DOWNSCALING YOUR WORKFORCE IN A PANDEMIC

The novel coronavirus (COVID-19) global health epidemic is setting in. Cases of the virus being transmitted through community (or work) interactions are now showing up around the country and the Victorian State Government has taken radical action as a result.  

Official health advice remains that the virus is highly contagious and that collective action from Australians of all ages needs to be taken to protect those that are vulnerable within the community (especially the aged). 

This Q and A is designed to help you navigate the impact on your workforce following the Victorian Government’s recent shutdown announcements, and enable you to appropriately manage your staff as much as you can in these uncertain times. The information contained in here can be applied in other states and territories in Australia. 

Q.WHAT SHUTDOWNS HAS THE GOVERNMENT ANNOUNCED? 

A. As many of you would know, on Monday 23 March 2020 the Victorian Government announced a shutdown of ‘non-essential business’ or undertakings for a period of 2 weeks, and has brought forward the school holidays. The shutdown directly applies to those specifically listed in the definition, that is, the operation of pubs, hotels, gyms, indoor sporting centre, casinos, cinemas, nightclubs, entertainment venues, restaurants and places of worship. This is in addition to the “social distancing” health authorities are advising everyone in the community practice to contain the spread of COVID-19.  

The announcement is, sadly, quite vague and the specific detail of the shutdowns is still to be announced. However, the announcement has had an immediate impact on pretty much all businesses, organisations and government and this impact will only increase the longer or wider these shutdowns operate. 

Q. MY STAFF SAY THEY NEED TO WORK FROM HOME BECAUSE THEIR CHILD’S SCHOOL OR CHILDCARE CENTRE HAS BEEN CLOSED, WHAT SHOULD I DO? 

A. Flexible working arrangements and carer’s leave.

As a first course of action, we recommend you try to negotiate flexible working arrangements with your employees with includes working from home, flexible working hours and jobs share arrangements to keep them working (and, therefore, earning a wage and paying their bills) for as long as possible.  

If there is no or insufficient work for the employee to do at home, or you cannot agree to a suitable paid arrangement, then an employee is entitled to take paid carer’s leave.  

When paid carer’s leave is exhausted, it is likely an employee would be entitled to unpaid carer’s leave. Under the Fair Work Act 2009 (Cth) (“Act”), unpaid carer’s leave may be accessed where a parent employee faces an “unexpected emergency” affecting a family member/child. Arguably, a government decision to shut down schools would meet this test. 

At this stage it is unclear how long schools (and potentially childcare centres) will be closed. In the event an employee parent needs to stay at home looking after them, unpaid carer’s leave period could continue for many weeks, and likely will operate in practice similar to unpaid ‘stand down’ arrangements (see below). 

Q. CAN I REDUCE HOURS FOR MY CASUAL AND PERMANENT EMPLOYEES?  

A. Casual employees are not guaranteed any work hours per week and, therefore, you are not legally obliged to give them any of their usual shifts. 

Employers are quite constrained in trying to reduce hours for permanent employees.  

If you would like to reduce usual work patterns of permanent employees, such arrangements must made be in accordance with their employment contract, award or enterprise agreement which may require notice, consultation and/or agreement. It also could potentially trigger claims of redundancy. If the employee does not agree to ‘take a haircut’ on their weekly hours or pay (or both), then the following steps need to be considered. 

Q. WHAT IS A STAND DOWN?  

A. Stand down = employee cannot be usefully employed because of a stoppage of work outside of an employer’s control and is stood down from work without pay 

Stand down must be viewed as a last resort where all other options have been exhausted. 

‘Stand down’ in this context must also not to be confused with a ‘suspension’.  

Under the Act, an employer may stand down an employee where “an employee cannot usefully be employed because…a stoppage of work for any cause which the employer cannot reasonably be held responsible”. 

A suspension, on the other hand, involves suspending/asking not to work under a further decision is made about their continuing employment (e.g. they are being investigated for misconduct). An employee is paid during a period of ‘suspension’ and the period is temporary (i.e until a further decision is made about their continuing employment).  

During a ‘stand down’ period: 

  • an employee ‘stands by’ (usually from home, given ‘social distancing’ and other Governmental advice and social warnings) until they can be useful employed – this means their status as an employee continues; 
  • however, an employee does not have a right to payment from the employer for the duration of the ‘stoppage of work’;  
  • the National Employment Standard (NES) entitlements in the Act (such as annual leave, carer’s leave, etc) continue to accrue; 
  • however, an employee is able to make requests to access some of their paid entitlements (annual or long service leave); and 
  • if the employee does not wish to continue their ‘stand down’, to say, get another job which pays them or to access welfare benefits (see below) this would likely (but not definitely) be considered a ‘resignation of employment’.   

The benefits of a stand down are that staff remain on stand-by until you are able to operate again, and the employer avoids a costly severance payment (which may be impossible given other cashflow concerns). However, this dramatic step has significant consequences for staff – a stand down effectively deprives workers of an income for an indefinite about of time and constrains their inability to claim Centrelink benefits. Hence why it should be treated as an action of last resort. 

