COVID-19: the JobKeeper support package and changing employees’ terms of employment

Major changes have been made to the Fair Work Act to regulate how employers can change their employees’ terms of employment as a result of COVID-19.

There is a new part of the Fair Work Act for employers that are entitled to JobKeeper payments for a particular employee.  These new rules govern the way ‘JobKeeper directions’ may be issued to such employees.  They essentially allow a JobKeeper direction to override other terms of the Fair Work Act, awards, enterprise agreements or contracts of employment, provided the JobKeeper directions meet the following criteria:

  • JobKeeper stand down directions can be issued to reduce hours (including to nil) if the employee cannot usefully be employed for normal days or hours because of COVID-19 or the government’s COVID-19 restrictions; the direction can be implemented safely; and it complies with the wage condition, the minimum payment guarantee and the hourly rate of pay guarantee.

An employer must pass on the JobKeeper payment to an eligible employee in full each fortnight to meet the wage condition.  The minimum payment guarantee requires eligible employers to pay the higher of the JobKeeper payment or a greater amount payable for work performed during the fortnight (in full).  The hourly rate of pay guarantee ensures that an employee’s hourly base rate cannot be reduced as a result of a JobKeeper direction.  So an employee earning $30 per hour who usually works 76 hours per fortnight who is directed to work 60 hours per fortnight cannot be paid less than $1,800 ($30 x 60).

  • JobKeeper duty directions to perform any duties within the employee’s skill set and competency may be issued if the duties are safe, the employee is licensed and qualified and the duties are reasonably within the scope of the employer’s business operations.
  • JobKeeper location directions to perform work at a different location may be issued if the location is suitable for the duties to be performed, not an unreasonable distance away, safe and the direction is reasonably within the scope of the employer’s business operations.
  • JobKeeper agreements to vary days and time of work or take annual leave, including at half pay are authorised if they are safe and do not reduce the employee’s hours of work (use the stand down direction for that).  Employees must not unreasonably refuse these requests and the Fair Work Commission can arbitrate disputes.

Restrictions apply to the issuing of JobKeeper directions:

  1. They’re ineffective if they’re unreasonable in all the circumstances (which include the employee’s caring responsibilities).  If they’re reasonable (and meet all other criteria), employees must comply;
  2. Employers making directions to change duties or location must have information that supports their reasonable belief the direction is necessary to continue the employment of one or more employees;
  3. Three days’ written notice must be provided (or waived by genuine agreement), the employee or their representative must be consulted and a record of the consultation must be kept;
  4. These directions are only valid if the JobKeeper payment is ultimately paid by the ATO to the employer (so make sure you’re eligible before proceeding).

JobKeeper directions continue to apply until 28 September 2020 unless the employer revokes or replaces them or the Fair Work Commission makes an order about them.

The usual Fair Work regulations regarding payment of wages and access to the unfair dismissal jurisdiction continue to apply, but the giving of a JobKeeper direction does not result in a redundancy.

These are civil penalty provisions.  Penalties of $126,000 (individuals) and $630,000 (companies) and compensation can be ordered. The requirements under this legislation are workplace rights so treating employees adversely for exercising them can also result in penalties and compensation orders.

Service and accrual:The period during which an employee is subject to a JobKeeper direction counts as service and the employee accrues leave as if the JobKeeper direction had not been issued.  Redundancy payments and payments in lieu of notice must be calculated as though the JobKeeper direction had not been issued.  Employees taking annual leave on half pay accrue leave entitlements as if the JobKeeper direction had not been made.

Got questions?  Join the queue.  What happens when the employee’s 13 fortnights of JobKeeper payment end?  How does this scheme apply to parties that have already altered their working arrangements?  We will follow up with answers to some of these questions when further information becomes available.

It may be that the JobKeeper payment is not the solution for every situation and that further redundancies will occur despite the support package.  Options to agree variations to terms of employment still exist outside the scope of the JobKeeper scheme.  Consultation with employees is a great way to explore these options.