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COVID-19 Australia: New flexibility measures introduced for employers in response to COVID-19

  • Market Insight 17 April 2020 17 April 2020
  • Asia Pacific

  • Coronavirus

COVID-19 Australia: New flexibility measures introduced for employers in response to COVID-19

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 COVID-19 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 full-time and part-time 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 part-time 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 self-isolation 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 award-covered employees to take double the amount of annual leave, at half pay.

We expect to see more businesses and industries making applications to the FWC to vary other modern awards, including those that have been affected by the reduction in household spending.

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 COVID-19.

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 re-hired) 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. This means those employees who earn below $1,500 a fortnight will receive a windfall, but employers must ensure that they continue to meet their contractual obligations including any contractual employee entitlements are not covered by the JobKeeper subsidy.

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 down employees, 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.

The new modern award provisions and the proposed FW Act amendments are subject to civil penalties if not correctly followed. Our team at Clyde & Co would be pleased to work with your business to navigate these complex rules and find solutions to deal with these unprecedented and challenging times.

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