Q. CAN I STAND DOWN MY EMPLOYEES BECAUSE OF COVID-19? 

A. Yes – assuming you meet the requirements of the Act. 

To determine if you satisfy the criteria, consider the following: 

1. Are there stand down provisions in my employees’ contracts or enterprise agreement?  

Your employee’s contract or applicable enterprise agreement may contain additional provisions about stand down such as consultation or notice periods.  If that’s the case, you will need to comply with these.  

2. Is COVID-19 really the reason for the stoppage of work (ie can causation be established)?  

Employers must ensure that they can prove that the actual reason for standing down employees is a ‘stoppage of work’ caused by something outside of their control and that the Government developments regarding COVID-19 mean your employees cannot be usefully employed.  

There is always a risk an employee will bring a general protections claim claiming that the real reason behind the stand down was different – eg in situations where not everyone is stood down, they may allege they were selected on the basis that they had previously made a safety complaint.  

In that case, a reverse onus of proof applies, and it is the employer who must prove that it was due to the ‘stoppage of work’. 

3. Has there been a complete stoppage of work?  

You may only stand down employees where there has been a complete stoppage of work. This must be more than a mere slowing or disruption of operations such as changed office hours, or less production. 

As we mentioned in our previous article, the last lawful stand downs in Victoria came following the Esso Longford gas explosion in 1998 which meant many Victorian businesses were without gas for many weeks and unable to trade.  

In the case of COVID-19, at this stage the Government has shut down the operation of ‘non essential’ businesses or undertakings.  

If this has completely stopped your business from operating (or part of your I.e. you are a pub and cannot open, then you have had a ‘complete stoppage’.  

On the other hand, reduced orders and lack of deliveries from overseas production are significant business interruptions, but may not constitute a ‘complete stoppage’. 

4. Can employees be usefully employed elsewhere in the business? 

In order to enliven stand down provisions, employers are required exhaust all potential alternate modes that the employee may be ‘usefully employed’ other than their ordinary role. This includes considering whether arrangements such as working from home, redeployment, or other flexible working would be available as discussed above.  

5. Can employees take a period of authorised leave or absence?  

An employee will not be considered to be ‘stood down’ if they currently are on authorised unpaid or paid leave or absence. 

You may be able to agree with staff that they will take their annual or long service leave or even unpaid leave before having to resort to a stand down. 

However, you can only direct annual leave in accordance with industrial instrument and/or the National Employment Standards. Long Service Leave may only be taken by agreement in accordance with State legislation or the applicable industrial instrument. 

Generally there is no capacity to direct employees to take long service leave save for with prescribed notice (varies from one to six months across States & Territories). 

6. Is the stand down ‘fair’? 

 Like any employer processes, the choice to stand down certain employees must be implemented fairly. Given a stand down effectively deprives workers of an income for an indefinite about of time, you may consider taking additional steps to lessen the harsh effects on employees, such as: 

  • inviting employees early to access their annual or long service leave entitlements;  
  • allowing an advance in pay or leave (eg negatively accrue leave);  
  • providing additional ex gratia payments; and 
  • providing as much notice as possible for stand down period. 

Q. WHAT PAYMENT IS AN EMPLOYEE ENTITLED TO IF I STAND THEM DOWN? 

A. Employees who are stood down may now be temporarily eligible for JobSeeker Payments or Youth Allowance. As per the recent Government announcement (25 March 2020), such allowances will be available if employee is:

  • a permanent employee who has been stood down or lost their job;
  • caring for someone who’s affected by COVID-19; or
  • sole trader, self employed, a casual or contract worker whose income has reduced.   

Such entitlements, however, will still be subject to income testing.

Q. CAN THEY WORK ELSEWHERE DURING A STAND DOWN PERIOD?  

A. Yes. 

During the stand down period, your employees may seek employment at another organisation provided that their alternate work arrangement is not in conflict with their current employment contract or they have your permission. If you ‘stand down’ your workers we encourage you to not take an overly legalistic or pedantic approach to ‘compete’ or ‘conflict’ with their primary employment. If your workers can ‘get by’ using their skills and earning some money from another workplace / employer during the period you are not paying them, then perhaps this is the best temporary arrangement for all concerned.   

Can We Help?

If you have any further questions on how best for your work to move forward at this time of uncertainty, please contact our Director Mark on mark@workplacewizards.com.au or 0458 6444 69

FREE: How-to guide: Survive (and thrive) through COVID-19
What to prioritise and how to tackle the main challenges businesses are facing.
Marketing by
Mark Ritchie

Mark Ritchie

Mark is passionate about helping Australian businesses efficiently resolve their industrial relations issues. Mark has demonstrated proficiency advising managers, executives and boards of small to medium-sized enterprises, as well as some of Australia’s best-known companies, on both litigious and non-litigious matters.

Don’t Stop Here

More To Explore

discrimination

What is workplace discrimination?

Discrimination is treating a person ‘unfavourably’ because of a protected personal attribute/characteristic they possess (e.g. because of their gender, or sexual orientation or religion). In