COVID-19: Changes to the Fair Work Act
The Government has made changes to the Fair Work Act due to the economic impact COVID-19 is having on businesses Nation-wide. Changes also compliment the JobKeeper Wage Subsidy, recently passed by parliament.
These new laws override any modern award, enterprise agreement or employment contract.
Employers can now legally:
- Stand down an employee without pay (either completely or partially) for any period that they cannot be usefully employed.
- Change employment arrangements (such as what they do, where they work and when they work) for a specific employee.
What does usefully employed mean?
Usefully employed and usual work does not need to be work that an employee ordinarily performs, but needs to be genuine productive work that provides a net benefit to the employer.
This situation may arise when an employee has no or a reduced level of useful work available to perform due to COVID-19, and subsequent restrictions of individuals and businesses. If this occurs, alternative work outside of their usual position may be considered.
What are the new stand down provisions?
The new stand down provisions allow an employer to give a direction, called a JobKeeper enabling stand down direction, to an employee to:
- Not work on a day or days which the employee would usually work;
- Work for a lesser period on a particular day or days; or
- Work a reduced number of hours.
And not be paid for the period that work is not performed.
This is allowed on the following provisions:
- The direction is given to the employer qualified for the JobKeeper scheme;
- For the period of the stand down the employee cannot be usefully employed (as described above);
- The implementation of the stand down direction specifically relates to the spread of COVID-19;
- The employer becomes entitled to one or more JobKeeper payment for the employee while the direction applies; and
- The wage condition is satisfied, the minimum payment guarantee is met, the hourly rate of pay guarantee is met (explained below).
What is the JobKeeper subsidy?
- The subsidy is a $1,500 fortnightly payment to subsidy wages of eligible employees.
- Read more on the JobKeeper payment here.
The wage conditions mean the employer qualifies for the JobKeeper scheme and is entitled to the JobKeeper payments and complies with the Coronavirus Economic Response Package (Payments and Benefits) Act 2020. Rules have yet to be announced.
Minimum Payment Guarantee
The minimum payment guarantee is when the JobKeeper payment is payable to an employer for the fortnights work performed by an employee. The employer must ensure the total amount payable for the fortnight is not less than the greater of:
- The amount of JobKeeper payment, payable to the employer for the fortnights work performed by the employee; and
- The amounts payable to the employee in relation to the performance of work during the fortnight (amounts payable includes incentive-based payments and bonuses, loadings, monetary allowances, overtime or penalty rates and leave payments).
Hourly Rate of Pay Guarantee
If a stand down direction is given, the employer must ensure the hourly base rate of pay is not less than the rate usually applies to the employee.
If an employer has instructed the employee to perform different duties to normal, than the employer must ensure the hourly base rate of pay is not less than the greater of:
- The hourly base rate of pay that would have been applicable to the employee if the direction has not been given; or
- The hourly base rate of pay that is applicable to the duties the employee is performing
When does a stand down direction not apply?
A stand down direction does not apply to the employee during a period when the employee is:
- Taking paid or unpaid leave that is authorised by the employer.
- Otherwise authorised to be absent from the employee’s employment.
Arranging Flexible Work
Employers and employees can explore a range of flexible working arrangements together that may suit individual needs and circumstances. These include:
- working from home
- changing the number of hours an employee works
- changing the start or finish times of employees’ shifts
- changing patterns of work, such as rostering arrangements
- Changing the type of work done by employees.
Using Paid Leave
Employees and employers can explore employees using accrued leave entitlements during the COVID-19 outbreak. Options include:
- Taking accrued annual leave
- Taking any other paid leave (such as long service leave or paid leave available under an award, enterprise agreement or employment contract)
- Directing employees to take accrued annual leave in certain circumstances
- Taking any other paid leave by agreement between the employee and the employer.
Fair Work Australia has detailed information on arranging flexible work, using paid/unpaid leave, standing down employees, ending employment, business bankruptcy and insolvency.
Want to know more?
With the equity markets and Government support packages frequently changing, we are continually updating and creating new tools and information for you. To review the latest materials on COVID-19, please click here. This page will be regularly updated, so please check back in from time to time.
Below are some articles that may interest you:
- JobKeeper Payment: Relief for Employers and Employees
- Are you entitled to the Federal Government Stimulus Package
- Government Stimulus Package for Business
- Government Stimulus Package for Individuals
- Australian Tax Office Relief
We’re here to support you through the changes. From making the most of the stimulus initiatives, through to managing the risks associated with the impact of the Coronavirus, the Modoras team is here to help you build a resilient business. Make well-informed business decisions; contact us on 1300 888 803 book a catch up with a Modoras professional.
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