Wednesday, 25 March 2020

Update 3: Employment Law Issues with Coronavirus (COVID-19)

As we all know the Coronavirus/COVID-19 situation continues to develop at a rapid rate and this is obviously changing daily.

This is primarily a health crisis with significant economic consequences – one of which that raises many employment law questions.

It is an understatement to say the issues businesses are dealing with are unprecedented.

This is an updated Q&A on some of the employment law issues you may be grappling with.

The answers may vary depending on what may be in your own employment contracts, policies and enterprise agreements.

We have also provided below a basic working from home checklist.

Stand downs
1.What if the employer needs to close all or part of the business?If a business is required to temporarily cease its operations due to a government direction (e.g. closure of a business, inability to adhere to social distancing requirements, etc), the employer has a right to stand down employees that cannot usefully be employed as a result – without pay.

This is because the closure is outside the control of the employer.

A related business can also stand down employees who cannot be usefully engaged (for example, a supplier to a school when the school is required to close).

The situation is more unclear where employers are partially affected by a government direction and this causes a slow down in work. Advice from the Fair Work Ombudsman provides that employers cannot generally stand down employees simply because of a deterioration in business conditions. However, the unique impacts of coronavirus have created situations where stand downs may still apply.
2.What is a “stand down”?Stand down applies where there is a stoppage of work that is beyond the control of the employer, and the employees cannot be usefully engaged. Where possible employers should deploy staff to other meaningful duties instead of standing them down.

Stand down can be indefinite – at present many businesses are being required to close indefinitely.

Stand down periods are generally unpaid. We discuss using leave while “stood down” in question 15 below.

Employees can seek alternative work while stood down and it does not trigger their “resignation”.
3.Can stand down apply to part of the business?Stand down can apply to part of a business (and only the staff who can’t be engaged). For example, in a Hotel the bar staff may need to be stood down, but the reception, cleaning and security staff are still needed.
4.Can there be a partial stand down of a business? Is this different to redundancy? A stand down may apply to operationally distinct parts of the business, but there can also be a partial stand down of a business in other ways (e.g. partial stand down of hours where employees cannot be usefully employed for part of their ordinary hours). This is a legally grey area but may in some circumstances be used as an alternative to the more permanent option of redundancy.
5.Is there a notice period for a stand down?There is no required notice period and they can be effective immediately.
6.What is the difference between “stand down” and redundancy?Redundancy is where the employer no longer requires the work to be performed by anyone – the employment permanently ceases – and the employer needs to pay redundancy. The employer will need to follow consultation processes under awards or enterprise agreements.

The employer also has to consider alternatives to redundancy – part time employment, etc.

For a stand down, see question 2 above.
Variations to an employee’s role, hours or salary
7.Can the employer force employees to reduce their hours or salary in the event of a slow-down?If “stand down” (as per questions 1 and 2 above) doesn’t apply, changes to work hours or remuneration for permanent employees could constitute redundancy (question 6).

As an alternative to this, reductions in hours or salary should be by agreement between the employer and employee. Any variation to the contract should be confirmed in writing.

Many employers are seeking to negotiate changes to arrangements by consent, before moving to redundancy or stand-downs.
8.If the employer offers an employee a different role in another part of the business, can the employer pay them under a different award/pay them a different rate of pay?If, instead of a stand down, the employee agrees to a new role under a different award/employment contract then the employee has consented to a variation to their original contract. The variation should be confirmed in writing to the employee.
9.Can employers negotiate with employees to work staggered days or weekends, how does this impact if modern awards/enterprise agreements provide for overtime or penalty rates?An Individual Flexibility Arrangement (IFA) could be used by the employer and employee to change the effect of certain clauses in their award or enterprise agreement. An IFA can’t be used to reduce or remove an employee’s entitlements.

