The coronavirus pandemic has come out of the blue. It was completely unexpected, and it is causing havoc among businesses of all sizes.
Although you have a lot on your plate at this time, it’s important to remember that you remain responsible for ensuring a safe workplace for your employees. This now requires you to take into consideration the potential for your employees to be infected with the SAR-CoV-2 virus, which in turn can give rise to the medical condition known as COVID-19. You also have a responsibility to ensure the safety of your clients and customers under consumer law.
Put in place a revised workplace policy that addresses COVID-19
No doubt you will have received a lot of emails with ‘policies’ about how businesses are addressing the crisis. The same thing applies to your business. To avoid the real potential for liability from not taking action to protect your employees, you should consider putting in place a COVID-19 policy immediately.
You can download our free sample ‘COVID-19 Workplace Policy‘ by clicking on this link:
Will you be able to pay wages?
This is not just a health crisis, this is also an economic crisis as well. The Government has taken dramatic action to slow down the progression of the virus through the population. This includes completely shutting down some businesses, and severely reducing the extent of economic activity for other businesses.
We have already seen significant ‘lay-offs’ and ‘stand-downs’ among big businesses, and we are now seeing much more of this among small to medium-sized businesses.
SME businesses are unlikely to have ‘enterprise agreements’ in place, and are equally unlikely to have specific ‘stand-down’ provisions in applicable awards or employment contracts. Even if you did have provisions of this nature in your contracts, there is still the risk of employees making an unfair dismissal claim with the Fair Work Commission.
If you are struggling to meet your payroll, or if you anticipate that you will be, then consider the following actions to cut costs:
- Review the terms of your contractors and consider reduced work or termination – see if your contractors are entitled to a minimum level of work. If not, you can make a cut here. If you have contracted for a mimium level of work, then check the termination clauses and see what notice you need to give to bring this to an end. A true independent contractor is not entitled to make an unfair dismissal claim and is not entitled to redundancy pay;
- Reduce your use of casuals – look very carefully at your casual pool. Can you reduce their hours and still function? You may wish to consider circulating your roster so that each of your casuals continues to get some level of work. Casual works are not entitled to any level of work and are not entitled to any redundancy pay.
- Constrain your permanent part-timers to their agreed minimum hours (PPT) – make sure your PPT employees work exclusively in accordance with their contracted hours. For instance, if a PPT is contracted to work 20 hours a week, make sure they only work the 20 hours – not one hour more than the 20 hours. PPT workers are protected under the Fair Work Act against unfair and unlawful termination and are entitled to redundancy pay (if applicable to their circumstances).
If work starts to dry, what happens then?
You have some options.
Encourage paid or unpaid leave
The first option is to encourage employees to voluntarily take paid or unpaid leave during this period of downturn. If you and your employee agree, they can take paid or unpaid leave. Unfortunately, many employees will be reluctant to take their leave at a time when they are unable to travel or do other ‘leave-related’ activities. But if your employees see that you are in genuine trouble, they may accommodate this.
Can you force an employee to take annual leave?
Some awards and registered agreements allow an employer to direct an employee to take annual leave. You should review any applicable award (or agreement) and see if this assists you. For many SMEs, it will not.
The generally applicable National Employment Standards allow an employer to direct an employee to take their annual leave, but only if the requirement is ‘reasonable’. The circumstances in which it may be reasonable to give such a direction include if:
- The employee has an ‘excessive’ annual leave balance. There is no definition of excessive in this context, but other contexts imply balances of 40 days or more. However, you may argue it is less in this context; or
- The employer’s enterprise is being shut down for a period. This is usually associated with a holiday, such as Christmas and New Year. However, arguably a shut down as a result of the COVID-19 virus may fall within this.
The factors you need to consider when assessing if you are being ‘reasonable’ by requiring your employees to take leave include:
- The needs of the employee and the employer’s business;
- Any agreed arrangement with the employee;
- Custom and practice of the business;
- Timing of the direction or requirement to take leave; and
- The length of the period of notice given.
Many awards specify a period a notice that is required prior to the enforced leave. This can range from four to eight weeks from the time of first giving the direction. All employers should seriously look at giving their employees a direction to take leave as soon as possible if they wish employees to utilise their leave balances over this period. We can help you determine the notice period and draft that direction so it is legally effective.
You may be saying ‘I can’t wait 8 weeks!’. This then becomes a question of negotiation with your employees on a case-by-case basis. Remember, you cannot terminate an employee because they refuse to take their annual leave within the eight-week period. Overall, act in a robust fashion, engage with your employees and address the issue.
Standing down an employee is something short of terminating them. You are basically saying that they still have their job, but you do not require them to attend work for a period of time. In most cases, employers will only stand down employees when they can do so without having to pay their employees. But in this case, your obligation to create a safe workplace may require you to stand down employees in circumstances where you need to keep paying them.
Making an employee redundant
If you do not have work for an employee, and you are not able to stand them down without pay, you may wish to consider terminating their employment on the basis of redundancy. In order to do this without exposing yourself to an unfair dismissal claim (or an unlawful dismissal claim), you need to meet the requirements of ‘genuine redundancy’. Read these articles to understand when someone is genuinely redundant:
If you are not a small business employer, then you will have an obligation to give redundancy pay, in addition to any period of notice required under the National Employment Standards, any applicable award and any contract of employment you have with the employee. This can get very expensive.
Can you direct employees to work from home?
Generally, employment contracts define the ’employment location’ as being a specific place ‘or such other place as the employer nominates’.
Employers can rely upon ‘such other place’ to direct an employee to work from home. For many types of employees, it simply will not be practical for the employee to work from home. In these circumstances, standing down your employees may be your only option.
Do you need to pay an employee in mandatory quarantine?
Our view is that they should be unpaid.
The notion of annual leave is an entitlement that the employer gives to the employee at the employer’s direction. You must consider whether the workplace is shutdown or people are working from home. If they are working from home while the workplace is shut down, the employee in quarantine can take their annual leave or personal (sick) leave.
If a person has gone into quarantine because of potential contact with someone who has the virus and can produce a medical certificate, they can, more likely than not, take their accrued annual leave.
What to do next?
None of this is simple or easy. Our employment laws have not been designed with a pandemic in mind!
Whichever way you turn, there are likely to be costs associated with restructuring your workplace.
The simplest thing to do is get us involved to help you develop a clear plan to see you through.
Call one of our lawyers now:
- Call John Morrissey on 0407 069 507
- Call Sladjana Skoric on 0410 900 248
- Call Mariam Chalak on 0410 914 128
- Call Thomas Du on 0410 906 194