An Overview of the new Part 6-4C in the Fair Work Act, 2009

Jobkeeper Enabling Directions

  1. Overview

On 8 April 2020, the Fair Work Act 2009 (FW Act) was amended[1] to allow employers participating in the Jobkeeper Scheme to:

  • Issue various directions to staff to reduce hours/days (with commensurate reductions in salary) or change duties/days/location
  • Effectively require staff to take annual leave.

The changes are explained in more detail below. In the legislation, the directions are referred to as “jobkeeper enabling directions”.

  • Who do the changes apply to?

The changes apply to national system employers who are eligible to and are participating in the Jobkeeper Scheme and their eligible employees. For employers with a turnover of less than $1 billion, this means the employer must have suffered a reduction of at least 30% of turnover when compared to a previous period. Further detail can be found in the Rules.[2]

An eligible employee is one who was employed by the employer on 1 March 2020 (a person remains an employee even if stood down under s.524 of the FW Act). Long term casuals are also eligible. Additionally, the eligible employee must be an Australian resident or hold a Subclass 444 Visa.

Employees must agree to be nominated for jobkeeper payments. An employer must notify an individual if the employer has applied for a jobkeeper payment in respect of that employee. 

An employee ceases to be eligible for jobkeeper payments in certain circumstances such as if they are totally unfit for work in a particular fortnight and are receiving workers compensation payments for some or all of that fortnight.

  • What are the pre-conditions before issuing directions?

Prior Consultation

Employers are required to consult with staff before issuing a direction under the amendments.  Employer are required to keep a written record of the consultation.

If, after consultation, an employer wishes to proceed with the issuing of a direction, the direction must be in writing. It may be required to be in a particular form.[3]

3 days must elapse between the start of consultation and the giving of a jobkeeper enabling direction unless the employee agree to a lesser notice period.

Direction must be reasonable and reasonably necessary to continue employment

A direction must be reasonable in all the circumstances and necessary to continue employment of one or more employees.

How this will be interpreted in practice is not yet known. A note in the legislation says that the impact of a direction on an employee’s caring responsibilities must be taken into account in assessing reasonableness.

 It is expected that some latitude will be given to employers but the power to issue jobkeeper enabling directions is an extraordinary one and employers should be able to explain the rationale for these directions if required to do so.

Direction must be because of Covid-19 and be safe

A jobkeeper enabling direction can only be given because of changes to the business attributable to the Covid-19 pandemic or government initiatives to slow the transmission of Covid-19.

Additionally, a jobkeeper enabling direction must be safe.

Jobkeeper payment must be passed to the employee

It is also a condition that the jobkeeper payment must be passed on in full to the affected employees.

  • What type of directions can be given?

Jobkeeper enabling stand down direction (can also be used to reduce rather than stand down completely)

A direction can be given to employees who cannot be usefully employed to:

  • Not work on a day of days on which the employee would usually work
  • Reduce his/her ordinary hours of work on one or more days
  • Reduce number of hours worked over a week

Salary can also be reduced proportionately provided jobkeeper payment is paid to the employee and the employee’s hourly rate of pay for the hours actually worked by him/her is not less than the pre-direction hourly rate.

A jobkeeper enabling stand down direction will not apply to periods when the employee is taking paid or unpaid leave authorised by the employer.

A test case involving Qantas is expected to shed some light on whether personal leave can be used during a stand-down period.

Change Location

 A direction can be given to change location of place of work (including to the employee’s home) provided the changed location is suitable and does not require the employee to travel a distance that is unreasonable in all the circumstances.

Change Duties

A direction can be given to require employees to perform any duties within their skill and competency, i.e. the employee can be required to ‘act down’ or ‘act up’.

If ‘acting down’, there is to be no reduction to the hourly rate of pay.

If ‘acting up’, and an Award or enterprise agreement prescribes a higher rate of pay, the employee must receive the higher rate of pay.

Change Days

A request can be made to an employee for the employee to work on different day or at different times compared to ordinary days or times of work. Overall, days/hours worked must not be reduced under this request.

The employee cannot unreasonably refuse the request

This section does not specify whether penalty rates under an Enterprise Agreement or Award will apply to the changed days/times. For example, if an employer requests an employee to work outside the normal span or hours or on a Saturday or Sunday, it is unclear if penalty rates apply.

Annual leave

A request can be made by the employer for the employee to take paid annual leave.

The employee must consider the request and not unreasonably refuse it.

Note that if the employee agrees to comply with the request, he/she must retain a balance of paid annual leave of not less than 2 weeks.

An employer and employee can also agree in writing to take twice as much annual leave, at half the employee’s rate of pay

  • How does service/benefits accrue?

During the period of a jobkeeper enabling direction, affected staff continue to accrue service and benefits at the pre-direction rate. In other words, an employee whose hours have been reduced by half because of a jobkeeper enabling direction will continue to accrue leave based on pre-direction hours.

Leave continues to accrue during the period of a jobkeeper enabling direction.

  • Requests for secondary employment, training etc

During the period of a Jobkeeper enabling stand down direction, the employer must not unreasonably refuse a request from the employee to engage in secondary employment or training or professional development.

  • Can an employer still make employees redundant?

The legislation makes it clear that a job enabling direction does not amount to a redundancy.

However, there is no prohibition on termination of employment for redundancy either as an alternative to a jobkeeper enabling direction or during the period of such a direction if operational conditions change.

Note however that if adverse action is taken against an employee because he/she asserts their workplace rights and, for example, refuses to agree to a request to take annual leave, this may be a breach of the general protections provision of the FW Act.

  • What if employers get it wrong?

The Fair Work Commission has been given jurisdiction to arbitrate disputes about jobkeeper enabling directions. It is expected the FWC will first attempt to mediate/conciliate the dispute.

Additionally, if the requirements of the Fair Work Act are not met when a direction is given, the directions may be unlawful  or of no legal effect entitling employees to commence proceedings in the Court system not only for back pay or re-crediting of annual leave but also for penalties for breach of the Fair Work Act, 2009.

  • When do the changes end?

A jobkeeper enabling direction can be withdrawn or revoked by the employer or replaced by a new jobkeeper enabling direction.

This section of the Fair Work Act will automatically cease on 28 September 2020. Any jobkeeper enabling directions will automatically expire on the same date.

The jurisdiction of the FWC in relation to disputes about jobkeeper enabling directions will also expire on 28 September 2020 but the legislation is silent as to how disputes lodged prior to that date will be treated.

[1] By the Coronavirus Economic Response Package (Omnibus Measures No. 2) Act 2020 – refer Schedule 1

[2] Coronavirus Economic Response Package (Payments and Benefits) Rules 2020

[3] If Regulations require it – none published as at 13 April 2020

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