The employer has to make sure that the employee is better off overall with the IFA than without it compared to their award or enterprise agreement at the time the IFA was made. This can include consideration of financial and non-financial benefits for the employee, as well as the employee’s personal circumstances.
Closure of non-essential services
10.The Federal government has suspended non-essential gatherings. Who does this impact? As a result of the ban on non-essential gatherings, the following facilities were closed from 23 March 2020:
Pubs, registered and licensed clubs (excluding bottle shops attached to these venues), hotels (excluding accommodation), gyms and indoor sporting venues, cinemas, entertainment venues, casinos and night clubs, restaurants and cafes will be restricted to takeaway and/or home delivery, religious gatherings, places of worship or funerals (in enclosed spaces and other than very small groups and where the 1 person per 4 square metre rule applies).

From 26 March, these restrictions were extended to:
food courts (except for take away); auction houses, real estate auctions and open houses; personal services ( beauty, nail, tanning, waxing and tattoo salons), spa and massage parlours, excluding health related services such as physiotherapy, amusement parks, arcades and play centres (indoor and outdoor), strip clubs, galleries, national institutions, historic sites and museums, health clubs, fitness centres, yoga, barre and spin facilities, saunas, bathhouses and wellness centres and swimming pools, community facilities such as community halls, libraries and youth centres, RSL and PCYC, gaming and gambling venues, indoor and outdoor markets (excluding food markets).

Weddings can be conducted with no more than five people. Funerals are limited to no more than 10 people. Hairdressers and barbers can continue to operate under strict new rules - clients must also not spend more than 30 minutes inside the premises.

States and territories are making their own announcements about restrictions.

This is changing on a near daily basis so we suggest you keep up to date by checking the Federal and State/Territory government websites.
Employees required to self-isolate
11.What if an employee is required to self-isolate (e.g. because they have been in close contact with a confirmed case of covid-19) - are they on paid or unpaid leave?The employer may stand down the employee without pay (see question 1). This is because an employee cannot work due to a government direction regarding self isolation or social distancing.

The employer may consider alternative arrangements to stand down to mitigate financial loss to the employee such as allowing the employee to work from home (if possible) or utilise their accrued paid leave entitlements (annual leave or long service leave, if a permanent employee).

The employer may allow the employee to take paid personal leave, if available, although this is not a requirement since the employee is not sick.

It is best practice to allow the employee to access paid leave where possible. Where the employee has no paid leave entitlements, employers may wish to allow employees to take annual leave in advance of it being accrued.

It is a matter of discretion for employers to provide paid leave in the circumstances.
12.What if the employer requires an employee to self-isolate, beyond the government directions - should they be on paid or unpaid leave? If the employer decides to request staff to self-isolate, beyond the government directions, the employer may request the employee take unpaid leave (or utilise accrued paid leave such as annual leave or long service leave), but cannot compel the employee to do so. If an alternative arrangement is not agreed, the employer must pay the person directed to stay/work from home.
13.What if there is a confirmed case of coronavirus in the workplace? What does the employer need to do? Where there is a close contact with someone diagnosed with coronavirus, the individual must self-isolate at home for 14 days after the last contact with the confirmed case. If the entire workplace has been in close contact with the confirmed case, all affected individuals will have to self-isolate (which may result in the closure of the business). There are strict cleaning requirements in the event of a confirmed case.

The Victorian government defines “close contact” as having face-to-face contact for more than 15 minutes or sharing a closed space for more than two hours.

There are slightly varying definitions of “close contact” within States/Territories – we suggest you keep up to date by checking your relevant government website.
Employees refusing to work
14.What if an employee refuses to come into work, or perform certain duties, as they are concerned about being exposed?If an employee refuses to attend work (or perform certain duties) as a precaution against being exposed to coronavirus, unless the employee is acting in accordance with government directions to do so, the employer does not have to pay them or allow them to access leave (but it is open to the employer to agree to do so anyway).

Depending on the circumstances, an employee could be subject to disciplinary action if they refuse to attend work or perform certain tasks or duties if the direction is lawful and reasonable and does not put the employee at any risk. However, this is not clear cut, as there are protections for employees (including under discrimination laws, safety legislation, and the general protection provision of the Fair Work Act), that prevent an employer from taking action against employees for raising genuine safety concerns.
Leave entitlements
15.Are employees entitled to use paid leave while stood down?Where an employee has prior to the stand down already commenced annual leave, long service leave or personal leave (including carer’s leave), they are entitled to take the paid leave for the period it is authorised. If an employee had applied to take annual leave or long service leave in the future, and this was approved before the decision to stand down, they are entitled to take the paid leave.

