The Covid-19 pandemic has had drastic impacts on the Australian economy. The Australian Federal Government has implemented schemes such as JobKeeper in response to preserve the employer-employee relationship and keep businesses and employees in work.
The second phase of the JobKeeper scheme begins from 28 September 2020. It allows legacy employers who were previously qualified to receive JobKeeper 1.0 to continue to issue JobKeeper-enabling directions to eligible employees. Such a scheme has been put in place to assist employers who will not re-qualify for JobKeeper 2.0 from 28 September 2020.
What is a Legacy Employer?
A Legacy Employer is an employer who qualified for JobKeeper 1.0 but will not qualify for JobKeeper 2.0. However, they are still able to show at least a 10% decline in turnover and are able to access Fair Work flexibilities for employees who received JobKeeper payments prior to 28 September 2020.
Legacy employers can give employees who previously received a JobKeeper payment:
- directions to change their current employee arrangements which require the employee to:
- work reduced hours or days (no less than 60% of ordinary hours and no less than 2 consecutive hours in a day);
- work in an alternative location; or
- undertake alternative duties.
- request the employee to work different days/times (this cannot be unreasonably refused).
Annual leave
Legacy employers cannot direct employees to take annual leave or reach an agreement to take annual leave at half pay.
Such requests and agreements made under JobKeeper 1.0 will cease to have effect on 28 September 2020. For example, where an employee was directed to take two weeks annual leave in October under JobKeeper 1.0, the employee will not be required to follow the direction from 28 September 2020.
Threshold requirement
Legacy employers must prove at least a 10% decline in turnover. They are required to:
- obtain a 10% decline in a turnover certificate from a financial services provider; or
- self-certify where the employer is a small business with less than 15 employees (statutory declaration).
The 10% decline in the turnover test requires a certificate/self-certification for each of the following quarters:
- June quarter (28 September 2020 to 27 October 2020);
- September quarter (28 October 2020 to 27 February 2021); and
- December quarter (28 February 2021 to 28 March 2021).
Alternative tests
The Commissioner of Taxation has discretion to set out alternative tests where it is not appropriate to compare actual turnover between 2019 and 2020 quarters or if the business has been trading for less than 12 months.
Ongoing notification requirements
Employers must get a new turnover certificate/self-certification at the start of each test time listed above.
Employers must notify employees before test time whether the current direction or request will:
- continue to apply; or
- cease to apply.
Failure to obtain relevant certificates
Where a legacy employer fails to obtain the relevant certificate or self-certification:
- any direction or request will cease to operate on the first day of the subsequent period; and
- the employer cannot give new directions or requests.
What if you do not meet the 10% decline in the turnover test?
Employers who knowingly or recklessly fail to meet the turnover test and continues to issue directions or requests may face penalties of up to $13,200 for individuals and $66,600 for body corporates.
Directions
Direction to reduce hours or days of work
A legacy employer can direct an employee to work a reduced number of hours or days:
- to a minimum of 60% of an employee’s ordinary hours i.e. the hours the employee is contracted to work as set out in the industrial instrument or contract of employment; and
- it cannot result in the employee working less than 2 consecutive hours in a day.
To give such direction, the following requirements must be met:
- the employee cannot be usefully employed for their ordinary days or hours because of the Covid-19 pandemic or Public Health Orders and Directions;
- the direction can be implemented safely;
- the hourly rate of pay guarantee is met (does not include additional allowances, loadings, or penalties); and
- the direction is reasonable in all circumstances with consideration to employee’s caring obligations.
The direction to reduce hours or days of work does not apply when an employee is on leave or it is a public holiday. Employees continue to accrue leave entitlements in accordance with their ordinary hours and days of work.
Direction to change the location of work
A legacy employer can direct an employee to perform duties at a different location provided that:
- the place is safe and suitable for the employee’s duties;
- the performance of such duties is reasonably within the scope of the employer’s business operations;
- the direction is reasonable in all circumstances with consideration to the employee’s caring obligations; and
- the employer reasonably believes that such direction is necessary to maintain the employee’s employment i.e. ‘but for’ directing the employee to perform different duties the employee would be made redundant.
Direction to alter usual duties
A legacy employer can direct an employee to undertake alternative duties provided that:
- the modified duties are safe and within the employee’s skill and competence;
- the performance of such duties is reasonably within the scope of the employer’s business operations;
- the direction is reasonable in all circumstances with consideration to employee’s caring obligations;
- the employer reasonably believes that such direction is necessary to maintain the employee’s employment; and
- the employer pays the employee the higher of:
- the hourly base rate of pay that applies to their previous duties; or
- the hourly base rate of pay that applies to their new duties.
Request to work different days and times
A legacy employer can request employees to perform their duties on different days or times provided that:
- the performance of such duties is generally safe and within the scope of the employer’s business operations;
- the agreement does not reduce the employee’s number of hours of work; and
- the agreement does not require the employee to work less than 2 consecutive hours in a day.
An employee cannot unreasonably refuse such a request.
Consultation requirements
A direction will not apply unless the employer upholds the following requirements to consult at least 7 days before the direction is made:
- provide written notice of the employer’s intention to give the direction (electronic means are acceptable);
- provide the employee or their representative with information about the nature of the direction, when it is to take effect, and the expected effects of the direction on the employee; and
- invite the employee or their representative to give their views about the impact and give prompt and genuine consideration to such views.
Disputes
Who can make a dispute?
The following parties can bring a dispute to the Fair Work Commission:
- an employee or a union; or
- an employer or an employer organisation.
What can a dispute concern?
A dispute can be brought in relation to any of the following matters:
- whether an employer holds a 10% decline in the turnover certificate; or
- whether the certificate was issued by an eligible financial service provider.
What orders can the Fair Work Commission make?
The Fair Work Commission can make an order that:
- the Commission considers desirable to give effect to an employer’s direction;
- sets aside an employer direction;
- substitutes a different employer direction for the one made; or
- any other order that the Commission considers appropriate.
This summary is a guide only and is not legal advice. For more information on legislative obligations, please call CTI Lawyers on 02 9021 9699 or email [email protected].