What happens now that the JobKeeper scheme has come to an end? The recent government implemented lockdown has been a sharp reminder that the war on COVID-19 is far from won.
With this in mind, three core issues are likely to become relevant to employers (and employees) moving forward:
- Whether employees can be lawfully stood down now JobKeeper payments have ceased;
- Whether employees will continue to accrue statutory leave entitlement when stood down; and
- Whether employees who are stood down or take unpaid leave (due to stoppage/shortage of work) will become entitled to redundancy pay.
In relation to standing down employees post-JobKeeper, the Fair Work Act 2009 (Cth) (the Act) provides:
524 Employer may stand down employees in certain circumstances
(1) An employer may, under this subsection, stand down an employee during a period in which the employee cannot usefully be employed because of one of the following circumstances:
(c) a stoppage of work for any cause for which the employer cannot reasonably be held responsible.
(3) If an employer stands down an employee during a period under subsection (1), the employer is not required to make payments to the employee for that period.
The issue was recently addressed in Marson v Coral Princess Cruises (N.Q.) Pty Ltd T/A Coral Expeditions. In this instance, a cruise company was unable to operate given government restrictions imposed to curb the spread of Covid. As a result of these restrictions, the company stood down approximately 50% of their workforce. In considering the stand down valid, and the situation a ‘stoppage of work’, Deputy President Lake provided at :
The facts of this case are that the Respondent has entirely halted trade due to a government directive to help curb the spread of COVID-19. To include an event such as COVID-19 within the ambit of the section reflects the broad approach to interpretation adopted in Coal & Allied Mining Services Pty Ltd v MacPherson…
Therefore, in instances where government restrictions have been imposed by directive, and this directive has caused a significant reduction in trade, it is likely that, so long as the restrictions remain in place, a stand down of employees will remain lawful. Further, as per subsection (3), where such a stand down is in place, there is no requirement to make payments to employees. Therefore, now that JobKeeper has ceased, there will be no obligation on employers to remunerate lawfully stood down employees.
Once lawfully stood down, employees will continue to accrue leave entitlements. This is because leave is provided by the National Employment Standards, and while an employee remains employed, they are entitled to accrue leave.
However, while an employee may still accrue leave, they are not entitled to take paid personal/carer’s leave or compassionate leave while on stand down.
Employees may still access annual leave while on stand down.
Can an employee who is stood down be entitled to redundancy pay? This determination will depend on the ongoing status of the employee’s position, and/or the status of the business.
Under the Act, a redundancy occurs when an employee is terminated:
- Because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or
- Because of the insolvency or bankruptcy of the employer.
In Ball v Thomas Foods International Murray Bridge Pty Ltd, an arbitration case which concerned an indefinite stand down of an employee following a fire within a business premises, Deputy President Anderson considered an award of redundancy pay arose only where a stand down was unfair as it was “of an ongoing and indeterminate nature, and…excessive.”
Per Commissioner Williams in Kingston v Complete Hire and Sales Pty Ltd  FWC 620 at :
The stand down of an employee under section 524 of the Act is available to an employer in prescribed circumstances and provides an alternative to the right of that employer to make an employee redundant.
Therefore, employees who are lawfully stood down, and their roles continue to be required, an entitlement to redundancy pay does not arise.
Once government restrictions cease, should an employee’s role no longer be required, or should the business experience an insolvency/bankruptcy event, then an employee may be eligible to receiving a redundancy payment.
Otherwise reverting to usual
In the absence of government restrictions, employees are entitled to return to their employment under the terms and conditions that applied (or would have applied) prior to the JobKeeper scheme’s commencement. These terms and conditions are set out in the National Employment Standards (NES), and in a relevant award, registered agreement or employment contract, and include the originally agreed hours of work, rate of pay and job role.
Any modification to the employee’s agreed hours of work, rate of pay or job role will have to be agreed upon by the employee with the commencement of a new employment agreement (and must be consistent with the standards set by the NES and/or industry award).
Should the survival of a business rely on the reduction of staff post job-keeper, employers should be mindful of the procedural requirements of effecting termination in order to avoid liability for potential unfair dismissal or other employment related claims.
With the end of JobKeeper subsidies, and the on and off implementation of COVID-19 restrictions, employers affected by the changes are likely to face certain key issues.
The application of the Act by the Courts/Commission has been determined that employers can stand down employees in cases of genuine ‘stoppage of work’ because of government-imposed restrictions. During this lawful stand down, an employer is not required to continue to pay the employee, nor is the employee entitled to access personal or carer’s leave. They may however access accrued annual leave. In the absence of government lock-down directives, employees are entitled to return to their pre-COVID roles.
Although JobKeeper has ended, there are alternative government support initiatives still available. These initiatives include the JobMaker Hiring Credit scheme and the Boosting Apprenticeship Commencements wage subsidy. Both programs aim at supporting employers hire eligible employees, incentivising the creation of job opportunities and training.
For tailored advice regarding your options post-JobKeeper, contact Saines Legal, a full-service employment law firm, on (07) 3324 1055 or via firstname.lastname@example.org.
The contents of this article are general in nature and is for information purposes only. The content of this article does not constitute legal advice and should not be used as such. Should you require assistance with a specific legal matter, it is recommended that you seek appropriate advice.
Authors Emma Marshall (Lawyer) and Nigel Saines (Principal)
  FWC 2721
 CEPU v Qantas Airways Limited  FCAFC 205
  FWC 2483