Where the employee is stood down, and then requests annual leave or long service leave, the paid leave can be taken if the employer authorises it. An employer may decide not to authorise/agree to the request.

While employers do not have to authorise taking of paid leave after a stand down is brought into effect, in current circumstances it is good practice to allow employees to take accrued paid leave if they request to do so.

There may be reasons (cash flow, etc) to refuse requests for using paid annual leave and long service leave, but grounds to refuse other leave (such as personal leave or compassionate leave where evidence is provided) is less certain and it will be difficult to justify not authorising the leave.
16.Do employees accrue leave during a stand down?An employee who is stood down without pay is still employed and continues to accrue leave entitlements during the period.

The period of the stand down does not break continuous service. So, an employee with 8 months service who is stood down for 6 months would be considered to have 14 months’ continuous service when they resume.
17.Are employees paid for public holidays whilst they are stood down?Permanent employees should be paid for public holidays whilst being stood down.

If, however, instead of being stood down, an employee is on a period of unpaid leave, they would not be paid for the public holiday.
18.Can an employer force permanent employees to take annual leave or long service leave?Generally, the taking of leave should be mutually agreed between the employer and employee. However, in current circumstances it may be necessary to proactively encourage employees to take paid leave as an alternative to stand down without pay or redundancy.

There are more conditions on directions to take annual leave for award and enterprise agreement covered employees. Additionally, state-based long service leave legislation usually requires advance notice of directions to take leave (eg in Victoria it is 3 months).
19.Can the employer allow some employees to take accrued paid leave (annual leave or long service leave) and not allow other employees to take paid leave?It is advisable to treat all employees consistently, however, there is no legal obligation to pay employees their accrued annual leave or long service leave entitlements while stood down. The employer therefore may allow some employees to take accrued leave whilst not approving others to take leave. The employer must not act in a discriminatory way in selecting which employees can take leave (i.e. the employer cannot treat employees differently due to gender, race, disability, etc)

The employer may ask employees to volunteer for these types of arrangements before implementing stand downs.
20.What if schools close and an employee has to stay home and care for their child? What type of leave will they be on? If a school or childcare centre that an employee’s child attends has closed, permanent employees are able to access paid personal/carer’s leave, and casual employees are able to take unpaid carer’s leave to care for their children. This is because personal leave is available to care for someone in an unexpected emergency.

If the children are teenagers and the employee wants to take leave, you may wish to discuss whether it is appropriate to take personal leave.
21.What if both parents apply for personal leave to look after children (in the event of school closure) at the same time?Strictly speaking personal leave should only be granted to one parent (unless there are extenuating circumstances). If one of the parents is working in an essential service, it would be reasonable for the parent in the non-essential service to take personal leave. Employers should adopt a case by case approach when authorising leave.
Working from home
22.Does the employer have to allow an employee to work from home? In Victoria, Premier Andrews has declared that workers should work from home wherever possible. As the situation rapidly escalates, we suggest that employers seek to transition as many workers to work from home as is operationally viable.
Operationally, there should be a need for the work to be performed, and the employee should have the means to work from home (i.e. access to a computer, phone, etc, where required).

Consider what equipment will be required by employees, both from a safety perspective and to ensure the employee is able to effectively work while offsite. Ensure IT systems enable the ability to work from home (whether its conferencing or other collaborative tools) and employees know how to access and use these.

Think about how you are going to coordinate work, manage performance and other work processes.
23.What are the safety considerations of working from home?Ensure Working from Home policies are up to date and consider safety issues, as employees injured while working in their own home are eligible to bring workers compensation claims.

Provide information to staff about how best to set up their home workspace to be safe. The factors will vary depending on the type of work they are performing from home. In most cases, the minimum requirements will be to ensure their home workspace is ergonomically sound.

