges may want to consider any applicable modern award or enterprise agreement against the recent changes to determine whether there are any benefits for its operations as well as its employees.

 

[1] Variation of Awards on the Initiative of the Commission [2020] FWCFB 1760 [22]-[25].

[2] See Fair Work Act 2009 (Cth) s 134.

[3] Variation of Awards on the Initiative of the Commission [2020] FWCFB 1760 [45]-[50].

[4] Variation of Awards on the Initiative of the Commission [2020] FWCFB 1760 [59], [73].

[5] Variation of Awards on the Initiative of the Commission [2020] FWCFB 1760 [60]. We further note that section 165(3) of the Fair Work Act 2009 (Cth) provides that these leave entitlement will not be available until the start of the employee's first full pay period that starts on or after 8 April 2020.

[6] Variation of Awards on the Initiative of the Commission [2020] FWCFB 1837 [111], [131].

[7] Variation of Awards on the Initiative of the Commission [2020] FWCFB 1837 [2]-[4].

[8] Variation of Awards on the Initiative of the Commission [2020] FWCFB 1837 [27]-[33], [39]-[43].

[9] Variation of Awards on the Initiative of the Commission [2020] FWCFB 1837 [44]-[46].

[10] Variation of Awards on the Initiative of the Commission [2020] FWCFB 1837 [2]-[4].

[11] Variation of Awards on the Initiative of the Commission [2020] FWCFB 1837 [143].

[12] Variation of Awards on the Initiative of the Commission [2020] FWCFB 1837 [33].

[13] Variation of Awards on the Initiative of the Commission [2020] FWCFB 1837 [134].

End

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