Ask staff to undertake a self-assessment of their proposed home workspace using simple checklists, and confirm the employee has taken steps to appropriately set up their home workspace.

Keep in contact with employees while working from home to ensure employees do not feel unduly isolated.
24.Does an employer have to provide ergonomic equipment for employees to work from home?The employer has to provide a safe place of work for employees as far as reasonably practicable. There is no strict requirement for the employer to provide ergonomic equipment, but appropriate equipment allowing employees to work from home should be provided where possible.
25.What if an employee refuses to work from home?If the employee’s duties can be effectively performed from home safely and they employee refuses to do so (e.g. because they don’t want to mix work and home life) then this constitutes a failure to follow a lawful and reasonable direction.

The employer should address any genuine concerns regarding barriers to effectively working from home, otherwise the employee may need to be stood down without pay or on unpaid leave.
Casuals and contractors
26.What about casuals or independent contractors? There is no requirement to pay casual employees or contractors who cannot continue working (whether due to illness, carer’s responsibility or lack of work). However, some employers are choosing to provide some paid leave for short periods to assist these workers financially (e.g. Uber).

Workers may also be able to access government welfare payments.
Supply chain issues
27.What are the legal ramifications for labour-hire suppliers and other supply chain issues?Communication with all stakeholders is key and aim to be prepared. All levels of management should plan for a slow-down or reduction in staff, at the very least, and a potential shut down as the situation develops. Decision-making should be streamlined and redundancy built into processes in the event that businesses need to close at short notice.

Commercial contracts should be reviewed, particularly force majeure and termination clauses. Management should have a stance on whether to seek to strictly enforce contracts and understand any legal, financial and insurance implications of different decisions.

Where possible, it would be good practice to allow leeway and understanding (rather than strict compliance) as every organisation and every person is affected by this.
New Zealand
28.What if an employer has staff in New Zealand? Can they be stood down?New Zealand has announced it will move to Coronavirus Alert Level 4 meaning that other than essential service workers, people are instructed to stay home. Employees will be unable to access their workplace because of restrictions out of their employer’s control.

Unlike Australia, there are no stand down provisions in New Zealand.

Instead, the New Zealand government has introduced a Wage Subsidy and Leave Payment for employers affected by COVID-19.
Centrelink payments
29.Who can claim the JobSeeker Payment? Services Australia has announced that it will temporarily expand its eligibility for JobSeeker Payment for job seekers so that permanent employees will now be able to access JobSeeker if have lost their job or have been stood down.

However, these employees can’t access employer entitlements, such as annual leave or sick leave, or income protection insurance at the same time as getting JobSeeker Payment.

Other advice for employers

Provide regular updates to staff and give them access to practical information – including about their own health and wellbeing. This is a time of considerable uncertainty for all, so it is important to manage expectations as much as possible as the situation develops.

Direct employees to government information – with the rapidly changing situation, employers can’t prepare everything themselves.

Where possible support staff with access to PPE, disinfectants and sanitisers, and when to use them.

Think about social distancing as appropriate for your workplace.

Plan for different eventualities (including your own staff or their families being ill).

Show leadership, compassion and understanding. Understand staff are going to be genuinely concerned. Be fair and flexible where possible.

There may be difficult decisions you need to make for the survival of your organisations – communicate the reasons openly.

The decisions you make will impact on your workplace culture once we get through this crisis.

HR Legal can provide advice on employment strategies for standing down staff, varying employment contracts and making redundancies where necessary. We can assist with preparing documentation such as stand down letters, contract variations, individual flexibility arrangements (IFAs), and Working from Home policies.

We can be contacted after hours (and on the weekends) to assist with urgent matters.

Click on the following link to download: Basic Working from Home Checklist

This article was produced by HR Legal. It is intended to provide general information only in summary format on legal issues. It does not constitute legal advice, and should not be relied on as such.


This article was produced by HR Legal. It is intended to provide general information only in summary format on legal issues. It does not constitute legal advice, and should not be relied on as such.